According to Crunchgear there is a Zune phone in the works. Apparently, it will be a smart phone that doesn’t run Windows mobile. Instead it will utilize an interface similar to the existing Zune interface. Correct me if I’m wrong … hasn’t Zune been a pretty big flop so far? I can understand being second to market with phone that consists of a Mp3 player, cell phone, camera, and internet browser, but shouldn’t it be built from scratch or piggy back on a more successful product?

Conversely, there is a pretty good chance of Microsoft taking what Apple has created, and making it better. The phone market is definitely a good opportunity for Microsoft to take some market share, especially considering the iPhone hasn’t even entered the mobile industry yet. Microsoft would enter the market within six months of Apple entering, versus the large amount of time Microsoft waited prior to entering the MP3 market. One could argue that the Microsoft Zune had more difficulty entering the MP3 player market since Apple already had a huge market share, with the successful IPod line. If the rumor is true, this could turn out to be an interesting rivalry.