Verizon Wireless and Microsoft are reportedly planning to launch a new touch screen handset next year to take on Apple’s iPhone, which is offered exclusively in the US by Verizon rival, AT&T. According to the Wall Street Journal, which cites people familiar with the matter, the new handset – codenamed ‘Pink’ – will extend Microsoft’s Windows Mobile platform to include a host of new features, including an application store similar to Apple’s App Store. The report notes that, while Microsoft is involved in the design of the phone’s software and hardware, a third-party manufacturer is expected to build the device – in a similar manner to how Google has worked with handset-makers on Android devices. Microsoft and Verizon have reportedly been working on the Pink project for several months and have formed closer ties following a recent high-profile mobile search deal in the US. A separate Bloomberg report on the story suggests that the phone could be built around Microsoft’s Zune music-player software.

Although Verizon Wireless has kept pace with AT&T in terms of attracting new customers recently, the operator is seen to be at a disadvantage as it does not offer the iPhone. Verizon Wireless has reportedly been in discussions with Apple recently about launching an iPhone-like device for its network, though AT&T and Apple are also rumoured to be in discussions about extending AT&T’s exclusive iPhone deal for another year.