For at least the fifth time since the original device was launched in mid-2006, rumors are again circulating that Microsoft is considering producing a phone based off of its hardly enthusiastically received Zune Media Player.
Zune was originally launched as a competitor to the strong Apple iPod brand but it seems that, with the exception of software updates, Microsoft has all but lost interest in the device. While I'm sure many people would love to see Microsoft produce a "dream phone" based on the Zune device, I think there's two major reasons why it'll never happen:
1. Microsoft can't win. The Zune, even 2 years after it's release, isn't a very strong device. Sure, it's managed to carve out a small portion of the market Apple dominates but, when people think MP3 player, they don't think Zune. Microsoft would have to start from the ground up with device redesign and advertising and it still probably couldn't pull the Zune brand out of the ditch. Short of buying Apple, this is not a market that Microsoft can compete and win in. With a few exceptions, Microsoft is not a hardware company. And, even when they have produced hardware, it's never been anything spectacular. Yes, I'm including the XBOX and XBOX 360 in that mix.
2. Microsoft tries too hard for integration. To Microsoft, everything revolves around the Windows death star. In order for ZunePhone to succeed, Microsoft would have to seriously support the device on platforms other than Windows (yes, I mean Mac) and that would place them far to far out from home and into hostile territory, again taking it further away from platform integration.
Personally, I think Microsoft regrets Zune. It was released at a time when the media player market was on fire and Microsoft wanted to cash in on it. You can tell from Zunes' first design model that there was no passion behind it. The device had no soul. Believe me, I bought one and tried to like it. But iPod is just a better made, sexier device and has a smarter, sexier store (they even sell movies!)
Two years later, iPod is still enjoying higher and higher adoption rates while Zune is still struggling for relevance in the marketplace. It's become an 'also-ran' device that never really ran to begin with. It simply doesn't make sense to expand the brand into yet another market it'll fail in.
For the reasons above, I don't think we'll see the ZunePhone anytime soon - or anytime at all for that matter. Instead, I expect to see an announcement fairly soon that Microsoft is pulling out of the media player business entirely and refocusing on their 'core'.
In today's economy, even the Beast of Redmond can't afford to waste money on a dying platform.
Soon, the final chapter will be written on the sad life of the little media player that tried but failed. And we, the buying public, will write its death certificate.