Microsoft in Talks with Verizon Wireless to Launch iPhone Rival

Software giant Microsoft (MSFT) is in discussions with Verizon Wireless (VZ) to launch a touch-screen multimedia cellphone on the carrier’s network early next year, according to the WSJ.

The Journal, citing people familiar with the matter, said Microsoft’s project, which is code-named “Pink,” will extend new software capabilities to its current Windows Mobile cellphone operating system, and would also likely include Microsoft’s new Windows Marketplace for Mobile, a mobile application store along the lines of Apple’s iPhone.

This deal, if it materializes, would make sense for M’soft since Verizon is the largest U.S. carrier and it doesn’t have the iPhone exclusivity (at least not yet, read more here).

This latest move by M’soft however, underscores once again the fact of the Redmond, Wa. based-co. being at this point only a reactive player. First Zune, now ‘Pink’. But let’s whithhold judgment for the time being and see what the market’s reaction toward the product will be when launched.

Both Microsoft and Verizon are looking for a response to the iPhone, which has boosted the fortunes of their rivals, Apple and AT&T Inc. (T). AT&T’s exclusive rights to the iPhone in the U.S. expire in 2010, but the carrier is trying to get a one-year extension.

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