Microsoft’s Zune phone rumor back again, this time with Tegra

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Microsoft’s Zune phone rumor back again, this time with Tegra

Redmond (WA) – There are some tech rumors that just won’t go away, one of them being Microsoft’s iPhone killer smartphone. A new report now suggests that Microsoft may be working with Nvidia on a cellphone that has Nvidia’s Tegra hardware at its core. And if that report is correct such a phone could only be three months away. Does this make sense or should Microsoft just buy Blackberry maker Research in Motion?

Microsoft has not commented on a Zune phone so far and did not confirm or deny any reports. Rumors about such a phone have typically been squashed by the argument that Microsoft would pose a threat to its Windows Mobile customers if it manufactured its own phone. But a new article published by the Inquirer revives those rumors with an interesting angle. The website suggests that the Microsoft-branded cellphone will be powered by Nvidia’s Tegra system-on-a-chip (SoC). The site even pinpoints the phone’s release date – 3GSM in February 2009.

The Tegra SoC integrates an ARM-based CPU and an Nvidia GPU core on a single die, in addition to a northbridge, southbridge and primary memory functionality. The first Tegra products are expected hit the market by the end of the year, but are believed to be limited to industrial and automotive applications initially. Since Apple appears to be determined to follow its own SoC route, Microsoft would be a huge win for Nvidia. And if that is in fact the case, the obvious question would be: What happened with Intel? Is the Moorestown SoC too late to join the party?

Apple’s own SoC plans

When Apple acquired the chip designer P.A. Semi for $278 million in March of this year, Steve Jobs confirmed the company’s plans to use P.A. Semi engineering talent to build SoCs for use in iPhones, iPods and possibly other gadgets down the road. The company then hired a former IBM executive with experience in designing Power processors, Mark Papermaster, to take over devices engineering. IBM has blocked the move, fearing that Papermaster will lead Apple’s internal chipset design team comprised of ex-P.A. Semi engineers and use IBM’s secrets to develop new chips for Apple.

Some analysts believe that Apple triangulated the technology and manufacturing licensing deals with ARM, Imagination and Samsung technologies to design its next-gen iPhone processors. They think the next-gen iPhone SoC will feature the latest ARM design and Imagination’s PowerVR SGX/VXD cores on a single die, manufactured by Samsung. The Samsung S5L8900 SoC used in the iPhone, iPhone 3G and first-gen iPod touch, features similar combo: A 32-bit RISC ARM processing core (ARM1176JZ(F)-S v1.0) down-clocked to 412 MHz (the second-gen iPod touch features an ARM1176 v4.0 core running at 532MHz) and Imagination’s PowerVR MBX Lite GPU (an improved version of the GPU that powered Sega’s Dreamcast game console.)

We here at TG Daily believe there a pros and cons about Apple’s SoC plans. And if you ask us, the fact that Nvidia’s Tegra is, at least in theory, currently the most powerful SoC for mobile devices, casts some doubts over Apple’s intention to differentiate itself in the hardware arena by designing its own SoC instead of relying on off-the-shelf components available to rivals.

Will Microsoft get it right?

If Microsoft beats Apple, licenses Tegra and Apple really follows its own SoC route, the iPhone maker could end up outclassed in the hardware arena. Add the Zune Marketplace content and the upcoming Windows Mobile 7.0 operating system that, by all accounts, will bring enough oomph for the OS to compete with Android and iPhone OS, on top of the Tegra-based hardware and you suddenly have all the key ingredients to build a device Apple should be afraid of.

Of course, hardware and OS are only half the story. The battle in the mobile phone space has shifted towards applications and ways of distributing them directly on users’ handsets. The hardware advantage may not mean much if Microsoft is unable to come up with compelling software features, an attractive and easy to use user interface, killer applications and an efficient application distribution platform like iPhone’s App Store or Android’s Market.

Since Microsoft is known for going to great lengths to reach out to its developers, we have no doubt that Microsoft’s third-party developers would support the platform. Suddenly, the blueprint of a Zune phone looks not only more impressive than anything that’s currently on the market. Multimedia-playback-gaming features of such a device could outperform even Sony’s PSP and position a Zune phone as the best mobile computing/communication/gaming device. The problem, of course, remains that such a product would anger many of current Microsoft’s partners.

Also, let’s not forget that Microsoft has not really a history of coming up with great hardware designs in consumer electronics, but has a very special talent to shoot itself in the foot at the very last moment. You just know that someone will make the decision that this Zune phone needs to come with a faux wood finish. There are other concerns as well: Tegra is an unknown platform. Will Microsoft put its bets on a new, unproven platform with very limited hardware support for a product that could potentially sell in the millions? Unlikely.    

Read on the next page: What if you were Steve Ballmer?


Analysts don’t buy the Zune cellphone idea

As TG Daily reported previously, most analysts still believe that Microsoft will not make a Zune cellphone. Jupiter Research analyst Michael Gartenberg thinks it is a bad idea since the risky move would unnecessarily impact traction of the Windows Mobile platform. “Microsoft now has traction with more than 20 million licenses out there and a great stream of partners and new phones for consumer and business use.” The analyst warned that “no one has ever been successful licensing technology platforms to others and then competing with a device of their own.” Instead, Gartenberg thinks that some features of Zune software might trickle down into Windows Mobile, similar to how iPod-related features ended up in the iPhone software.

Another report puts Nokia and Microsoft in an alliance to create a Zune phone. According to this rumor, the Zune team is closely co-operating with Nokia in order to integrate the Zune Marketplace with Nokia smartphones. The move would leverage the Zune digital distribution platform to expand the Zune Marketplace content (music, movies, TV series, etc.) to Nokia smartphones, in addition to the Windows Mobile platform, PCs, Xbox, etc. There is little credence to this rumor beyond speculation and it becomes less likely if you know what effort Nokia put into supporting the Nokia Music Store and Ovi on its smartphones.

What if you were Steve Ballmer?

We here at TG Daily could imagine that Nvidia and Microsoft are collaborating on a smartphone, which would also mean that some people at Intel might lose their job. Such a scenario would be a big blow to the Intel Atom platform. However, is Nvidia and the development of a smartphone really Microsoft’s best option? The choice here is to build from scratch and expose yourself to similar mistakes that were made with the original Zune or hit the ground running. How? Simple: Buy Research in Motion (RIM).

RIM seems to have a really good idea how it needs to compete with Apple, it is clearly ahead of Google and, best of all, it might be cheap. RIM may be undervalued as so many other tech companies right now, but at a market cap of about $25 billion, Microsoft might be able to pick the company up for about $30 – $35 billion and have enough money left to heavily invest into consumer smartphones, a weakness of RIM.

So, build from scratch and take the risk of mistakes or buy RIM? To us, that is an easy decision.