iPhone, Google Phone, Zune Phone?

With the upcoming release of Google’s Nexus One we’re seeing a big shift in the smartphone industry. The new direction in mobile is in integrating the hardware and software behind the device and delivering a ‘complete’ and ‘pure’ experience to consumers. Apple obviously started this out with the wildly successful iPhone and now Google is following suit with the Nexus One. Let’s not forget about Nokia’s Maemo platform and Samsung’s upcoming Bada operating system. But what about Microsoft? Where do Microsoft and its Windows Mobile platform fit in this increasingly competitive arena?

Microsoft has certainly fallen behind the curve in the mobile world. There’s no buzz around its mobile platform right now and sales of Windows Mobile devices have been relatively low compared to its competitors. Some analysts are calling for Microsoft to get out of the phone business entirely. It seems unlikely that Microsoft will exit this area given the importance of mobile computing, but it definitely needs to shift its strategy if it hopes to compete for market share. I think that if Microsoft hopes to remain a player in the mobile world it will need to cross the threshold into smartphone hardware and release its own fully branded Windows phone.

Microsoft is no stranger to stepping into the hardware game. Microsoft successfully entered the video game market in 2001 with the introduction of the Xbox console, challenging Sony and Nintendo for superiority in the home gaming market. Microsoft also entered the portable media player market in 2006 with the Zune player to challenge Apple’s line of iPods. The Zune player itself is a sleek device that rivals the iPod in functionality and ease of use, but it never really caught on with consumers. Although it has not sold well in the market, analysts predict that Microsoft may enhance the Zune device with phone capabilities and enter the smartphone space with it.

Over the past year, there have been murmurs on the internet about the ‘Zune Phone’, but so far nothing concrete has materialized and Microsoft has not confirmed any of these rumors. The release of the Nexus One will certainly increase this chatter. It’s also going to inadvertently shine a bright light on Microsoft and call into question its current mobile strategy. Right now it appears that Microsoft is focusing much of its attention on the next version of its mobile operating system, Windows Mobile 7, scheduled for a 2010 launch. But will this be enough for Microsoft to regain its lost market share? Probably not.

If Microsoft hopes to once again become a leader in mobile computing it will need to follow the lead of its rivals. Windows Mobile 7 will not be enough. Microsoft needs to move beyond software and integrate into hardware for smartphones. I think we will see a Zune Phone released by the end of 2010. If Microsoft waits much longer than that it could find itself completely out of the mobile revolution.