Windows Phone Handset With a Microsoft Brand Is a Bad Idea: 10 Reasons Why

NEWS ANALYSIS: Microsoft says that it won€™t be building its own Windows Phone and that is a smart move. Microsoft has much to lose and little gain from trying to compete with prospective Windows Phone OEMs. Right now it needs to focus on gathering allies to help grow Windows Phone market share.

An analyst recently said that Microsoft might be considering launching its own Windows Phone handset to compete against the likes of Apple€™s iPhone and the Samsung Galaxy S line. However, the company said in a recent statement that it had no plans to do that and would continue its policy of providing software to third-party vendors. It seems that Microsoft would rather partner with companies like HTC and Nokia, rather than make them competitors.

It€™s a smart move. Since its inception, Microsoft has decided that making friends with other technology companies is far more profitable than making them enemies. And in the mobile space, despite its troubles, the same policy applies. To change that now and attempt to try its luck in the mobile market would be a huge mistake that could have lasting negative consequences compared to whatever it might gain from marketing its own brand name smartphone.

Here are the reasons why Microsoft shouldn€™t even consider building its own Windows Phone–based device.

1. Learn from Google

Google has made the somewhat misguided decision to partner with handset makers to deliver its own branded products, known as Nexus. The devices were supposed to showcase the latest version of the company€™s software, and at least initially, demonstrate the best features. However, the devices were quickly overlooked as better alternatives hit the market. Microsoft shouldn€™t want any part of that.

2. Vendors won€™t like it

One of the main reasons Microsoft never offered up its own devices over the years related to its desire to not compete against those who were using its software. The company reasoned that by competing in the hardware space, it might hurt software licensing. It was right€”and it€™s why a Windows Phone from the software company would make no sense.

3. What€™s the upside?

When the idea of bringing a device into the market is actually considered, what sort of upside can really be found? Yes, companies like Apple and Samsung are successfully and profitably delivering smartphones. But the vast majority are not as successful. Microsoft has enough to worry about with software. At this point, there€™s no upside compelling enough to make Microsoft market its own handsets.

4. Costs will rise

If Microsoft launched its own smartphone anytime soon, the company would be forced to take on millions in additional research and development and production costs just to get the product to store shelves. That will put pressure on Microsoft€™s profit margins and that won€™t help Microsoft€™s bottom line or its relations with investors.

Microsoft Handset Could Spoil Nokia Relationship

5. This isn€™t Windows 8

Microsoft made the surprising decision recently to launch its own Windows 8-based tablet, known as Surface, later this year. Although that might indicate that it could consider launching its own handset, remember that the Surface is designed to establish Microsoft in the tablet market€”a space where it has very little presence. In the smartphone market, it has some presence. It needs to allow them to grow over time without too much of its input.

6. The Motorola element

Microsoft€™s decision to not deliver its own Windows Phone-based device might have something to do with Motorola. Earlier this year, Google closed its $12.5 billion Motorola acquisition, making the handset maker a first-party provider of Android-based devices. There€™s a chance in the coming years that this will alienate competing Android vendors who might then be more likely to market Windows Phone devices. Meanwhile, Microsoft, with no allegiance to any particular handset maker, would benefit.

7. Remember patent disputes

The mobile space right now is riven by patent disputes related to both software and hardware. On the software side, Microsoft doesn€™t have much to worry about, and in fact, receives licensing fees from Android vendors. But on hardware, who knows what could happen? Nearly every company is suing another on design. The last thing Microsoft should want to do is expose itself to this patent lawsuit crossfire any more than it has already.

8. It all comes back to end-to-end quality

9. It already has Nokia

Let€™s not forget that Microsoft has a strong relationship with Nokia. Last year, the companies signed a deal that would see Nokia bundle Windows Phone on its smartphone line. Nokia also will bundle its Maps service in Windows Phone 8. Offering its own hardware might hurt Microsoft€™s relationship with Nokia. That€™s the last thing the software giant needs right now.

10. The track record isn€™t so strong

Save for the Xbox 360, it€™s hard to find any hardware products Microsoft has launched over the years that has been all that successful. From the ill-fated Zune to the Kin smartphones designed for social users, Microsoft doesn€™t exactly know what€™s best for hardware. So, why should it embarrass itself even more?

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