No Microsoft phone, executive says

Microsoft says services, not OS, is the place to be

Microsoft stated emphatically Monday that it would not be building a phone; instead it would roll out services and rely on partners to supply the hardware.

"We are not going to make a phone; we believe in the richness of the ecosystem," Andy Lees, senior vice president of the mobile communications business at Microsoft, told a group of financial analysts at the Mobile World Congress in Barcelona.

There had been rumors circulating for months of a forthcoming Zune phone and speculation on special projects as a result of Microsoft's Danger acquisition.

Lees even took the mobile operating system down a notch, perhaps taking a swipe at the new Palm webOS, when he said, "Historically we've focused on the OS. The OS is important but it isn't what a customer buys."

Despite his comments, Microsoft Monday introduced its newest mobile operating system, Windows Mobile 6.5, which is set to ship in the second half of 2009.

But it is features in the operating system that Microsoft is banking on to help it finally make a significant mark in the mobile arena.

Lees noted Microsoft's mobile market shift, which it is altering to include consumers, will focus on services integrated across the phone, the PC, the television and other devices.

To emphasize that point, Microsoft Monday highlighted the Windows Mobile 6.5 feature called Windows Marketplace for Mobile, an online outlet where users can find applications.

CEO Steve Ballmer, at an earlier news conference, characterized the new mobile strategy by saying, "The time has come to do more. We need to take our Windows Mobile business to yet another level."

That level, however, is still poorly defined by Microsoft.

The company's introduction of My Phone, another feature of Windows Mobile 6.5, is not integrated with the Windows Live or Live Mesh platforms, which means data synchronization is still not a closed loop across the Microsoft platform.

Lees said Microsoft would make more announcements over the next 12 to 18 months "where you are going to see more pieces of this puzzle come into play."

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