Microsoft is in discussions with Verizon Wireless to produce a touchscreen multimedia phone running its Windows Mobile platform as a rival to Apple’s iPhone, according to a report in the Wall Street Journal, a development that adds yet another layer to the rumors swirling around Verizon’s future device plans.

The device, which is code-named “Pink,” will have additional software capabilities and feature Microsoft’s Windows Marketplace for Mobile, according to the Journal, which cited unnamed sources familiar with the matter. A third party is expected to actually produce the hardware for the phone.

There have been rumors in the past about a project dubbed “Pink,” a possible Microsoft smartphone based on the software giant’s Zune digital music player. The rumors indicated that the phone would use technology from Microsoft’s acquisition of Danger, the company that brought the Sidekick to T-Mobile USA.

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