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Nervous, Nokia? Microsoft tests own smartphone

Microsoft is working with Asian component suppliers to test its own smartphone design, according to a Wall Street Journal report.

The company released its own tablet, the Microsoft Surface, as part of its Windows 8 push (NZ release dates have yet to be announced).

But at the launch of its latest cellphone software, on Tuesday NZ time, Microsoft CEO Steve Ballmer made no mention of a house-brand smartphone as he showed of handsets from Windows Phone 8 partners Nokia, Samsung and HTC (Telecom has confirmed to NBR it will stock three models by Christmas - the Nokia Lumia 920, the Samsung ATIV S and the HTC 8S. Vodafone and 2degrees said they would also carry Windows Phone 8 handsets by Christmas but did not detail models).

The Journal quotes a source close to the project who says the proposed Microsoft smartphone has a four-inch display. The company has yet to decide whether to the product will go into mass production.

In an interview with the paper, Microsoft CEO Steve Ballmer refused to comment on whether his company would make its own smartphone.

"We're quite happy this holiday [season] going to market hard with Nokia, Samsung and HTC," said Mr. Ballmer.

"Whether we had a plan to do something different or we didn't have a plan I wouldn't comment in any dimension."

If it does produce its own smartphone, Microsoft will be walking a thin line. The move would give the company total control over its own handsets, as Apple has with the iPhone, and Google with its house-brand Nexus (and newly acquired Motorola Mobility). But it would also risk alienating key partner Nokia, plus Samsung and HTC. 

While Nokia has put most of its eggs in the Microsoft basket, Samsung and HTC are enjoying strong sales for their Google Android-based models.

Comments and questions

I'm assuming 2degrees will be a carrier for the Ativ S a warehouse stationary has them on pre order. In saying that I wouldn't be surprised if Vodafone carry it too.

Why does Nokia trust Microsoft not to undercut Nokia ?

Ballmer is playing a dangerous game. A Microsoft smartphone would have a massive effect on Nokia's share price and force Nokia into releasing an Android model, which would be well received I suspect.

Nokia need a tablet. I hope they have a Surface competitor in the wings because they really need something to revive their flagging fortunes.

I think windows 8 will be more popular than the others realise espically if the HTC 8S price comes in the right bracket. The HTC 8S is only 4.0 which is better than these silly large phones they persist in pitching.

Ha, so what's the fuss?, Samsung, APPL, HTC, & Alcatel are all pioneers in making smartphone but still can't do zilts to beat the innovative NOKIA's smartphone, so what more MSFT......However, the support for the 3rd ecosystem by the Wp8 OEM's is needed to flood the shelves with nothing but window phones, W8 needs more device OEM's to continue it's progressing success...On the other hand MSFT's surface phone will be nothing but a canivalized smartphone similar to iPhone.

There will be no difference on the statue of successful Galaxy S3 as to Google's MOT razor to innovative Lumia 920 to Msft's surface phone......

NOKIA is will be over $3.00 by next week which will still be below book value....Lumia 920 & L820 will be hitting the shelves next week....All pre-orders in France, Italy & yesterday Sweden are all sold out...Yesterday Germany hit the 80% mark & Lumia in China is racing to take the top spot on carriers billboard chart.....need I say more?

Its a free market and there is absolutely no reason MS should not launch their own handset. Indeed Windows phone is a longterm strategy and may not be the solution to Nokia's troubles. If Nokia feels their interests are better served by Android they should shift base. All this MS and Nokia are tied on the hip is only an Elop imagination. He must make up his mind whether he is in MS or Nokia. You can not serve two masters.

Very much true..Free Enterprise & that is the backbone of America my friends & I love it....The question here is, is Elop a Trojan Horse or is he the new NOKIA's visionary?

Have any of you guys heard of NOKIA's Archer & Pheros with an OS code named Phi? That's right you heard here & it is in Australia for Beta testing.........Yes, I believe NOK have a plan B in place afterall. Then the fact also remain that NOKIA still owns Meego OS & 10% of Virtu which is now developing a new Nokia phone with Android OS. Should NOKIA be nervous? I doubt it. However, I would like to see a MSFT surface phone & Nokia's Lumia 920 being marketed side by side, I think it will be awesome for W8 OS.

A Nokia Android phone would be great.

The use of a ubiquitous OS might put some steam back into one of Nokia's previous great sources of advantage: the creation of high quality and desirable hardware. I love the look and feel of their new phones, but have to admit that the lack of surety around Microsoft's OS (including upgrade paths) has discouraged me from buying one so far. If I could get a Nokia Android, I would.

Microsoft launching an own "surface" smartphone just makes no sense. There is no reason for Nokia to be nervous, because there is no reason to think Microsoft would do any better than Nokia. On the contrary. It is because of Nokia's appealing smartphones WP still gained some marketshare in 2012. On the other hand, Microsoft seemed to make every (marketing) mistake to sink its own OS marketshare.
The biggest headwind Microsoft caused for Nokia, was the introduction of WP8, shortly after WP7.5 handsets were broadly available. Excisting WP7.5 phones were not provided a cmplete upgrade path to WP8.

Recall that Microsoft has a published reference specification for the windows phone so that anyone can build one.

This fact along with the fact that the surface tablet development was such a well kept secret that it doesn't make sense that they are working on a surface phone. Rather, it is probably the Windows Phone reference specification that they are working on. i.e. help all windows phones to have better call features, have better integration with voicemail, ringtones, skype, etc.. (remember that skype piggybacks on the general OS heartbeats).

WP needs to improve battery life and call quality overall.. that is probably what they are working on with the reference specification improvements.