Microsoft to Launch iPhone Rival.

Microsoft Corp. is in discussions with Verizon Wireless to launch a touch-screen multimedia cellphone on the carrier's network early next year, in a bid to compete with Apple Inc.'s iPhone, people familiar with the matter say.

Microsoft's project, which is code-named "Pink," is aiming to produce a phone that extends the tech giant's Windows Mobile cellphone operating system, adding new software capabilities. It would also likely include Microsoft's new Windows Marketplace for Mobile, a mobile application store along the lines of Apple's, these people say.

While Microsoft is involved in the design of the phone's software and hardware, a third-party is expected to make the device, just as Google Inc. has worked closely with partners to make handsets based on its Android operating system, people familiar with the matter say.

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