Microsoft Launching Zune Phone This Year?

At Microsoft, monkey-see monkey-do is the usual business strategy, with Apple the company's most preferred company to copy.

Microsoft's exuberance gave us the much-maligned Zune, and now comes breathless rumor (and it's only rumor) that by the end of the year Microsoft will unleash a Zune Phone in the wake of Apple's big iPhone news. CrunchGear has the tip sheet.

Microsoft has obviously been no stranger to the mobile phone world, as Windows Mobile is probably the most common smart phone operating system currently available. But the rumor says that the Zune Phone wouldn't use Windows Mobile operating system but rather a phone-ified version of the Zune OS.

The feature list is unknown, but one odd idea is that the Zune Phone would be able to stream video downloaded to an Xbox 360 directly to the phone (and presumably via Wi-Fi, not via cellular connection, though if it's the latter that's a seriously cool feature).

No details on whether or not this phone would use a hard drive, what capacities would be like, or how large the device would be. Again, it's all rumor, but it certainly is an interesting one.

Anyone have thoughts on this? Anyone want to wager on whether it's legit?