Here’s the WSJ story*.  The short of it:  Microsoft can’t handle the iPhone nuttiness and blames its hardware partners for not getting the Windows Mobile implementation right.  So they are going to go with an OEM (ironically, probably HTC – which is also a hardware partner) and do it "themselves" – kinda like Google is doing with Android.  Which means they’ll be responsible for the outside colors (Brown!) and the advertising/product placement/branding.  Maybe they’ll even *gasp*  use Lauren.

Verizon also would like to have something to battle the iPhone, if it can’t get Apple hardware.

This plan is likely to backfire because Microsoft’s current partners aren’t going to be happy with competition from the OS provider and will be more likely to move to Android or Symbian.  Zune all over again.  They should call the device "Calls for Sure™"

The one upside?

The group [creating Pink] includes staffers from Danger Inc., a company that Microsoft acquired a year ago that designs the software in the Sidekick, a popular cellphone sold by T-Mobile. 

The Sidekick was a revolutionary device that, if marketed and updated properly, should have owned the smartphone space.  They had an app store two years before Apple did and had proper multitasking, keyboard and email that killed the Blackberry and everything else around.  Unfortunately, it didn’t get sexy hardware upgrades and it was marketed toward consumer youth and hip hop stars (yeah we had em!).  Then Microsoft bought it.

*Just an FYI on WSJ security.  If you Google a quote from the snippet they provide, and then go to the story from Google, you can read the whole thing.  Shhh

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