Microsoft to make its own Windows Phone: On the rumor that keeps resurfacing

Microsoft to make its own Windows Phone: On the rumor that keeps resurfacing

Summary: If Microsoft really has no plans to make its own Windows Phones, why won't anyone from the company say this?

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Earlier this summer, rumors swirled that Microsoft was going to make its own Windows Phones and maybe even market them under its Surface brand. This week, that rumor is back, thanks to China Times and now Boy Genius Report.

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Why does this rumor keep recurring? It's either because it's true, or because Microsoft's top brass won't, once and for all, quash it if it's not. And that leaves the door wide open for speculation.

When rumors first surfaced (pun intended) that Microsoft might make its own Surface Windows Phone, Microsoft fueled the fires with its own open-ended tag line. The Surface product family was described by Microsoft earlier this year as "Microsoft-made hardware to be available starting with release of Windows 8 and Windows RT." Does that mean there will be Surface-branded keyboards, trackpads, mice, etc.? Does it mean there will be Surface-branded Windows Phones. I asked. Shockingly (not), I got a no comment.

A month or so later, CRN asked Microsoft CEO Steve Ballmer in a sit-down interview if Microsoft would make its own smartphone. Ballmer evaded the question, failing to provide a firm yes or no. From CRN's report:

"When asked if Microsoft might make its own smartphone, Ballmer paused and then replied: 'Right now we are working real hard on the Surface. That’s the focus. That’s our core. Look, we’ll see what happens. We have good partners with Nokia, H(T)C in the phone space. I love what we've got going on with the Surface. We are going to focus on Surface and our other Windows 8 Tablet partners and see if we can go make something happen.'"

Hmm. "We'll see what happens." Not exactly a denial.

Shortly after that interview ran, I asked Microsoft whether Ballmer's comments signified a change in Microsoft's previous position that Windows Phones would come from OEMs only, and not from Microsoft itself. I received a non-answer from a company spokesperson. The official statement:

“We are big believers in our hardware partners and together we’re focused on bringing Windows Phone 8 to market with them.”

I asked the Windows Phone team again yesterday, October 1, if Microsoft would confirm or deny new rumors that it intends to make its own Windows Phone. I received the exact same statement about partner love as above.

If Microsoft has no plans to make its own Windows Phones, why won't someone just plainly say this? If Microsoft is simply building new reference designs, why not let folks know that's what's happening and move on?

Leaving the door open with evasive non-answers is likely to hurt Microsoft's premier Windows Phone partner Nokia, as WPCentral pointed out in a good post on the ongoing Microsoft phone rumors. After all, Nokia is the only one of the five remaining Windows Phone partners that is all-in with Windows Phone. Nokia's phones are, for all intents and purposes, Microsoft's Windows Phones.

In the case of the Surface PC/tablets, Microsoft decided to burn OEM bridges by coming out with its own Microsoft-made and -branded devices allegedly (and believably) because the company was unhappy with its OEMs' designs. But in the case of Windows Phone, Nokia, HTC and Samsung have all shown off Windows Phone 8 models that look very appealing.

Unless Microsoft is just working on some Windows Phone designs of its own as a last-ditch effort -- in case its partners can't get it beyond its current three percent marketshare -- I'm not quite sure why the Redmondians would go the Surface Windows Phone route.

Any guesses/thoughts out there as to what's happening on the inside? After the Kin mess, I'd kind of think Microsoft would stay out of the phone space. But desperate times may call for desperate measures....

Update: Now WPCentral is also reporting they believe Microsoft is working on its own Windows Phone. I have to say I doubt that Nokia preferring to brand its phones as "Lumia" rather than "Windows Phone Lumia" is a factor behind rumored Microsoft dissatisfaction with its partner, as that site claims... and definitely a very flimsy reason for the Softies to be working on their own phones. Nokia's fiscal health would be a far more believable reason, in my opinion.

If Microsoft does end up launching a Microsoft-design and -branded Windows Phone, it'll be safe to say the Redmondians have reversed course and admitted Apple's end-to-end design/manufacturing/distribution model is the new way forward.

Topics: Smartphones, Microsoft, Windows

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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125 comments
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  • They haven't said

    They haven't said they are NOT going to build cars to drive Sync either. Does that mean they are building a factory?
    NoAxToGrind
    • Building cars

      Hi.

      I have a feeling if I asked MS if they were planning to build cars, I might get a denial. Maybe I should try it :)

      Also: They don't need to build a phone factory to do their own phones. ODMs (original design manufacturers) can do a lot of the heavy lifting. Pegatron supposedly is the ODM behind the Surface tablets. They also have worked on Xbox, as has Foxconn.

      Thanks. MJ
      Mary Jo Foley
      • What difference would it be if they said 'No, not at this time'?

        That's really the same thing. No not now but we're not closing the door to it. BTW the entire premise of the statement that surface burned bridges with oems is just absurd. That said while Nokia/HTC/Samsing have done some ok work they havent done the surface of smartphones. Their high end phones dont have expandable storage, 3000+ mAh batteries, etc. Heck have they even dropped kickstands? The nokia is the most innovative but is brick weight wise. If MS wanted to do this would they just buy out Nokia?
        Johnny Vegas
        • MS should just buy Nokia

          I think you are correct Mr Vegas,
          Nokia has spent more on R&D in the last 10 years than any other mobile company including Apple. There first batch of windows phones were OK but it takes more than a few months to integrate all the technologies needed to make a phone. I'm pretty sure that as long as they can survive this period of transition there will be some very good things to come from Nokia but hey if not MS could do a lot worse than to snap them up.

          The mobile phone biz is different to the PC biz and Nokia has all the carrier relationships and the distribution channel that MS would need to build if it were to get into the phone making biz. Without that it would be a very small player and at the same time alienate its existing partners.
          alecfoundry
          • or not

            I have to believe MSFT has already looked into buying Nokia, and I have to believe one of the reasons they haven't would be the likelihood that there are overstated assets and understated liabilities on Nokia's balance sheet. I have no idea what sort of pension liabilities Nokia may have, but I'm much surer they look nothing like what MSFT has for its employees. IOW, I believe Nokia's book value is maximized as an independent company. It'd be worth a lot less on anyone else's books, even MSFT's.
            hrlngrv 
          • Well

            Nokia has "poison pill" in its stocks. If you buy over 40% shares, you need to buy whole company. And it would come very expensive because prices would go up in milliseconds.

            And Microsoft doesn't need to buy Nokia at all. They already own Nokia. They have its in their hang rope and Nokia is its' bitch. Microsoft can squeeze Nokia balls and it does exactly what Microsoft wants.

            Give patents for Microsoft partners? Of course!
            Give maps for Microsoft? OF COURSE!
            Stop every alternative product line? NO QUESTIONS ASKED!
            Do a Windows Phone and HW development what Microsoft wants? *slap* NO PROBLEMO!
            Spend hundreds of millions for Windows Phone marketing? Heck, Lumia is "Microsoft phone".

            And if Windows Phone does not succeed and Nokia goes down, Microsoft has no problems because it has not placed its weight at all on that ship.

            Microsoft is only interested to get Windows back to 98% marketshare, to harden that, it needs smartphone markets. For that it needs HTC, Samsung and others. Nokia is just one small player on that field what does not have a such value alone. The whole package is.
            Microsoft does not care what happens to Nokia, if Microsoft gets Windows Phone up, only that matters.
            Fri13
          • Possible...

            You know they've discussed a 1st party Windows phone as at least a fall back if OEMs fall short of expectations. They have a good thing in WP8, and it would be tragic if it didn't take off. I think the rumors have weight, but nobody knows if this is a situation that will play out or if Microsoft is simply prepping a backup plan. A Surface phone would be interesting, but if OEMs are doing well, there's not as much need for a 1st party device. Like Surface, it would more likely push others to improve design efforts and kill off the cutting-corners approach so many manifacturers take these daya
            thisistheslam
          • Don't forget BING Maps

            MS is now using Nokia for Bing Maps. I am sure if MS continues to rely on Nokia for more and more products and services and Nokia continues to have low market share or poor financials. MS will have not choice but to buy some or all of Nokia because the alternatives would hit MS hard.
            rmark@...
          • Nope

            Nokia were developing Windows Phones (not Mobile) with Microsoft since 2009. Lumia was not "few month" development.

            There were leaked information, photos and rumors from that year that Microsoft and Nokia are developing "next gen" phones.

            Nokia and Microsoft only denied everything and Nokia said "We are not going to abandon Symbian and we never take Windows platform" a like. It toke only over a year before truth was revealed, but with new lies covering it to rise a hype.

            Same thing Nokia and Microsoft has denied 2011 before announcement of partnership, both parties denied that any discussion has been going. A month and both came toward the truth first lying about it.

            Little bit later, Elop denied that specific factories are going to be shut down, few months and it was happening.


            Are Nokia/MS fans so blind for lies? Nokia has not succeeded so far ever developing any new phone under a year. And then suddenly in "three months" Nokia goes and builds totally new motherboard, new chips from others, new kind display, totally new software system from other company and fits everything in N9 casing and designs two (710 and 610) new cases and motherboards same time?

            WHOAH! Everyone from Ex-leaders (Ollila, Kallasvuo, Vanjoki etc) to middle-leaders and even for new CEO (Elop) saying that Nokia is too slow and it takes totally too much time to make a new smartphone.

            And everyone should believe that leaked information (by Nokia and Microsoft engineers and artists) was not true, even after all came true?

            WHOAH! WAIT A MINUTE!

            Maybe I should go and make my own tinfoil hat because Microsoft and Nokia has just pulled in three months a "awesome beta-smartphone"!
            Fri13
      • I was

        I was being facetious. But now that you mention it, a re-branded Ford built to MS specs has possiblilies. I absoutely loved what they did with this mustang. :-)

        http://mashable.com/2012/04/04/microsoft-mustang/
        NoAxToGrind
      • No, you wouldn't get a denial.

        You'd get silence, as you do with all of your queries to MSFT.

        Maybe you should get your answers from people MSFT actually talks to?
        SeanConner‮700y
      • Interseting question, but I think your answer is in what you wrote.

        "If Microsoft has no plans to make its own Windows Phones, why won't someone just plainly say this?"

        "In the case of the Surface PC/tablets, Microsoft decided to burn OEM bridges by coming out with its own Microsoft-made and -branded devices allegedly (and believably) because the company was unhappy with its OEMs' designs."

        "When asked if Microsoft might make its own smartphone, Ballmer paused and then replied: 'Right now we are working real hard on the Surface. That’s the focus. That’s our core. Look, we’ll see what happens."

        "in the case of Windows Phone, Nokia, HTC and Samsung have all shown off Windows Phone 8 models that look very appealing."


        "Unless Microsoft is just working on some Windows Phone designs of its own as a last-ditch effort -- in case its partners can't get it beyond its current three percent marketshare"


        It seems pretty obvious, your own article more than hints at it. Microsoft came out with the Surface because they were not going to tolerate OEM's who may simply refuse to get it right. It seems a little more logical that Microsoft may have had a little more faith in the phone manufacturers to get it right and didnt make any effort to jump the gun on them so to speak. But Microsoft may well keep in consideration the fact that if the smartphone industry misses the boat on putting out enough compelling devices that there may arrive a point in time where Microsoft may have to step in again and put a device of their own out to show the OEM's how it needs to be done, at least in the mind of Microsoft.

        But! As you have pointed out the current line of Windows 8 smartphones look pretty good so there currently appears to be no good reason for Microsoft to start rattling their sabers about putting out a phone of their own. But it can also just as easily be the case that this fact alone has not caused them to think of forever abandoning the possibility of producing their own phone if the OEM's do not follow through the way they need to continue to do so.

        This seems to me to be the most likely simple reality. Uncomplicated and logical given all the market circumstances along with past actions of OEM's and Microsoft themselves with Windows 8.
        Cayble
    • Factory?

      Apple does fairly well building phones without a factory of their own. Like Microsoft (and Qualcomm, and AMD/ATi, and nVidia, etc) they also seem to be making chips without a fab of their own. This isn't the 70s.
      Hazydave
    • LOL

      Go and ask! If they then come back and say "We have focus to Windows family and we have great partnership with GM, Toyota and Honda", then they ARE going to release a Windows Car.

      99.9% sure that answer would be "We are not going to Car business"
      Fri13
    • Based on customer complaints regarding SYNC and MyFord Touch

      I'd hope Microsoft doesn't start building cars...
      HypnoToad72
  • I'd say they're leaving themselves open to a Defcon 5 scenario

    That being, none of the OEM's are making a splash or much of an effort with their Windows phones, and are basically porting and renaming existing hardware without putting in much effort (somewhat akin to the state of PC’s & laptops pre-Surface). I’d say Nokia is doing an admirable job holding their own in the phone marketplace, provided MS itself can successfully roll-out WP8 and it doesn’t disappoint.
    Jayson Merryfield
    • The also don't want a lawsuit.

      If they give a definite answer to this and then do the opposite they would likely get sued by the stock holders of the companies that got hurt by the direction they take.
      raleighthings
  • Surface may have been the push OEMS needed.

    HTC seems to be putting more effort into designing memorable devices for the WP8 platform perhaps after seeing Nokia's marginal success on the Lumia line, and perhaps because the Surface kicked OEMs in the pants a little and told them to get serious about product design. MS can certainly afford to attempt an Apple approach to product production, and while it may not pan out in the long run it would hurt Manufacturers that rely on MS product sales for the term of the experiment.

    Love it or hate it, Windows 8, RT, and Phone 8 are what manufacturers have to design for if they want to sell any MS products this year. Had Android tablet sales been more successful, maybe they wouldn't feel so much pressure, but that plan hasn't really born much fruit (I own an Asus Transformer and love it, but I don't know more than a handful of people who own Android Tabs).
    d20dad
    • It's also WP8

      The problem with WP7 was that Microsoft's design limitations meant it just couldn't be competitive with other devices. I think that was sufficient to have other companies only flirting with Windows Phone. Nokia gets $250 million per quarter to fall in love with WP, so they do. It's been fairly traditional at phone providers to support different platforms as long as those platforms show promise -- also makes it easier to drop one like a stone if it's not producing (something Nokia should have considered, perhaps, in their deal with MS). WP8 is allowing competitive hardware.

      Thing about MS, they're at an automatic advantage against other WP or Windows tablet makets, since they don't have to pay the software licensing fees, estimated at $75-$100 on a Windows RT tablet, which must carry Office as well (no options). Same goes on the phone. It's likely for now MS will just turn that into more profits rather than lower prices, but they have the option to drop prices that other companies don't.

      The others are right to worry about a MS-branded phone. Google walks a thin enough line with the Nexus series, and they're getting bigger about it, less experimenty and more appealing to the masses. I can see some success in Surface devices getting Microsoft on a hardware kick. Works for Apple, eh?
      Hazydave
      • With WP7 it was even more than that.

        Windows phone 7 did have one major problem, and the problem wasnt with WP7 itself. When I walk down the street, through a mall, on public transit or anyplace you might find yourself strolling past hundreds of people, the vast majority of them with no IT savvy or interest, all using their phones, from young teens to the elderly gentleman chatting with his own children, almost none of them even knows what a "Windows Phone 7" even is.

        I have been shocked in the past to mention an interest in considering a Windows phone as a possible upgrade from my current iPhone, which I like, and getting responses that typically very from a blank stare, a question of "Whats a Windows phone" to "Is there a Windows phone?"

        I am no longer shocked by those responses and I have quickly come to realize that the only people who even know that Windows phones exist are those who at least follow new tech to some degree, where they at least read some related articles or chat frequently with people who do. For example, despite RIM's race to the basement, it seems everyone still know what a Blackberry is, and many people still seem to enjoy them and want them, but a big company like Microsoft that isnt on the verge of whirl pooling down the toilet bowl like RIM is, has a product out in the very lucrative smartphone market and nobody even knows what it is.

        On one hand, I have to believe what Microsoft didnt need was a huge budget advertising campaign for a WP7 they knew would be somewhat obsolete as soon as WP8 comes out. Its a bit of a negative for them already that there is likely going to be a few unhappy WP7 purchasers who are going to feel left behind once WP8 comes out. I can see why it must have crossed MS's mind that encouraging millions to buy WP7 when the real goal will be to do that with WP8.

        But if MS has a brain at all, once Windows 8 is released they better push WP8 like it’s a freight train full of gold or they will get the exact same results as they got with WP7.
        Cayble