A new report adds to the evidence that Microsoft is getting closer to bringing its long-rumored "Pink" mobile-phone project to market. The Wall Street Journal says today that Microsoft is "in discussions with Verizon Wireless to launch a touch-screen multimedia cellphone on the carrier's network early next year." The news follows an AdWeek story indicating that Microsoft is picking an ad agency for the project.

So what is Pink, exactly? There's been lots of speculation over the months, and Microsoft isn't talking yet. However, veteran Microsoft watcher Mary Jo Foley reported most recently that Pink appears to be a mobile phone and related services that combine Microsoft's Zune music service with offerings from Danger, the mobile software and services company acquired by Microsoft last year.

The Journal describes Pink as an iPhone rival, but given Danger's role in designing the software and services for T-Mobile's popular Sidekick devices, it could make more sense for Microsoft to target a younger demographic with the new offering.

In any event, Microsoft appears to be walking a fine line with the project -- trying to move its mobile-phone strategy forward without competing too overtly with the device makers and wireless providers already using its Windows Mobile operating system. The Journal says Microsoft is involved in the design of the hardware and software, but a third-party manufacturer will make the actual device.