Zune HD2 In the Works at Microsoft?

Rumors of the Zune HD2, a next-gen entertainment device that would run Windows Phone 7's spiffy Xbox Live games, have been kicking around for months. But a new Microsoft job listing suggests that now it's actually in the works.

The listing, which was dug up by WMPoweruser, calls for a mechanical engineer to help build "the next generation of portable entertainment and communication devices" for Microsoft's Portable Entertainment Group.

Though there's still no saying exactly what form the device might take—it could be a radical departure from the Zune HD, maybe a gaming-centric device or a Microsoft phone—what seems likeliest is a next-gen Zune that's part of the Windows Phone 7 family, an iPod Touch-competitor that would help Microsoft gain much-needed footing for their promising but late-to-the-game platform.

Over at ZDNet, Mary-Jo Foley's Microsoft tipsters have told her that the device would come in 16GB, 32GB, and 64GB varieties sometime next year, but it wouldn't be surprising if Microsoft started drumming up excitement for a WP7-running, next-gen Zune amidst the Windows Phone 7 launch next month.