Microsoft said to be working on its own Windows Phone 8 handsets

Microsoft said to be working on its own Windows Phone 8 handsets
Think Windows OEMs were upset because of Microsoft’s foray into the tablet/convertible PC market with Surface? Now it looks like they may have even more to fret about; according to financial analyst Rick Sherlund, the word from the supply chain is that Microsoft is looking to make its own Windows Phone 8 devices as well.

Sherlund’s full statement says:

Separately, our industry sources tell us that Microsoft may be working with a contract manufacturer to develop their own handset for Windows Phone 8. It is unclear to us whether this would be a reference platform or whether this may be a go-to market Microsoft branded handset. We would not be surprised if Microsoft were to decide to bring their own handset to market next year given that Microsoft has decided to bring to market their own Windows 8 ‘Surface’ tablet/PC products.

From this quote we can discern that the device may just be a reference platform - but that's somewhat difficult to believe. The hardware development platform is clearly already in existence and being tested, as the dual-core silicon powering this year's WP8 phones was already revealed at their mobile event (it was the Snapdragon S4, for those of you wondering). It seems unlikely that Microsoft would go to the trouble of creating an external design just for a reference platform, and given their newly revealed ambitions in PC hardware, it seems more plausible that whatever device is being designed is intended to go to market.

Can Microsoft pull off a successful smartphone? They certainly have plenty of experience with what not to do when designing and marketing a phone, as the KIN debacle readily testifies to. If the finished Surface hardware is as good as it looks they probably have the talent and experience to make a successful smartphone – but would it be the smart thing to do? Making their own phone would certainly upset many of their OEMs – especially those who also make PCs/tablets and were already getting nervous about having to compete directly with Microsoft.  Of course Android has a similar issue after Google’s purchase of Motorola, but Google hasn’t yet turned on OEMs – many PC vendors still recall how Microsoft wielded its monopoly power at the height of their OS dominance.

The move might also hurt Nokia, which has acted almost like a hardware division for Microsoft the last year. On the other hand, Nokia’s financials are looking bad enough that they could potentially collapse even without Microsoft entering the phone hardware fray, and having a real in-house hardware division would help to insulate Microsoft from the fallout of a Nokia bankruptcy.

It may also be a financial reality for Microsoft – they can’t charge as much for Windows Phone licenses as they do for a full version (or the RT version) of Windows, and with phones set to outpace PC growth Microsoft may think it’s necessary to try and get more profit from each sale by entering the hardware channel. Surely their business planners also have read the headlines that Apple and Samsung (two companies that make hardware and control their supply chain) are taking home 90% of mobile profits with 55% of the market share.

Clearly it’s a gamble either way: with a successful phone Microsoft could make more money per unit and insulate themselves against OEM failure or departure. On the other hand, if Windows Phone sales continue to stagnate, OEMs may be more inclined to abandon the platform if Microsoft is competing against them. Especially combined with a possible Nokia failure (since they bet the farm on Windows Phone) such an exodus could lead to a very nasty narrative about the role of Microsoft in consumer software going forward.

Would you buy a Microsoft phone?

source: Business Insider

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34 Comments

1. downphoenix

Posts: 3165; Member since: Jun 19, 2010

Looks like the Nokia buyout going on behind the scenes is on schedule.

2. jove39

Posts: 2147; Member since: Oct 18, 2011

Go for it MS

22. neutralguy

Posts: 1152; Member since: Apr 30, 2012

If MS will do this, then nokia will surely scratch they're head thinking what's next? MS should continue what it's doing right now. We don't need a phone from MS which doesn't have any experience like nokia when in terms of building a quality product. MS should do what Google did with Galaxy nexus. Continue their partnership with nokia and build a flagship phone for the platform.

3. jcpwn2004

Posts: 314; Member since: Jan 18, 2012

after the surface announcement I'm looking forward to what microsoft can put out. I still have night mares about the kin though.

4. downphoenix

Posts: 3165; Member since: Jun 19, 2010

The Kin was't a bad product, it was just marketed badly and forced onto a smartphone phone even though it wasnt a smartphone, it was just a feature phone slightly beefed up. Verizon is the main failure here, any of the other major carriers would have properly treated it as a feature phone and it could have been a decent success on another carrier.

5. Penny

Posts: 1860; Member since: Feb 04, 2011

Well, this rumor was to be expected. It's hard to tell if this is a legit possibility because it would be very easy for someone to throw out this guess right now after Microsoft announced its own tablet.

6. jtech

Posts: 101; Member since: Jul 14, 2011

Its does indeed sound like microsoft will buy out Nokia and use them as the phone sector, but who knows maybe maybe not

7. Joshing4fun

Posts: 1246; Member since: Aug 13, 2010

Microsoft is really starting to look like a mix of google and Apple. Sounds good on paper .

8. Ruckus

Posts: 286; Member since: Oct 20, 2011

Let's just hope they don't "red ring" ^_^… On a serious note I'm rather anxious to see if they do! Competition only benefits us the consumer!

9. pegasso

Posts: 285; Member since: Nov 27, 2011

poor Nokia... no one will buy Nokia Lumia knowing current Lumia phones won't get any WP8 update (and there will be no WP8 phones until october). now, MS is leaving Nokia and working on its own phones... i wonder what will going to happen to Nokia for the next three months?

10. rinawan

Posts: 4; Member since: Jun 20, 2012

yap, i agree.. Why Lumia 900 wont get WP8 update too?? :)

27. SherlockHolmes

Posts: 125; Member since: Apr 10, 2012

No the current phones will get the Win 7.8 Update !!

24. haseebzahid

Posts: 1853; Member since: Feb 22, 2012

WELL IF U DIDNT WATCHED THE ANNOUNCEDMENTS THEY USED lUMIA DEMO PHONES FOR WIN8

29. PhoneLuver

Posts: 481; Member since: Jul 05, 2010

The Nokia betrayal is almost complete!

11. Alistaire

Posts: 132; Member since: Apr 13, 2012

why would it be bad for Nokia? The reference device is built by Nokia, if MS release their own phone, it will probably be made by Nokia. More $$ for Nokia. It's no different from Google who also make their own andriod phone in direct competition with their other OEM.

28. tegradragon

Posts: 68; Member since: May 23, 2012

Thats Google with MASSIVE other companies you're talking about. Samsung, HTC to name a few. Nokia is a company hanging by a thread right now. Samsung's quarter profits are equivalent to what Nokia earns in 5 years. And how does it make sense when you say Nokia will earn money??

30. Alistaire

Posts: 132; Member since: Apr 13, 2012

fact is Nokia is still selling millions of phones. India, China, South East Asia. UEA... Aside from Smartphone, and WP, Nokia is selling lots of feature phones, internet access is not prevalent in most other countries, and super costly. Most countries do not run with under sea super cable like Singapore or South Korea. USA is just a new market for Nokia, and that's a smartphone market. Yes, Nokia will be finished, if it depends only on the North American markets. That said, the Lumia 900 have to be restocked from carriers a few times, since it's launch a month ago in Taiwan, China, Singapore....

31. tegradragon

Posts: 68; Member since: May 23, 2012

Fact is, I'm an Indian. So being a local i know the condition. Given there are 1.3 billion people here, but Nokia's figures have been on a dive. People have been opting for phones by local manufacturers which throw in a touch screen and stuff at pretty much the same cost Nokia has been providing low-end 12 key-pad phone. Nokia is in a big crisis and if Microsoft starts making its own phone, Nokia will go bankrupt.

12. kanagadeepan

Posts: 1271; Member since: Jan 24, 2012

Well, this time they don't bring the TORTOISE shaped KIN again, let's hope...

13. Mobile-X-Pert

Posts: 565; Member since: Dec 20, 2010

They´re just gonna do what google does with the Nexus.

14. Mobile-X-Pert

Posts: 565; Member since: Dec 20, 2010

15. tiara6918

Posts: 2263; Member since: Apr 26, 2012

Maybe microsoft shouldn't be making its own windows phone 8 just yet. Let's first see how many windows phone 8(made by nokia,htc,samsung and huawei)can be sold.

26. haseebzahid

Posts: 1853; Member since: Feb 22, 2012

they are setting the refrence design for OEMs as they stated in Surface presentation so other OEMs can have some baseline benchmark

16. MISTER-H

Posts: 87; Member since: May 28, 2012

Poor Nokia. Hahaha. Good .

17. snowgator

Posts: 3621; Member since: Jan 19, 2011

It's possible. MS sure has a ton of pokers in the flame. It will be interesting to see what is true and what ain't. Also will be interesting to see what works and doesn't. Tough to tell anymore.

18. SmartPhoneStream

Posts: 162; Member since: Jun 21, 2012

I'm very interested, as an Android user i really don't know what to expect when i switch to windows phone 8 when my upgrade is up, I really like the Surface but i think i'm going to have to go with the ASUS Taichi

19. hung2900

Posts: 966; Member since: Mar 02, 2012

Nokia's stock will go down more. I think that's Microsoft's strategy to buy out Nokia.

20. rpankaj

Posts: 29; Member since: Jun 21, 2012

if Nokia is hardware partner, then they have a lot of pennies to sit n count.. If they r not, then they have nothing just to sit n watch ios, android n Microsoft selling products.... no one will buy nokia wen ms release its wwin8 phone

21. u-suck-more

Posts: 529; Member since: Aug 26, 2011

Nokia would be dead if MS releases a killer WP8 device. No one will get a Nokia device.. but Nokia could also very well be the hardware partner, so yea.. i guess it depends on how much MS values Nokia.. if MS goes with some other brand, say HTC for example, Nokia sales will nose dive and the company will be forced into bankruptcy. and then, possibly, MS might buy Nokia and do to Nokia what Google is intending to do with Motorola.. ah well, we have to wait and see

23. 7thspaceman

Posts: 1597; Member since: Feb 14, 2011

The Nokia 900's body I believe will get a new high def screen and the new internal Electronic guts to run Windows phone 8 but my guess is it will be a branded a Microsoft smart phone because things look so bad for Nokia that Microsoft will have to buy Nokia and use Nokia's expertise to make Microsoft Branded smart phones and Tablet computers. "HELLO Microsoft Mobile device manufacturing devision" Looks like it will be in business by September 2012

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