Microsoft rumored to announce their own smartphone

Microsoft has been in the smartphone business for a while, but only as a software vendor with their WinCE OS (ok, so Microsoft calls it “Windows Mobile” now, but the WinCE name is so descriptive).  

There are rumors circulating that Microsoft will be announcing their own smartphone hardware.

Microsoft already produces hardware, the Zune being the closest to what they need for a smartphone platform.  How the current hardware vendors who sell phones with the Microsoft smart phone OS will react to Microsoft starting to compete with them in the hardware arena.