Rumors are floating around that Microsoft will showcase a Zune like smart phone based on Windows Mobile 7 within the next two months.
Its still unknown who but, Microsoft is partnering with a few different OEM manufactures, similar to what Google has done with the Nexus One.
The new phone will have 720p HD video capabilities, at least a 5MP camera, and that will run Windows Mobile 7.
As always, Microsoft is denying the rumors saying they are only interested in the mobile OS business, not competing with smart phone makers.