Another Zune Phone rumor fizzles

I was there when this whole Zune Phone thing was born. It was September 2006, at the news conference in Redmond where Microsoft unveiled the original Zune music player. It started when a reporter asked a Microsoft executive if a Zune phone was possible in the future. The exec's answer was affirmative but less than emphatic -- essentially acknowledging that it could make sense at some point.

Next thing you know, the gadget blogs were trumpeting the company's big Zune Phone "announcement."

As it turns out, the speculation about the "Zune Phone" hasn't become any more grounded in reality since then. The latest word is that the company won't be unveiling any such device at the Consumer Electronics Show, after all. That news, via CNet News.com and Gizmodo, takes the air out of recent reports by Global Equities Research's Trip Chowdry and and CNBC's Jim Goldman.

More realistic are reports that Microsoft is working on premium mobile services based on technology acquired in its purchase of Danger Inc., the company behind T-Mobile's Sidekick device. In addition, there are rumblings about Microsoft extending the Zune music service onto mobile phones. That would make sense, too. And it's possible that Microsoft could give a glimpse of these things at CES.

But what about a Zune Phone? Does Microsoft have one in the works at all? Or is it still a media concoction?

It's notable that two analysts who have followed the company for years are both skeptical, for the same reason: Windows Mobile hasn't yet stumbled to the point that Microsoft would risk alienating its mobile-phone partners by coming out with its own competing phone.

"Windows Mobile may have stalled in the water while the iPhone and RIM phones have continued to take market share, but to Microsoft, 11% global market share and 16 million units a year isn't unsuccessful enough to kill the platform and change strategy completely," wrote Matt Rosoff, an analyst at the independent Directions on Microsoft research firm, in a post on his CNet blog today.

Michael Gartenberg offered similar reasoning in this post last month.

Who knows, maybe there will be Zune phone, someday. But for now, at least, this one still hasn't risen above the level of rumor.