Microsoft (NSDQ: MSFT) says they have “no plans” to create their own mobile phone, completely dismissing the idea that they could follow the Apple (NSDQ: AAPL) iPhone’s lead by fusing together their Zune music player with a cell phone. In a wide-ranging interview with the San Francisco Chronicle, Robbie Bach, president of the software giant’s consumer-facing entertainment and devices unit said that Microsoft was doing very well shipping “lots” of 3G phones already through their Windows Mobile software, thank you very much. “We will outsell the iPhone. We will outsell the BlackBerry,” he said, adding that he expects 20 million devices with Windows Mobile to ship this year alone. Why not make a mobile phone? Microsoft, he said, believes that the “phone is a very personal thing,” that is, one phone won’t suit the needs of a wide variety of people.

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Bach: “We don’t think it’s like there will be three devices and everybody in the room will have one of those three devices. I think there is going to be a lot of diversity and the right way to service that market is to work with a lot of different handset manufacturers. We call them mobile phones but in fact they are going to become much more than mobile phones.”

Bach also tried to downplay the iPhone’s success saying that “evolving markets” in the mobile space has led to a “tremendous growth” in smart phones, and the “opportunity for a richer experience”. Bach believes that “what people want is what they get on their personal computer”—that is, the ability to browse any web site, rather than using their cellphone for more mobile-specific things. Meanwhile, the business model for the mobile internet “has not gotten itself completely clear yet,” and while the internet may be ad-supported, Bach admits, it’s “not clear” what form mobile ads will take.