Summary: Microsoft's hardware business (in the sense of direct sales, not manufacturing) to expand at the expense of the licensing model if rumours are correct

MICROSOFT has some financial uncertainties looking at the long term (sharp earnings dive serves a s prelude). It is unable to elevate the price of software because better and cheaper competition exists, notably GNU/Linux. Microsoft has already attempted to enter deeper into the hardware market with XBox and Zune, but it lost so many billions of dollars and it still operates at a loss.

If the rumours are true -- and there are reasons to suspect they are true -- then Microsoft will be launching some kind of a 'Zune phone' .

Microsoft confirms Izune in June

IT LOOKS LIKE Microsoft is getting closer to launching the Zune phone we told you about earlier, here and here.

We have been saying for a while that the launch is quite imminent, production snafu's aside, and Microsoft just confirmed it.

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Hold off? Why, so you can be disappointed by the new Ibrick SP3, then go out and buy an Iphone or Pre? So you can feel the warm fuzzyness of owning a Izune, and by that I mean the heat of the Nvidia chipset burning your leg?

The effect would be devastating to Microsoft's Windows Mobile partners. Microsoft already lags behind the competition in this area, so charging for Windows Mobile licences is hard because there goes Microsoft's value proposition. On a related note, it's not going particularly well for Zune, which is still disastrous in financial and technical terms.

Microsoft’s anti-ipod ad shows how out of touch their Zune division is

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And if you thought you were going to be cute and record your SPDIF output, Vista will disable that if the file is DRM’d.

Have fun lighting your money on fire with Zune + Vista!

Is Microsoft running out of decent products that people actually want rather than forced to use for compatibility? ⬆