In a a Tuesday report by Jim Goldman of CNBC that quotes a "good source" ostensibly close to Microsoft, the new smartphone is code-named 'Pink' and will marry functionality of the Zune with technology that Microsoft picked up in its February acquisition of Danger, developer of the T-Mobile Sidekick.
Microsoft may unveil a prototype of the new device at the Consumer Electronics Show in January or the 3GSM conference in Barcelona in February, although an actual product release is likely to be at least a year away, according to the report.
Rumors are also swirling that Nvidia's Tegra chip will power the Microsoft branded smartphone, although the speculation appears to stem from a single, snarky report that appeared in The Inquirer last week.
Unveiled in June, Nvidia's Tegra 600 and Tegra 650 feature low power consumption and an ARM 11 central processing unit core, and also include system memory, a media processor, a graphics processing unit and peripherals.