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Reports from Citi's Global Technology Conference in New York today indicate that Microsoft may be readying its own rival to Apple's iPhone. In light of the iPhone's success as the biggest-selling smartphone in July, this news comes as no surprise. In fact, given how we've all known about the iPhone since the beginning of the year, I'm surprised that Microsoft isn't further along in the process.

The aforementioned report says that Microsoft wouldn't confirm rumors that it would have another iteration of its Zune media player in time for this year's holiday buying season. But a true hybrid phone/media player sounds like it's a ways off--which, if true, could be a detriment to such a device gaining traction.

Still, there could be some advantages to Microsoft getting in the game. Up until now, the company's strategy has been one of partnership: Microsoft's Windows Mobile operating system has proliferated to the point that handsets using the OS have a strong foothold in the smartphone market. But integrating hardware design with software design can have benefits. The iPhone's elegance reflects that: There, Apple had the benefit of controlling the design of both the operating system with the hardware, and that marriage made the sublime operation iPhone a possibility.

Microsoft could have a similar advantage if it designs its multimedia handheld environment in tandem with the hardware that will run that environment. In fact, the Zune's beautiful interface was one of its assets. I'm sure Redmond can come up with ways to integrate a phone and messaging interface within that environment--and a way to handle all of those JPEG files and Word documents, and more, too.

The company is no stranger to creating consumer hardware: Already, Xbox 360 is well-established, and the Zune player shipped last year. However, if Microsoft were to take the step to do its own handset, the company would end up competing with the same handset makers that already use its Windows Mobile OS--a tricky position for any company that supplies enabling technology to third-party customers, and then gets into that business under its own brand. In the end, though, I imagine we consumers are the ones who'd benefit most from such a rivalry.

The question that stands is whether Microsoft wants to get into the cell phone handset business itself--or will it instead expand on existing relationships with handset makers like HTC, which already produce touchscreen-enabled, Windows Mobile-based handsets. We'll find out soon enough, I'm sure; until then, let the speculation begin.

Source: PCWorld