There have been rumours about the Zune HD 2 seemingly ever since the first Zune HD was released but over the past few months these rumours have centred around any future Zune HD running on the Windows Phone 7 OS. It certainly makes for an interesting idea but not one without major issues.

We all know that the iPod Touch is doing great even though it lacks only the phone functionality of the iPhone. Therefore Microsoft would be silly not to release a newer Zune HD to sit alongside Windows Phone 7 device just like the two Apple products do; or would they?

I’m sure that having Xbox Live, Bing, IE, Office, camera etc all on a device that doesn’t require would be great and I’m sure this is the best thing for Microsoft to do. However there is a down side this. Apple makes both the iPhone and the iPod so they aren’t too bothered about which device sells just so long as something sells. Microsoft have a different strategy though with Windows Phone 7 in that Microsoft will only make the software and will let its partners design and make the hardware (which minimum specification from Microsoft though). Microsoft believe this to be the best way to offers phones as it provides a single mobile OS for a range of different hardware types and designs.

With a Zune HD 2 there is very little need for such a choice of hardware as this is a product likely to be a much smaller deal for the company and consumers. Perhaps two device types would be all that is necessary; a slate design and one with a slide out keyboard. Therefore, it doesn’t make sense for Microsoft to licence Windows Phone 7 OS (without phone functionality) out to partners as there would be little demand for a wide range of devices.

This then leads me to think that Microsoft will again design and have made its own Zune HD 2 hardware. If this is the case then another issue exists. Microsoft will want the Zune HD 2 to be best in class that means the device will need to pack a punch and to do this it might make the device more powerful than some of its partners Windows Phone 7 devices. If this happens partners are likely to get annoyed and not want to sell Windows Phone 7 devices which Microsoft can’t afford to let happen. This is why I believe we won’t see a new Zune HD for at least a year.

Microsoft wants Windows Phone 7 to do well in the market and I think it will. If it does and more handset makers get on board with Windows Phone 7 then I think we can expect to Microsoft release an updated Zune HD. By that point Windows Phone 7 will have proven its economic worth to companies and I think unlikely that if the mobile OS is popular that any company would stop making devices which run the OS.

When thinking about this idea some more it reminded me of what Google did with the Nexus One. The company released their own designed and specified devices to encourage Android device manufactures to design and make higher spec’d hardware. It was feared by some that this approach would alienate some devices markers from making Android phones and Google who provided the OS was competing the devices manufacturers. However, whether through weak sales or other reasons Google does seem to have forced its device makers to create better hardware whilst not losing of them.

Microsoft in turn can force their hardware partners to keep the devices highly spec’d by releasing a powerful Zune HD 2 device. If this device is more powerful than some of the partner devices then people might decide to buy a Zune HD 2 for the Windows Phone 7 OS functionality and buy another phone to actually call people. This should allow Microsoft to indirectly keep its partners innovating and providing cutting edge devices without alienating its own partners.

In short I think Microsoft, as they have long been rumoured to be doing, will release at least one more Zune device and it should more than likely run Windows Phone 7 OS. But, I don’t think we can expect to see it any time soon, Microsoft’s mobile partners just wouldn’t want it in the market and Microsoft is doing all it can to entice its partners to make handsets for Windows Phone 7.

If you are interested in Zune and want to know what I think lies next for the entertainment service in terms of functionality then why not read the article.