The phones would be targeted at heavy users of social network sites, according to the person who asked not to be identified as the devices have not yet been announced.

The phones are being developed by Microsoft under the code name Project Pink, the person said. Representatives for Microsoft and Verizon Wireless declined comment.

Microsoft primarily competes in the wireless industry by selling its Windows mobile software to multiple handset makers, but it has been losing market share to Apple Inc, Google Inc and others.

The software company also sells the Sidekick phone, which is manufactured by Sharp Corp. The Sidekick came from its acquisition of start-up Danger Inc.

Microsoft has long denied rumors that it is developing new cellphones beyond the Sidekick, but talk about Project Pink has persisted.

Technology blog Gizmodo on Thursday posted photographs of a black phone with rounded edges that slides open and includes a mini-keyboard.