When the Windows operating system first crawled onto a Palm sized device back in April, 2000, a lot of us thought we were seeing the future of smart phones. Many developers spent the next few years building apps and preparing for the future.

But fast forward to today, and Windows Mobile is almost an afterthought on the Smartphone scene. Instead, Apple’s iPhone and the offerings from Blackberry rule the smartphone market, with upstart Android gaining ground every day. With built in branding to the world’s largest and most recognizable operating system, how could this happen?

To answer that, you almost have to take a leap of faith. Let’s step back and look at how Windows Mobile is used. Microsoft does not actually build the phone hardware, but rather licenses the Mobile OS to phone manufacturers. Since they have made no movement into producing their own phone hardware to this point, we should assume that Microsoft is complacent with that arrangement. After all, there are no Microsoft computers, only computers that run the Microsoft operating System, Windows. So it all fits.

Zune is Media

However, the rule breaker for this harmonious picture is Microsoft’s Zune. The HD movie viewer and music player is aimed directly at the Apple iPod. Microsoft builds the Zune (or has it built), creates the OS it runs, and distributes it. So much of Microsoft is behind the Zune that they closed their popular MSN Music store in order to sell directly to Zune users. In fact, if you even want to buy music for your Windows PC, you have to install the iTunes-esque Zune software to do it. You can even put Zune on your Xbox 360. In Microsoft’s eyes, multimedia is Zune.

Okay, so far we have stated that Zune is synonymous with Media as far as Microsoft is concerned. Being that portable media is a big portion of what people do with portable electronics, that is an important note. But let’s go on to another aspect of smart phones that is becoming more important all the time – that is the App.

Zune is Apps

The app is the key piece in enabling a portable device to extend its functionality beyond that which it was originally designed for – it is the reason why person X has a NEED for the device. Apple’s AppStore has been proven to be beyond just a concept with literally billions of downloads. And, as you would expect, Microsoft has Apps for the Zune. You can find the Zune app marketplace on the Zune software, free for your perusal and purchasing.

This sets up the Zune to have ever extending functionality, exactly as we have seen with the iPhone. This ability to grow in functionality as needed literally within minutes of an app download is probably a hallmark of the modern smartphone, and the Zune has this capability. Let’s make a note of this as we look at another important aspect of smart phones today, social media.

Zune is Social

In Zune talk, social media goes by the name The Social, and it gives a way for music lovers to share music. If both users have a Zune Pass, then they can even share music. The Zune is socially centric, as a lot of the smart phones are today – how many readers have a Facebook or Twitter app on their iPhone, Android Phone, or Blackberry today? How many realized that a Twitter App is available right now for the Zune?

Zune has its own social media, The Social, built into its frameworks. On top of that, it has the apps to connect to other social media. Zune is about social media, another thing to put in our notes as we look at an aspect of communication that is a virtual firestorm for smart phones and their carriers right now, the softphone.

Zune is Not a Softphone

Whoa, hit the brakes. I bet you expected to read how Zune does Skype, Google Voice, etc. and how, with its built in Wifi capabilities, it was already practically a smart phone. Well, that is not the case. One reason why this is not so… is a simple one – the Zune has no microphone, and it will not properly support a headset with one. Perhaps the most important aspect to becoming a smartphone, the ability to carry on a voice conversation with another user, is an impossibility for the current Zune HD.

Where do we go from here?

So, no software phone for the Zune makes the Zune smartphone pretty much a bust. Right? So, we should NOT expect that the Mobile World Congress trade show in Barcelona to present the fabled Zune Phone?

That is no doubt the case, at least as far as everything from Microsoft has suggested. But with portable media players being replaced daily by more than capable smart phones, why would Microsoft put so much into the Zune branding to have it left behind?

The answer is probably right in front of us. Windows Mobile has gotten the rap of not being exciting. It is a has been, with a boring interface that is hard to use without a stylus in your hand. Microsoft needs an excitement injection.

And there you have the connection – Windows Mobile 7 will incorporate Zune into its DNA. Zune gives Windows Mobile 7 music and video, along with a social media structure and an existing App store. This fires up WinMo 7, and makes it competitive with Apple’s offerings.

The Zune Phone is called Windows Mobile 7.

Beyond Zune

But it doesn’t stop there. Microsoft has an ace up its sleeve that may end up giving Apple a run for its money. That ace is a little thing called Xbox Live.

I fully expect to see Windows Mobile 7 to not only incorporate all things Zune, but also Xbox live. With that, Windows Mobile phones not only give you a new OS that is finger fancy, it also powers up the experience with Zune media and Xbox gaming. Not only is it exciting, you can even show off your gaming accomplishments and share it all with your social friends.

An Uphill Battle

With such an established foe in the marketplace, would Microsoft stand a chance in re-establishing Windows Mobile as the cool kid on the block? Well, anyone that has lived through the console wars has seen Microsoft enter and arguably take the market from reigning champ, Sony. It is certainly not inconceivable.

So, there you have it – I predict we will indeed see a Zune Phone. But it will carry the Windows Mobile 7 label. And with media, gaming social networking, and a new platform, it will be interesting to see exactly how much it energizes the mobile market players.