Microsoft Pink - What this really means at 11:09

The Wall Street Journal posted, on Wednesday, a report that Microsoft is working with Verizon on the 'Pink' project.
Many believed that this was proof of the fabled Zune Mobile and that this was going to be a real iPhone alternative from MS to fight back aginst the Apple invasion.
Microsoft came back the very next day with a to say "No Zune phone, no Microsoft phone, no way, no how, get over it."

But this this is only half of a denial.
Yes, they have denied the Zune Phone, which is something that they have kept to for years now, but they havent said that they are not working on the Pink Project with Verizon.

We know that the Zune Phone is out of the question.
We have all seen the pictures of the Zune HD.
We know that the Zune HD will have some Windows Mobile 7 features.
We know that it will be a touch screen multi-media device.
We know that the Pick project is a 'touch-screen multimedia device with cellphone capabilities'.

Put these 5 facts together and you get an iPod Touch Killer !
A touch-screen multimedia Zune,
based on WM7,
with a data connection over an cellphone network.

That connection would give you Internet Access and access to the Marketplace in the same way the iPod Touch uses Safari and the AppStore.

If the Zune HD has a greater storage capacity than the iPod Touch and is finally pushed out to the rest of the World, we could see MS over taking Apple in the mp3 player world.
MS already produce a higher quality sound on its devices, what reason would be left to use an iPod?