Microsoft to launch Zune phone at CES

Microsoft seems set to take on Apple’s iPhone.

Leaks suggest a Microsoft “Zune phone" will be unveiled by CEO Steve Ballmer at his keynote address to kick off the giant CES trade show in Las Vegas, January 8.

Previously, Microsoft's CES keynote has always been delivered by the now-retired Bill Gates. So one way or another Mr Ballmer will be looking to make a splash during his first outing at the world's largest IT and consumer electronics show.

Reports hint Mr Ballmer will preview a phone that mashes Microsoft’s Zune portable music player (left) with its Danger Sidekick (below), which features a full Qwerty keyboard (Microsoft bought Danger, maker of T-Mobile's Danger Sidekick, earlier this year for $US500 million).

Barrons quotes a research note by analyst a Global Equities Research analyst who asserts the Zune phone is on its way.

The rumour is being further fuelled by an email leaked to Wired.com, in which Mr Ballmer says: "We're changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises. We'll do the same with phones."

Mr Ballmer's comments seem to back-up an earlier report on CNBC about a so-called Project Pink cellphone initiative, based around a Zune-like handset, and a report in The Inquirer that nVidia is making a chip for a Microsoft phone.

Microsoft’s Zune player – not released in NZ – has struggled to gain traction against Apple’s wildly successful iPhone. And while the company’s business-focussed Windows Mobile software has made respectable progress, third-party phones based on the OS still lags far behind RIM’s BlackBerry, or Apple’s iPhone, which is increasingly popular with business. Making its own phone would help boost Microsoft's mobile progress.