This ungainly looking beast is the codename ‘Menlo’, a prototype Microsoft phone, unearthed by ZDNet. It was used in a research paper that Microsoft published, titled “User Experiences with Activity-Based Navigation on Mobile Devices” (pdf warning), which describes the phone as:
Menlo is a prototype mobile device with a capacitive touch screen (4.1‖ diagonal, 800×480) running Microsoft Windows Embedded CE 6.0 R2 which incorporates a Bosch BMA150 3-axis accelerometer and Bosch BMP085 digital pressure sensor (barometer).”
I don’t think this means that Microsoft is about to start making phones, this is more about them researching how people use cellphones. This paper in particular was for retracing steps to find a parked car, so don’t expect to see the Menlo at your local Verizon branch.