While Windows Mobile languishes and the iPhone, BlackBerry and Android battle for smartphone supremacy, there are rumours Microsoft may turn to Zune to carve a new path in the smartphone market.

According to IT consulting firm IDC, the global mobile phone market will grow 11.3% in the fourth quarter of 2009 after shipments shrank in the five previous quarters. In Canada, the advanced wireless networks launched by Bell and Telus late last year have already helped increase demand for smartphones, especially the iPhone.

On the Microsoft side the buzz involves a potential Zune smart phone, because the latest update has a driver package that points to a phone.

Designed to rival Apple Inc.'s iPod, Microsoft's Zune first appeared in late 2006, but has failed to live up to its promise. While the iPod has evolved into the iPod touch and iPhone, Microsoft has been slow to leverage Zune, with devices distinguished only by size and storage capacity.

We’ll likely hear more news on the Zune mobile strategy next month at the Mobile World Congress in San Francisco or at the CTIA conference in March in Las Vegas.

The question then becomes whether or not Microsoft will bail on Windows Mobile and put all of its efforts into the Zune phone for direct, head-to-head competition with the iPhone and Android? Unlikely, unless it gets traction, particularly on the app development side.