From picturephoning.com I learned that Microsoft is working with the huge contract electronics manufacturerFlextronics to develop a mass market GSM GPRS camera phone that's a new, slimmed down version of its current SPV cellular phone using the Windows Mobile Smartphone operating system, according to an article in The Guardian and also a Flextronics' press release.
The phone, code-named Peabody, will include a camera (no details about the resolution or features) and Bluetooth. It will be sold to Original Equipment Manufacturers.
The Guardian notes that handsets with Microsoft's OS are sold by 67 networks in 48 countries " but its share of the market has been limited by its high prices. It hopes the new phone will be more attractive to operators and is now looking for a major handset name that wants its brand on the phone."
Going for mass appeal
Flextronics' press release says the Peabody is a "low-cost, feature-rich Original Design and Manufacture platform" developed by Flextronics and Microsoft.
Flextronics says, "Peabody can be brought to market quickly, cost-effectively and at high volumes."
As Peter Rojas of engadget just wrote, "Having the platform already set out makes the phones easier and cheaper to build, and you can already tell that Microsoft is itching to do for cellphones what they’ve already done for PCs."
Flextronics also is developing cellular phones based upon "next generation Windows Mobile Software" for GSM EDGE networks.
Microsoft's cellular history
I have been following Microsoft's entry into the wireless business since the company first began looking at the market. Many people in the company greatly underestimated the difficulty of creating an operating system for cellular.
Indeed, many top officials considered wireless "just another" transport mechanism" and really didn't understand that creating a graphical interface for a wireless devices was not simply a matter of porting Windows to a handset.
The original Microsoft code for cellular phones was bloated, buggy, inefficient and battery-hungry.
If at first you don't succeed...
But as is well known, Microsoft is nothing if not persistent in entering markets it considers important. Microsoft has made dramatic improvements in its Smartphone platform.
It has been able to get its OS into a variety of cellular phones, first into handsets from third-tier manufacturers and now into top-tier vendors.
From the standpoint of camera phones, Microsoft has a great deal to offer. Putting on my wireless data (and camera phone) consultant's hat...
Microsoft's strengths
Look, for example, as Microsoft's entry into the blogging sphere. Its MSN Spaces (see below) might not be the most well known or feature-rich, but it has 1.5 million or more users (at least that number has signed up), according to a report in Blogcount.
Think of how MSN Spaces could encourage camera phone use.
(The Six Apart blogging empire, by the way, has about 6.5 million subscribers, of which 3.5 are active, notes another entry in Blogcount. TypePad has a very nice photo albums features.)
Business applications
Consider Microsoft's power in the business market and then consider what a terrible job the wireless industry has done in marketing -- or not marketing -- camera phone applications to businesses.
Think about the vertical markets where camera phones are being used now: Journalism, real estate, construction, field sales and service, healthcare, politics, entertainment, etc.
When you begin adding up Microsoft's interests and the current and potential applications for camera phones, you can see how wireless imaging cuts across a great deal of Microsoft's ventures.

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