What does Microsoft hope to do with a Zune Phone?

If a recent rumor coming out of Redmond is to be believed, Microsoft will attempt to prop up their floundering Windows Mobile and Zune products by marrying them together.  According to an entry on a blog on allthingsd.com Within two months from now ether at the mobile world conference in February or the Cellular Telephone Industry Association conference in March, Microsoft will announce a new smart phone running Windows Mobile 7 using a Zune style user interface.  The phones will be made by Microsoft and sold through a carrier (Verizon most likely)  While other handset makers will be able to make phones with Windows Mobile 7 the Zune style media player functionality will be exclusive to Microsoft's phone.

If Microsoft is hoping to compete with the iPhone, that ship sailed two and half years ago.  At best Microsoft can only expect to hold ground against Google's Android.  While Android has a better overall UI it hasn't been exactly been the strongest portable media player in a phone not made by Apple.  Microsoft needs the handset makers for Windows Mobile to survive, and given that Microsoft is has become a handset maker when they acquired Danger (maker of the well known and now infamous sidekick), and going further into making actual smartphones, that doesn't exactly give handset makers a reason not to defect to Android.