Microsoft Smartphone Rumors Rise Again, Seeming Likely

Microsoft is working on a smartphone to run its Windows Phone 8 software, just as it built the Surface tablet to run Windows 8, says the latest report.

Microsoft is, again, said to be working on its own smartphone to run its new Windows Phone 8 software.

The Wall Street Journal is the latest news outlet to fan the flames of the rumor—sort of. The paper reported Nov. 1 that that officials at some Microsoft parts suppliers said that Microsoft "is testing a smartphone design but isn't sure if a product will go into mass production."

Again suggesting that Microsoft may have had such a plan in place but scrapped it, The Journal quoted Microsoft CEO Steve Ballmer, who said during an Oct. 29 interview, "Whether we had a plan to do something different or we didn't have a plan, I wouldn't comment in any dimension."

Ballmer added that Microsoft was "quite happy" to be headed into the holiday-shopping season with Windows Phone 8 devices from Nokia, Samsung and HTC.

This also means the device would follow the holidays.

Microsoft officially unveiled the mobile OS on Oct. 29 at an event in San Francisco, calling it "the most personal smartphone there is." A new Nokia ad successfully (and certainly Nokia could use a successful ad) demonstrates this concept, with people explaining how they've customized the tiles on their devices to best meet their needs.

In early October, both the China Times and WP Central reported that Microsoft was already in the testing stages with a smartphone. Microsoft plans to debut the phone in the first half of 2013, reported the China Times—according to an approximate translation by Google Translate—so as to "implement its vision of Windows Phone 8" and not leave decisions about materials, design, service or software-hardware integration "in the hands of others."

Microsoft went this route with its Surface tablet, creating its own hardware to showcase its Windows 8 software, and many believe the gamble—which alienated some Microsoft hardware partners—paid off.

"A tremendous amount of thought went into [the Surface]," Gartner analyst Michael Gartenberg told eWEEK after an Oct. 25 launch party for Windows 8, which more than 1,000 devices have been designed around. "It's the device that most clearly embodies what Microsoft is trying to do—which is likely exactly why they made it."

The Journal report noted that Nokia CEO Stephen Elop, instead of feeling threatened by the extra competition a Microsoft smartphone could bring, said in a recent conference call that he'd welcome such a device, believing it would be a "stimulant" for interest in Windows Phone devices and helping all parties involved.

Ken Hyers, a senior analyst with Technology Business Research (TBR), said he fully expects Microsoft to offer a Windows Phone 8 smartphone in the coming months.

"Just as Google has helped to define what a best-of-breed Android device should look like, through its Nexus line, Microsoft can do with its own Windows Phone 8 devices," said Hyers.

"While OEMs may grumble about competition from their OS supplier, Microsoft, unlike Google, has been very careful not to undercut its hardware partners by pricing its own Windows 8 tablets below those from other Windows 8 device manufacturers," Hyers added. "I expect that Microsoft will do the same with a WP8 smartphone, while also showing what Windows Phone 8 can deliver in a premium smartphone."

Analyst Jack Narcotta, also with TBR, says that in building a phone, Microsoft is taking cues from both Google and Apple.

"From Apple, Microsoft sees the value of tightly controlling all aspects of its software and hardware ecosystem, and it could very easily put the work it poured into Surface—OS, software and hardware design—into its own smartphone hardware," said Narcotta.

From Google, it has seen how Google's Nexus devices "serve as templates for its OEMs [original equipment manufacturers] to use for their own devices. Microsoft could position its own phone as a guideline for its OEMs to use for their own devices."

Google has made clear, Narcotta added, "that a balance can be struck between OEMs and the 'mothership.'"

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