Zune phone simple enough. It looks like they already have the hardware but will need a PR blitz as well as incentives for carriers to sell the phone. http://www.tomsguide.com/us/microsoft-zune-phone-iphone-pre,news-3918.html

Only idiots would forget about BC. I mean seriously Sony had the best selling console with the ps1 and ps2. It would be an ignorant statement to say that those people would suddenly forget about their old games. I think there was some insane number of PS1 and PS2's sold over 100,000,000 (sorry no link here) so yeah BC is important and anyone who says it's not is ignoring the facts. Yeah price is an issue too but it seems like Sony is shooting themselves in the foot with this move.