Being a former MSFT blue badge, I know how competitive it is in Redmond. Teams fight to establish and keep their identity and a "takeover" or "merge" with another group is hardly ever looked at as a "win-win" as they try to tell you in the Town Hall meeting. Someone always lost.
With the new WinMo7 series phone I can’t help but wonder what the folks in the Millenium complex are thinking and talking about. This is an obvious encroachment on their territory and especially since they haven’t been able to really be iPod/iTouch killers and WinMo has never been the iPhone killer…it almost makes sense for Redmond to merge the two. Zune is a better mp3 product than iPod. Hands down. WinMo7 lacks the feature set it needs to be the iPhone killer and integrating the Zune (umm..assimilating is a better word) could possibly give Microsoft what it wanted three years ago.
When the phone gets released, what will the Zune team do then? What new features will be available on the mp3 player the WinMo7 phone wont have? If the story isn’t compelling, the Zune may be doomed.