Microsoft harrumphs at potential iPod phone

Entertainment chief at Microsoft says Apple will face all sorts of problems if it launches a mobile phone built around the iPod.

LAS VEGAS--Apple Computer faces some tough hurdles if it decides to launch a mobile phone built around its popular iPod music player, Microsoft's entertainment chief said.

Robbie Bach, president of Microsoft's entertainment and devices division, said Monday that it too is considering a mobile phone integrated with its Zune digital music player, but launching such a device is not at top of its priority list.

Microsoft launched Zune in November and set a sales target of more than 1 million units by the end of June. It is the first Microsoft-designed device in a market dominated by Apple, which has sold more than 70 million iPods since it was launched in October 2001.

Apple's longtime rival plans to come out with new Zune models later this year, but Bach said do not count on a phone model just yet.

"It's probably on the table of things for us to look at, but not the No. 1 thing we are focused on," said Bach, speaking to analysts at the Consumer Electronics Show here.

Many Apple watchers are expecting Apple CEO Steve Jobs to announce an iPod phone on Tuesday at Macworld in San Francisco. Analysts estimate such a phone could sell for $200 to $400, depending on its configuration.

Analysts have said Apple may sell the phone with its own branded cell phone service via a mobile virtual network operator (MVNO), under which Apple leases excess capacity from other carriers.

Or, they have said, Apple might instead sell the phone "unlocked," in which case buyers could choose the cell phone service provider they want to use.

"The latest rumor we hear is that it is going to be a MVNO phone and there hasn't been a lot of successes in that MVNO space for a lot of different reasons," said Bach, who oversees the Zune business and Microsoft's video game division.

Bach said MVNO phones often have difficult relationships with the mobile operators. One of the few successful MVNOs in the United States so far is Virgin Mobile.

"Historically, working with partners hasn't been a strong point for Apple, so maybe it will find a way to work around those relationships," he said.

An Apple representative said the company does not comment on speculation.

Putting together a phone with a media player raises many design questions, including how to manage various inputs, the optimal screen size and battery life, Bach said.

"You have to find out what it's great at. Is it great as a phone or is it great as music player?" Bach said. "If it's great as a music player, then it's just another iPod trying to be a phone."