Is Microsoft working on a new multimedia phone?

Rumour has it that Microsoft is working on a new multimedia phone to compete with Apple's iPhone, the new phone may be named Pink.

Rumour has it that Microsoft Corp. and Verizon Wireless discussing a launch of a touch-screen multimedia cellphone on the Verizon's network early next year. The new phone, apparently, code-named 'Pink', will be a full multimedia phone based on Windows Mobile. The "Pink" will feature a touchscreen, lots of multimedia features, and some new software capabilities. It seems the handset would be manufactured by a third-party company, probably HTC given Microsoft's close relationship with the Taiwanese company, and distributed in the United States by Verizon. It seems Microsoft and Verizon plan to launch the phone and an app store early next year with the intention of becoming an iPhone competitor.