Long Zheng was quick to dig around in last night’s updated Zune software, and quick to find reference to a %phone% (good work, btw!), and this just a day after Microsoft denied publically to Mary Jo Foley that the Zune update had anything to do with Zune/phone.

So what is going on with Zune/mobile/Pink?  There are so many rumors out there, what is really going on?  While we don’t have any insider info, we’ve been reading some tea leaves (and a lot of blog posts), and here’s how we’re putting the pieces together:

First, it helps to think of Zune as a marketplace and not a device, or to think of Zune devices as paths to building out the marketplace.  The first step was to get a Zune device out there and Zune software on PCs, then start building out the marketplace, adding in features like HD video and games, and then move to support more devices like phones, built hopefully by 3rd parties.  Thinking about Zune like this almost justifies the US only aspects of the current hardware, when acquiring rights to music and video in multiple markets is a complicated (read: expensive) process.  Zune hardware, including even the Zune HD, are test devices for a much bigger plan, not just devices unto themselves. 

Possibly very soon, we’re going to see the next step in the process, running Zune software and services on a phone.  This is “Pink”, the device that’s identifying itself as “Danger” on Twitter.  What Long Zheng found in the new Zune software update refers to 3 hardware phone devices, 3 “Pink” phones.  We don’t think these will be Windows Mobile 7 devices.  Think of them as “Sidekick IIs”, a new phone built by the people that built the TMobile Sidekick, but running Microsoft “Premium Mobile Services” such as Zune software, some form of Xbox Live games, Facebook and Twitter clients,  etc.  Again, these “Pink” phones will another step along the way, offering new services on a fairly tightly controlled phone.

The “Pink” phones will also continue on another parallel path in Microsoft’s planning, and that is to market Microsoft products as fun and consumer friendly.  Xbox was the first successful effort in that arena, and even though sales of Zune haven’t flourished, the Zune brand has done well.  By releasing these new phones featuring a new brand of consumer friendly, fun and powerful services, Microsoft will continue to work on repositioning itself in the consumer marketplace.  But that’s not the end of the story.

Next in the path will be Windows Mobile 7, revealed at MWC next month, with developer bits coming at Mix.  We think it’s possible that WinMo7 will RTM in the Mix timeframe, since the minute it hits OEMs it will be on XDA anyway, but we’ll have to wait and see on that.

Then in the fall, we’ll see the first Windows Mobile 7 devices.  These may not include “Premium Mobile Services” right off the bat, but will get a new kernel, with a new application development model, in the hands of developers and customers. 

The Windows Mobile marketplace, which itself is being built out but has somewhat languished, will (hopefully) spring to life with a straightforward development model, possibly utilizing Silverlight for mobile using Visual Studio and Blend, with an ability to develop apps for any phone (Windows Mobile 7 or not?).  We heard talk in the halls at PDC that Microsoft was in fact waiting for Windows Mobile 7 before the Windows Mobile Marketplace was really supported.

Then, perhaps at the same time as the first Windows Mobile 7 devices become available but perhaps not, “Mobile Premium Services” will come to Windows Mobile 7, and we’ll finally begin to realize the full potential of what Microsoft has been planning for years.  New phones with new specs, running Xbox games and Zune music and video, and a slew of new Silverlight for Mobile apps.

Or not, of course.  We think we have a pretty good feel for what’s coming, but it’s only that.  And we haven’t said anything about how this will be perceived in the marketplace,  Microsoft (again) may have simply waited too long and allowed Apple and the iPhone too much of a head start. At least the wait is almost over, though, and we should know a lot more soon.