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Microsoft could soon be releasing a Zune-based iPhone competitor

According to a report from Dow Jones’ MarketWatch, Microsoft submitted a filing to the FCC on Monday seeking approval for a prototype wireless device that could be used to talk over the Internet. Microsoft’s filing labeled the device has having the purpose of “consumer broadband access and networking,” through the use of OFDM for wireless communication.

Although the FCC filing does not specifically name the wireless device as a member of the Zune family, analysts and rumormongers suspect that Microsoft’s music player has a part to play in this filing. Analyst Rob Enderle said the filing seems to indicate “an internet device or a mobile VoIP phone,” that “certainly could be a Zune derivative product.”

Earlier in the month, CrunchGear kicked off the rumors of a Zune phone that will work with Zune Marketplace and be able to connect with the Xbox 360 to access Xbox Live Marketplace content for downloaded movies on the go. The device will not make use of Windows Mobile, but rather the more consumer-friendly Zune interface and could see store shelves as early as this December. Gizmodo claimed to have confirmed the story with its own sources, adding that the device may not have a touch-screen like the one on Apple’s iPod.

Unlike Apple’s phone offering, Microsoft does not appear to be making a device that uses traditional cellular carrier networks, which would put the software giant in a position of disadvantage when dealing with major carriers. Instead, its choice to go with OFDM could be a hint towards WiMAX. Sprint Nextel have already announced plans to create a WiMAX network that will offer speeds between 2Mbps and 4Mbps -- speeds perfectly able to handle streaming of large files. The addition of WiMAX would help solve one Zune’s current shortcomings: the range of Wi-Fi doesn’t allow for a significant range to make sharing worthwhile. WiMAX could extend the sharing capabilities from close-range to international.

Following news of the FCC filing, CrunchGear goes out on a limb to say that Microsoft could be announcing this product before March 17, with a possible launch sometime in May, supposedly before Apple’s iPhone. The unnamed source of the story also says that such a device has been in the works at Microsoft for a while, but the idea of branding it as a Zune came as a recent decision as a response to the iPhone.

While the details are still belong in the rumor mill, Microsoft’s work on a Zune phone certainly isn’t fiction. Last September, Zune marketing manager Chris Stephenson responded to a reporter’s question about such a product by saying, “There is a possibility for a Zune phone,” and “the entire Zune platform and brand is about a family of devices. So to the degree that phones and other products exist in the family going forward, absolutely, that's definitely where this is all going.”

Upon a later question from another reporter, Stephenson reiterated, “We don't have any specifics to announce on that. I think what I was saying is that a Zune phone is definitely part of the future of this brand.”

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MS impresses me
By Orpheus333 on 2/10/2007 2:44:40 PM , Rating: 2

I think one must consider apples 50% profit on the iphone ($250 to produce but $499 AND TWO YEAR CONTRACT charge for the 4gb) and then realize that if M$ charges even a fair price they will beat out the iphones price by $$$ when wireless providers entice you with their two year deals.

Why would anyone pay $200-300 more for the iphone when zune/samsung will offer something similar/better and most likely not try to bend customers over with a 50% premium?

RE: MS impresses me
By JeffDM on 2/11/2007 12:20:37 AM , Rating: 3
The 50% number that is bandied about is the gross margin, not the net margin. The sum of the cost of the parts is only one part of the cost of doing business. Apple is not making a 50% profit on anything.

I don't understand why the teardown pricing information isn't done with competing products.

We'll see. I hope MS does this right though. I thought entering the HDD audio player market was a blunder because flash players are what sells.

Even if Apple's phone is the slickest one out there, if MS can make something that's a lot cheaper, even if it's not nearly as slick or is as powerful, cost wins the market. Only 10% of the phone market is smart phones, so if Microsoft can make a phone that is just phone and media for a lot less, I think they can clobber Apple.

"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)

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