Rumors again have surfaced about Microsoft’s mysterious "Pink", this time claiming that the software giant is in talks with Verizon to release "Pink" as an iPhone killer mobile device next year, according to reports from the Wall Street Journal.

Microsoft will apparently design both the software and hardware, and farm out the production to a third party. Microsoft’s Windows Marketplace for Mobile will serve as their version of Apple’s App Store. The phone will feature the Windows Mobile OS with what the report refers to as “new software capabilities”. The report makes no mention if the OS is expected to be Windows Mobile 6.5, which is expected for a Q4 release.

Those "new capabilities" could be the Zune software Microsoft CEO Steve Ballmer stated was coming to mobile devices. In 2008, he claimed “Now, we built the Zune hardware with the Zune software - and what you’ll see more and more over time is that the Zune software will also be ported to and be more important not just with the hardware but on the PC, on Windows Mobile devices, etc.” Earlier this month, I4U reported that Microsoft was pitting three ad agencies against one another for the right to promote “Pink.” It was thought then that “Pink” was a mobile device featuring Zune software, but not the long-rumored Zunephone.

If Verizon’s involvement is true, they are making a major push into the smarthphone market. I4U reported earlier today that Verizon was in talks with Apple to produce a “smaller, thinner iPhone,” and a CDMA iPhone.