Last week, Engadget reported that sources close to Microsoft had passed along information about a Zune-based competitor to Apple’s iPhone. Following up on those reports, CrunchGear goes on to say today that the Zune phone is not just a rumor and is confirmed for a 2007 release.

Now this is really interesting. It’s pretty safe to say that the Zune has done little to challenge the iPod in the portable music market. So, what potential reason would Microsoft have to believe that a telephone bearing the Zune brand would fare any different in competing against the iPhone?

Does Microsoft know something we don’t? Or is this one of those moves that will go down as one of the all-time greatest tech blunders?

Honestly, I’m not quite sure which side of the fence on which to come down?

CrunchGear has more details about the Zune phone:

The first real news is that we can expect to hear an announcement from Redmond about it before March 17, St. Patrick’s Day, at which time we should learn the name of the device. At the same time, we should also learn other launch specifics, and here’s where it gets incredibly juicy; our source says that, pending FCC approval, the specter-like Zune Phone will hit the streets sometime in May, a full month before the iPhone.

No, really.

Our source says that an iPhone competitor has been in the works for a while, and the idea of branding it as part of the Zune ecosystem, from the brown color through the interface, came as a recent decision as a response to Apple’s iPhone. The source didn’t go into details about features, as they don’t know specifics—they’re not yet all finalized. But there is one thing our source says will not only separate it from other music phones, but from iPhone as well.

So Microsoft plans to release the phone in May, but the features aren’t even finalized? Does anyone else see a problem with this particular method of product innovation?

This whole thing leaves me with more questions than before. I’m eagerly waiting to hear what Microsoft has to say about all this.

Tags: Microsoft Zune Mobile Zune Phone

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