Microsoft Charting New Course For Windows Mobile?

In a Tuesday note to clients, Jefferies & Company analyst Katherine Egbert predicted that Microsoft will release its own branded Windows Mobile 7 smartphone within the next two months. "We expect the new phone to debut soon, at either the Feb 15-18 Mobile World Congress conference in Barcelona Spain, or possibly at CTIA in Las Vegas one month later," Egbert said in the note.

Egbert described the device as "a Zune-like phone," which suggests it may bear some resemblance to Microsoft's 'Pink' smartphone. Pink is believed to be Microsoft's attempt to leverage the talent from its 2008 acquisition of Danger into a consumer oriented device, but repeated Windows Mobile 7 delays and other problems have reportedly doomed the project.

Microsoft often says it has no intention of getting into mobile hardware and that its partner ecosystem is best suited for that task. But while Windows Mobile still has a decent share of the business market, Microsoft simply hasn't been able to get consumers excited about Windows Mobile devices. Windows Mobile's declining market share, combined with the buzz that Google generated in its Nexus One release earlier this month, may prompt Microsoft to re-evaluate its strategy.

There are signs that Microsoft may have figured out a way to broaden the market for Windows Mobile. According to the enthusiast blog WMExperts, the next version of Windows Mobile -- which Microsoft is calling "Seven" -- will come in two versions, one for business users and the other for consumers.

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The first to arrive, possible next month at MWC, will be Windows Phone Seven Business Edition, which will allow users to work on Office documents remotely in conjunction with other users and have changes synched to the cloud, according to WMExperts. Otherwise, this version will be mainly just a stripped down edition of Windows Mobile designed to give OEMs more control over customization, the blog noted.

More noteworthy is Windows Phone Seven Media Edition, a consumer offering that will feature support for Silverlight, Mediaroom, Xbox Live, with Zune music integration and Facebook and Twitter interfaces, according to WMExperts. Microsoft may give MWC attendees a glimpse of Media Edition running on a handset from LG or HTC, but it probably won't arrive until 2011, WMExperts noted.

This information resonates with comments Robbie Bach, president of the Entertainment and Devices division at Microsoft, made earlier this month about Windows Mobile having been too "business focused" and not "modern" enough. Bach told a meeting of financial analysts that Microsoft has addressed these problems in some sort of forthcoming product release.

"I'm certainly confident people are going to see it as something that's differentiated and something that really does move the bar forward, not in an evolutionary way from where we are today, but it's something that feels, looks, acts and performs completely different," Bach told analysts.

It's been a year since Microsoft unveiled Windows Mobile 6.5, and during that time the company's failure to keep pace with smartphone rivals has become a major thorn. Next month, Microsoft will have a chance to show it's got a plan to fix the situation, and what emerges from the MWC event is likely to include some new and interesting directions.