Microsoft has begun planning a Zune-based rival to the iPhone, according to a tip received by CrunchGear. A "sound" informant has indicated that strategists from the Redmond company are already solidifying plans for the device and are holding meetings today to plan its final release. While many elements of the design are still unknown, the cellphone is expected to mimic the music-only original and will dismiss Microsoft's existing Windows Mobile phone OS for a customized control scheme.
Tighter integration with Microsoft's existing hardware and software will be even more critical to the design, the source says. The company plans to expand the limited Wi-Fi options of the original Zune by linking the phone edition with the Xbox 360, allowing the phone to stream media -- including video -- directly from the game console when it forms part of a wireless network.
Launch details and ramifications follow after the jump.
Perhaps more surprising still is the anticipated release date. Despite being in an early design stage, the Zune phone is already planned for release by December, roughly a year after the Zune brand's mid-November launch in 2006. These plans may change depending on how well the company meets its goals, the informant warns.
If true, the move confirms earlier company revelations of new Zunes before 2008 and sets up a potentially explosive confrontation between Microsoft and Apple, both of which were thought to have been only indirect competitors in the phone market until today. Apple's iPhone is expected several months ahead of its freshly revealed Zune challenger and should release in June.