Report: Microsoft, Asus partner on mobile phone

Microsoft is working with Taiwan-based Asustek to build its own phone, according to a new report.

An "exclusive" report by The Street notes that the device is a "candy bar"-style touchscreen handset running, naturally, the newly-announced Windows Phone 7 operating system.

However, the companies "have encountered some setbacks" along the way, and production "has been stopped temporarily." It will arrive early next year, according to the report.

All signs point toward this being a part of "Project Pink," on which our dogged Microsoft reporter Mary Jo Foley has reported for the better part of the year.

It's certainly not the first partnership Asus has entered into in the mobile sector. Earlier this year, it joined Garmin to launch its GPS-enabled Nuvifone, which some reviewers said was "not worth the money" and "fails as a smartphone."

Phone makers HTC and Samsung also make devices for Microsoft.

UPDATE: Sources close to the matter tell ZDNet that it's not a Microsoft-contracted phone. As a reminder, Dell, Garmin-Asus, HTC Corp., HP, LG, Samsung, Sony Ericsson, Toshiba and Qualcomm were cited as manufacturers in Microsoft's press release from Monday.