"At the end of the day, one of the big trends is that all content is going digital. And if we don't have the software and services that are useful, helpful and valuable for the consumption of music and video, we are sort of not really a player," Ballmer told CIO. "Now, we built the Zune hardware with the Zune softwareand what you'll see more and more over time is that the Zune software will also be ported to and be more important not just with the hardware but on the PC, on Windows Mobile devices, etc."
So Ballmer has finally confirmed what some have speculated: there won't just be a Zune Phone, there will be many Zune Phones. Windows Mobile may not be the biggest platform when it comes to mobile phones, but it does have a presence on every major handset maker, except for Nokia and Apple, and is a major player in the smartphone market. If Microsoft can get Zune-like functionality integrated into Windows Mobile in time for when version 7 ships on various new phones, the Zune ecosystem could get a big boost.
Even as the first iPhone rumors came to light, many were speculating that a Zune Phone was in the works. Microsoft employees insisted, however, that no such thing was being developed (Bill Gates himself denied the rumors in January). Some analysts thought differently; after all, Microsoft wouldn't be the first company to deny rumors that later ended up being true. Integrating the Zune software into a matureand homegrownplatform like Windows Mobile is a better choice than trying to build new hardware and software from scratch. Microsoft is a software company at heart, and it's very good at creating a platform and growing it until the competition realizes their customers expect it on their products.
The Zune is still a young brand, and at the rate it is currently going, it would take years for it to seriously cut into Apple's market share. The mobile phone market is also already very saturated. And yet, even though the Zune has often been hailed as a solid product (especially the 3G), most consumers simply don't think about it as a real alternative to the iPod. If Microsoft can strengthen the Zune brand by taking advantage of the position of Windows Mobile and its mobile hardware ecosystem, the company would have a stronger competitor to the iPod + iTunes juggernaut. It won't be as good a result as selling more Zunes, as Microsoft arguably makes more from selling Zunes than Windows Mobile licenses, but it's better than the alternativebeing locked out of the smartphone + media player market that is becoming much more popular. Microsoft will still need to execute: Windows Mobile 7 has to be a great leap forward from version 6.1, and the company has to be willing to expand the Zune's footprint beyond just the US and Canada.
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[Source: Just Another Mobile Phone Blog]
