No,
this is neither confirmed nor have I heard anything but this rumor is constantly
popping-up, here and there. Nevertheless,
jkOnTheRun has received a - as James Kendrick said - "totally unconfirmed
information from a reader" (who wishes to remain anonymous) that Microsoft
is indeed working on a Zune phone. jkOnTheRun's source got information about a
meeting this week in Redmond that was planning a Zune phone to compete with
Apple's iPhone. Furthermore, the source got information that Microsoft's Zune
phone will be based on a special version of Microsoft's next Windows Mobile
version which is so far known as "Windows Mobile 7" and the key functionality of
the phone is expected to be centered around Windows Live (Mobile) Services.

The phone itself is expected to be a touch-screen based kind of (smart?) phone using multi-touch but other than that not much is known.
Well, there's always the chance that Microsoft brings the Zune platform to
its mobile phones as well as there's always a chance that Microsoft builds its
own hardware (as Microsoft does with Zune players or the Xbox). On the other
hand, it could also mean that "Windows Mobile 7" might get the long overdue
media functionality refresh and why to invent the media-wheel for the upcoming
Windows Mobile version again if Microsoft has a quite successful media player
platform/GUI available already.
Cheers ~ Arne
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