PCWorld reports on the rumors that Verizon is talking to MS about phones:

Microsoft denies rumors of a Zune phone, but the idea has some merit. Is this just Verizon's ploy to get Apple to play ball?

While everyone counts MS out of the phone game (just do a few Google searches to get an idea as to how little regard their mobile devices have now), one thing people need to keep in mind is how long a game MS is willing to play. They have a huge pile of cash on hand, and a history of patience. Think back to the early days of Windows: no one took Windows 1.0 or 2.0n seriously, and even 3 was chuckled at before it took off. After Windows 95, it was MS' turn to laugh all the way to the bank.

So with that in mind, look at the phone space again. The big play seems to be coming in games and video, and MS has been doing pretty well there with the XBox 360. It's not unreasonable to ponder a mobile Zune phone that synchs nicely with Windows and the 360. While Apple owns all the buzz in the smartphone space right now, the second spot is wide open - the gPhone isn't really taking off, and Palm is in "last chance" mode with the Pre (I'll get to the Blackberry below).

If Microsoft wants to take a real stab at this space, I think the field is still open to them. RIM seems to have a solid lock on that #2 spot, but consider: how safe is their hold on the corporate connectivity space if Microsoft actually comes after them with a device that works well and talks to Outlook (and the rest of Office)?

Meanwhile, it's not at all clear to me what Verizon is up to. Do they actually want the iPhone, or are they just trying to make ATT have to pay more to keep the exclusive contract?

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