Microsoft warns Apple over iPhone

Microsoft has warned Apple that a mobile phone built to emulate its successful iPod MP3 player will still face a tough challenge in the marketplace. 

Robbie Bach, president of the entertainment and devices division at Microsoft, claimed that the company thought about launching a Zune mobile phone but decided against it.

"It is probably on the table of things for us to look at, but not the number one thing we are focused on," Bach told analysts at the Consumer Electronics Show in Las Vegas.

Talking about the rumoured iPod phone, Bach speculated that it would probably be released using leased capacity from existing carriers to act as a mobile virtual network operator (MVNO), or as an unlocked phone that could be used on any network.

"The latest rumour we hear is that it is going to be an MVNO phone and there hasn't been a lot of success in that MVNO space for a lot of different reasons, " reported Reuters.

"Historically, working with partners hasn't been a strong point for Apple, so maybe it will find a way to work around those relationships."

Bach suggested that the big challenge was to merge the two formats of media player and phone, including making sure that the unit had ample battery life and good screen size.

"You have to find out what it's great at. Is it great as a phone, or is it great as a music player?" he said. "If it's great as a music player, then it's just another iPod trying to be a phone."