What's Your Take on Ballmer's Zune Phone Comments?

"Q: When can we look forward to a Zune phone?

A: It's not a concept you'll ever get from us. We're in the Windows Mobile business. We wouldn't define our phone experience just by music. A phone is really a general purpose device. You want to make telephone calls, you want to get and receive messages, text, e-mail, whatever your preference is. The phone really is kind of a general purpose device that we need to have clean and easy to use. "

Despite rampant rumors of an impending Zune phone, even dating prior to before the initial Zune launch, Steve Ballmer has recently nay-sayed that idea in a USA Today interview.  Does Ballmer's comments mean we will never see a Zune Phone device?  Maybe Microsoft has decided to play a wait-and-see game with the iPhone and judge its success before jumping on the band wagon.  Or maybe his comments indicate Microsoft doesn't intend to produce a dedicated Zune Phone device, but rather they are looking at adding a software based Zune "client" to their existing or future Smartphone devices.  What are your thoughts on Ballmer's Zune Phone comments?