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Could a Zune phone come with free music?

No wonder it's taking so long to get the Zune Marketplace ported over to Windows Mobile--Microsoft is apparently planning to let carriers to get involved in selling downloads over 3G.

In the absence of any concrete news from Microsoft about Zune, the same rumors crop up every few months. We've known for some time that Microsoft is porting the Zune software and marketplace to some sort of living room device--it's called the Xbox 360. (I doubt they'll do a separate piece of hardware like Apple TV, especially given the recent rash of cost-cutting around the company.) And as far as the latest crop of Zune-phone rumors, I expected Microsoft to announce Zune for Windows Mobile back in February at the Mobile World Congress show, and was surprised when it didn't happen.

Supposedly a screenshot of the Zune interface planned for Windows Mobile 7. WMPoweruser via CNET Asia

Now I understand why it's taking so long. According to this unsourced rumor at WMPoweruser, Microsoft is planning to allow mobile operators to be involved in the process of selling downloads. In other words, when you download a song from the Zune Marketplace to your Windows Mobile phone over 3G, your carrier will set the price and handle the billing. Adding a third party--the carriers--to your development process introduces delay.

I believe the rumor for a couple reasons. The last time I talked to the Windows Mobile team, they emphasized that they consider carriers as a major customer, alongside end-users and handset makers. This is unlike Apple, which built the iPhone primarily to appeal to end-users, then told carriers they'd have to agree with Apple's terms to sell it--in other words, all downloads go through iTunes. Carriers want to keep control of the customer billing relationship, and they want to dictate prices for content downloads, especially ringtones. So I could see Microsoft capitulating here.

Second, Microsoft acquired a company called Musiwave in 2007, and has posted job ads for developers to work for Musiwave to help power the Zune Marketplace. Musiwave was a provider of back-end platforms for carriers such as Orange and Vodafone. That kind of expertise could be helpful in transitioning the Zune Marketplace to a model in which some transactions are handled by carriers instead of Microsoft.

Personally, I like Apple's all-in-one model, and if Microsoft's not careful, allowing the carriers in could create a usability nightmare. What if, for instance, Wi-Fi and PC downloads are handled by Microsoft, but 3G downloads are handled by carriers, leading to two bills and different prices for the same content? Epic fail. But I could see some advantages as well. For instance, today carriers subsidize the price of many phones (including, of course, the iPhone). What if Microsoft could convince them to subsidize the cost of a Zune Pass (Microsoft's all-you-can-hear subscription plan), or even build it into the monthly data plan fee? The result would be similar to Nokia's Comes With Music phones--a phone that offers you unlimited over-the-air music for a year or two.

Whatever the case may be, we probably won't see any Zune-Windows Mobile integration until Windows Mobile 7, which won't be out until 2010.

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