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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.

"The Sidekick is a messaging device, kind of big
and heavier than other devices. It’s fairly successful, but challenged by a
number of other phones," says Llamas. "At the time, it was a cool
device, but I think it is a bit more challenging for them to compete in recent
years."