Microsoft hints at Zune-based iPhone killer

Microsoft says it's not "unreasonable" to suggest that it's developing an Apple iPhone rival running Windows Mobile, amid speculation that the software giant has grand plans for its Zune media player


Microsoft has suggested that it is developing an Apple iPhone rival running Windows Mobile.

Speaking at Citi's annual Global Technology Conference in New York, Mindy Mount, corporate vice president and CFO for Microsoft's Entertainment and Devices Division, said it was not "unreasonable" to think that Microsoft will integrate photo, music and touchscreen features into a Windows Mobile product in the future, though she declined to comment on the specifics of when or what that might look like.

Microsoft's idea with Windows Mobile has been to move everyday business capabilities, such as accessing email, from the PC to the mobile device. However, most people "tend to have one phone for personal as well as work [use]," Mount said. "Being able to do pictures and music is something that consumers are going to want, so it's a natural thing for us to want in our product roadmap."

Microsoft is rumoured to be evolving its Zune multimedia player – its rival to the iPod – with new features out by the end of the year, though Mount declined to confirm this on Tuesday. But a hybrid product melding Zune, which so far has had lacklustre response from consumers in the US, with Windows Mobile features is not completely unrealistic for the future.

Microsoft has already worked with hardware partners to develop Windows Mobile handsets with touchscreen capabilities that are similar to the iPhone's. For example, the HTC Touch is one of the latest Windows Mobile devices to offer users the ability to use a touchscreen to scroll through email and contacts and browse web pages.

But the HTC Touch smartphone, which is available in the UK, Europe and Asia and should makes its North American debut later this year, doesn't have the type of multimedia capabilities that give the iPhone an edge over rival smartphones, at least in the short term. Market research firm iSuppli said that in July, its first full month of release, the iPhone outsold popular competitors such as the Blackberry and Palm Treo devices.

Regarding RIM, Mount's comments also seemed to shoot down speculation last week that Microsoft is in talks to purchase Blackberry maker Research in Motion. "We don't comment on rumours, but what I would ask people is what that really gets you," she said.

Much of RIM's success has been with the device portion of its BlackBerry business, whereas Microsoft has been very successful with using third parties to build its Windows Mobile devices, Mount said. The company sold 11 million Windows Mobile licences last year, and expects to do 20 million in the current fiscal year. "We're pretty happy with that roadmap right now," she said.

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