As MS gives up on Zune, Nokia warns on WP7 risks

A portent? Just as Nokia admits that its Windows Phone 7 strategy could cost it market share, its new partner has admitted defeat with Zune.

A Microsoft spokesman told Reuters the current 16GB and 32GB Zune music players would be the last, although the software would continue to be supported “across Microsoft platforms.”

Zune has been moderately well-reviewed but has gained negligible market share since debuting in 2006, ceding a five-year head start to the iPod.

With Zune, as with its latest mobile partnership, Microsoft was trying to win from a long way back. That’s a challenge when your targets are Apple and Google.

Technically, Nokia had the biggest smartphone market share in 2010 and, technically, Microsoft is actually one of the handset OS pioneers, with a (mostly-forgettable) record back to 2000.

But as Microsoft sees off Zune, Nokia has warned that its expected two-year transition to WP7  “may prove to be too long to compete effectively in the smartphone market.”

Nokia said in an SEC filing:

“The Windows Phone platform is a very recent, largely unproven addition to the market focused solely on high-end smartphones with currently very low adoption and consumer awareness relative to the Android and Apple platforms, and the proposed Microsoft partnership may not succeed in developing it into a sufficiently broad competitive smartphone platform.”

Nokia also cautions that the MS partnership may harm its brand identity and the company may be unable “to change our mode of working or culture to enable us to work effectively and efficiently with Microsoft.”

 Apart from that, it’s all good.