Straight from the Crazy Unconfirmed Wild Speculation Department: More on the Zune Phone

"We have totally unconfirmed information from a reader who wishes to remain anonymous that Microsoft is indeed working on a Zune phone. This source had information about a meeting this week in Redmond that was planning a Zune phone to compete with the iPhone. According to this information the Zune phone will be based on a specialized variant of Windows Mobile 7 and key functionality will be centered around WIndows Live Services. On the hardware side the ZunePhone would be touch-screen based using multi-touch (surprise) but other than that not much is known."

I'm wary about placing too much stock in rumours, but thing one has a ring of credibility to it that the others lacked: if the Zune team were to to a Zune phone, this is exactly how they'd do it. They'd take Windows Mobile 7, they'd optimize the hell out of it for speed and stability, and slap a Zune-like interface on it. Wrapping it all up with Windows Live services also sounds like a Microsoft thing to do, for better or worse (I love the Live Search client on Windows Mobile though, it rocks!). Multi-touch? That's a bit surprising, if true, but it makes a certain amount of sense: Apple has drawn a line in the sand with a number of iPhone features, and when consumers see someone with an iPhone pinch a picture to make it small, they expect to see that feature on all touch-screen phones. Will we see a Zune phone next year?