Ars Technica's Peter Bright says that Microsoft should build its own phones. And I agree.
Here's the money quote:
With the loss of the software customization and the lack of hardware variation, OEMs might find themselves with no effective means of establishing a branding or carving out a niche for themselves. Though they're supporting Windows Phone 7 right now, there's a good chance that they will lose interest once their hardware has been commoditized.
Microsoft has in the past been severely let down by its handset hardware partners. Microsoft would supply an OS along with a vague technical spec, and basically allow OEMs to mess about with the OS and shove it onto any old junk that would (barely) run it. Basically the only way OEMs could differentiate themselves was on price, and that meant a race to the bottom. The end result was that the Microsoft mobile experience sucked for the end user, and Microsoft failed to get the traction it needed.
Now it seems that Microsoft has learned some lessons. There's a very strict hardware spec, and there's little or no room for OEMs to mess about with the user interface. So how do OEMs differentiate their product from the competition?
... any ideas? ...
... *crickets* *crickets* ...
And that's going to be the problem with Microsoft's endeavors with Windows Phone 7. Once the initial hype has died down, it's going to be hard for OEMs to push a particular handset because little (or nothing) will separate it from other handsets on sale. And why should they? These companies all have their own handset aspirations outside of Windows Phone 7.
Bright raises another point:
Microsoft might be hoping that smartphones go the same way as desktop PCs, and experience a race to the bottom. The margins in desktop PCs are negligible, with the only company making much money out of them being the one selling their operating system. They're all so thoroughly interchangeable that price is the only way to differentiate, so OEMs slash their margins to make their products ever cheaper. If that happens, it won't make phones any more profitable to Microsoft; it'll just make them a whole hell of a lot less profitable to Apple and others.
I don't see this happening for one reason - Android. While Linux isn't really an option on the desktop for the Joe Average, Android on a handset is, and OEMs could cut Microsoft out of the game.