Does Windows Mobile 7 Delay Portend Zune Phone?

The repeated delay of Windows Mobile 7 is throwing the rumor mill into overdrive following the recent online leak of photos thought to represent phone prototypes from a development project at Microsoft called Project Pink.

The photos and speculation around them place Microsoft's acquisition of Danger in the spotlight and are leading many to conclude that the software giant has tapped Sharp to offer Windows Mobile 7 and a possible Zune-like experience on a Sidekick-type slider.

Here's the deal. The devices in the photos are said to be code-named Turtle and Pure and are thought to run Windows Mobile 7, currently slated for release in late 2010. The photos strongly resemble the youth-targeted, co-branded Sidekick from Sharp and Danger, which Microsoft acquired almost two years ago. One possible source of the Windows Mobile 7 delay is Danger's lack of experience with Windows Mobile. Danger's proprietary OS is built on Java.

Steve Ballmer's latest comments indicate that Microsoft's top brass is becoming increasingly frustrated over the delays and lack of consumer adoption of Windows Mobile. Ballmer made headlines Sept. 24 at the Microsoft Venture Capital Summit when he admitted Microsoft "screwed up with Windows Mobile" and "wishes they had already launched Windows Mobile 7," in the words of attendee Paul Jozefak, made public via Twitter. Journalists were not allowed in the session.

Another tweet from the same event pointed to organizational issues and shake-ups within the Windows Mobile team, "We've pumped in some new talent," Ballmer said. "This will not happen again."

Back in March, Ballmer expressed disappointment about Windows Mobile 6.5, set to be released in October. When challenged by U.S. public-sector CIOs about their employees' preferences for the Android and iPhone operating systems, Ballmer admitted that 6.5 was "not the full release we wanted to have this year."

In response to an inquiry about the cause of the Windows Mobile 7 delay, a Microsoft spokesperson says, "We are always working on future versions, but we aren't going to hold great features that can be available to our partners and customers."

When asked if the leaked photos were legitimate and if a Zune Windows Mobile 7 device was in the works, the same spokesperson says, "I can only comment on initiatives that are public and in market." He adds that investments were being made across the company and Windows phones are a focal point.

Leif Eriksen, managing director for analyst company Industry Insights, says Microsoft has been producing "the poor man's smartphone," and he's not surprised by the delay of Windows Mobile 7.

"It's typical Microsoft," says Eriksen. "They had the same mess around Vista—delay, delay."

Regarding the leaked photos, Eriksen says, "Creating an iPhone clone with keyboard won't rescue Microsoft from smartphone purgatory; it needs to create the mobile answer for the social networking generation."

IDC analyst Ramon Llamas would not comment on rumors about Windows Mobile 7 or Project Pink, but says he does not see a smartphone with Zune in the future.

"I don't see that happening," says Llamas. When asked why, Llamas says Microsoft, "has been very siloed—Zune here, Xbox there. They have had some great technological developments and enhancements and you can't take that away from them, but I have not seen much [organizational] crossover."

Microsoft may be increasing efforts to collaborate across the organization. On Sept. 25, Microsoft confirmed Silverlight will integrate with Windows Mobile 7, and the company will offer third-party development applications for the OS.

Unless Windows Mobile 7 presents a slick, sexy and intuitive interface for consumers, betting on a Sidekick-like slider with a QWERTY keyboard may have its challenges.

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