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The over-hyped Zune Phone, would not be launching at CES, according to Microsoft Zune Chief Brian Seitz. Microsoft is already fighting an uphill battle against iPod, which is made even tougher due to the fact that Microsoft entered the market when Apple established a near monopoly. It seems that Microsoft is about to make the same mistake in the smart phones market.

Alley Insider is also highly critical of the fact that Microsoft is not making any moves in this segment:

It’s a shame something ambitious like a Zune phone isn’t in the works. Microsoft has been trying to win market share from Apple’s (AAPL) iPod with "bring a knife to a gun fight" features: astrology themed devices, recommendation features, wifi at McDonalds.

None of them has moved the needle, and from what we know so far, "Pink" sounds like yet another vaguely cool feature that won’t win any converts. At this point, Microsoft should gamble on something hugely ambitious for their music player — like a Zune phone — or cut losses and shut the program down.