Microsoft Corp. plans to take aim at Apple’s iPhone with its own version of a touch-screen handset that could launch on Verizon’s network sometime early in 2010, according to a report published just minutes ago by the Wall Street Journal.

Citing people familiar with the matter, the financial publication said the two companies are currently discussing possible terms of the deal. It adds that Microsoft has been working on its own touch-screen smartphone hardware under the code-name “Pink.”

The project would reportedly leverage and then extend upon Microsoft’s existing Windows Mobile operating system, adding new capabilities that would undoubtedly mirror many of Apple’s advances in the mobile space, including the Windows Marketplace for Mobile — a clone of Apple’s App Store.

No other details were published for now, but it’ll be very interesting to see what comes of this development.