Microsoft Research has apparently been working on what looks like a new mobile platform, called Menlo, whose features could be integrated in mainstream devices in the future.
The phone, which has been described in a research paper called "User Experiences with Activity-Based Navigation on Mobile Devices" (via ZDNet) is very unlikely to be anything like the failed Kin though.
The handset comes with a 4.1-inch capacitive touchscreen that can display 800x480 pixels and runs on Microsoft Windows Embedded CE 6.0 R2. Intriguingly, it comes with a a Bosch BMA150 3-axis accelerometer and Bosch BMP085 digital pressure sensor barometer, which would allow the phone to be located in 3D.
It is interesting to see that Microsoft is investigating other avenues in the mobile market; whether or not Menlo will indeed be fused in Windows Phone 8 or any next generation platforms remains to be seen.
Integration with Windows Phone 7 is very unlikely given that the latter is based on Windows Embedded CE 7 and will be launched within months.
The other question that pops to mind is whether the phone will use Intel's own Medfiled hardware platform, which is derived from the 2008 Menlow Platform.