Microsoft Smartphone Rumors Gain Steam

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Rumors that Microsoft will launch its own smartphones have gained steam again, with one analyst predicting that the device may be introduced at the GSMA Mobile World Congress in two weeks.

The Microsoft-branded phone may include Nvidia's Tegra processor and a telecommunications baseband chip from Qualcomm, wrote Doug Freedman of Broadpoint AmTech in a report Thursday.

Microsoft already sells the Zune portable media player, among other devices, so it isn't a stranger to the hardware business. And it has its Windows Mobile OS, which it licenses to other phone makers. But it doesn't yet have a smartphone of its own.

Rumors surfaced last year that Microsoft would launch a smartphone at the Consumer Electronics Show in January, but none materialized. Freedman now believes it will happen at MWC, which takes place Feb. 16-19 in Barcelona.

Microsoft declined to address the rumor directly. "We have nothing to announce at this time. We continue to collaborate with Nvidia on the delivery of innovative solutions that move the smartphone industry and the consumer experience forward," Scott Rockfeld, director of Windows Mobile, said in a statement.

Nvidia declined to comment. At last year's MWC, Nvidia announced that its Tegra APX 2500 mobile processor would support Windows Mobile and enable 3D user interfaces and high-definition video on smartphones.

Freedman also said that Nvidia is investing additional resources to support other mobile operating systems, which could include Apple's OS X used in the iPhone.

But another analyst said it would be foolish for Microsoft to launch its own smartphone. The company may be thinking of adding cellular capabilities to the Zune, he said, but such a move could backfire on them, said Jack Gold, principal analyst at J. Gold Associates.

"They haven't set the world on fire with Zune. Why do they think they are going to do any better if they put a phone on it?" he said.

Apple had instant success with its iPhone, but Microsoft doesn't have the same type of allure among consumers that Apple has. Windows Mobile has a stronger following among businesses, with its support for applications like Microsoft Exchange and extensions for business productivity applications, Gold said.

Windows Mobile is already licensed by top smartphone makers like Samsung, Motorola and HTC, so there's no reason for Microsoft to enter the consumer market, he said. Making a smartphone of its own could also antagonize Microsoft's licensees, who could easily switch to one of several free, Linux-based platforms such as LiMo or Android, analysts said.

While its own smartphone is unlikely, Microsoft's partnership with Nvidia could revolve around building a gaming-centric smartphone, said Chris Hazelton, research director of the mobile and wireless practice at The 451 Group. The iPhone is taking shape as an effective gaming device and many smartphones are adding chips that enable a better multimedia experience, he said.

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