Zune-branded mobile phone, this idea has been floating around for awhile, but it got a kick following the positive buzz surrounding Google’s powerful Nexus One handset. Microsoft apparently wants to take from Google’s playbook and design a device of its own with Zune at its backbone.

As Google did with Nexus One, Microsoft would be in charge of designing the features while a hardware manufacturer would actually build the device. Whether this strategy sounds familiar, it was the same used in the development of Xbox 360. Hopefully, the company would not rush hardware testing like it did with that console, because things did not fare so well in terms of quality.

However, Microsoft believes in the potential of a Zune-enabled phone that could provide both telephony functionality with multimedia potential to rival Apple’s iTunes.

In case you have stopped laughing, consider the evidence. According to reporting from Ars Technica later this year the launch of Windows Mobile 7 supposedly comes in different flavours for home use, business, and even media viewing. This last configuration is the media that caught our attention – support for 720p video, Silverlight, Xbox Live, and other features are prime for gaming.

Microsoft is always eager to have new hardware to show new versions of its Windows operating system, so why should it be any different with Windows Mobile? Next month, some speculation puts a Zune Phone announcement at Mobile World Congress, but we are less bullish and see something later in the year or 2011.