Microsoft To Build Its Own Windows Phones?

Report says company is testing prototype, but such a move could jeopardize relationship with partners like Nokia.



Windows Phone 8: Star Features (click image for larger view and for slideshow)

After denying it had such plans earlier this year, Microsoft reportedly is developing a self-branded Windows Phone 8 smartphone that would compete with products sold by its existing partners, including Nokia and Samsung.

Citing unidentified sources, The Wall Street Journal said Microsoft is testing prototypes with Asian component suppliers. The newspaper's sources said the device would feature a screen measuring between four and five inches diagonally. That would put it somewhere between Apple's new iPhone 5, and the larger Samsung Galaxy III.

The report contradicts statements that a Microsoft executive made to InformationWeek earlier this year. Asked if the company planned to make its own phones, Greg Sullivan, senior marketing manager for Windows Phone, said, "No, we do not."

[ Read Windows 8 Momentum: Will Pop-Up Stores Help? ]

Hardware makers building Windows Phone 8 devices include HTC, Nokia, and Samsung. "We have a strong ecosystem of partners that we are very satisfied with," Sullivan said in a July interview.

It's conceivable that the company has since changed plans. Last week, it introduced the Windows 8-powered Surface tablet, its first entry into the personal computing hardware market, not including peripherals such as mice and keyboards. The company said it views Surface as a showcase for Windows 8's full potential, an indication that it's not entirely happy with the efforts of its OEM community.

Asked by the Journal if a phone was in Microsoft's plans, CEO Steve Ballmer declined to comment. "We're quite happy this holiday [season] going to market hard with Nokia, Samsung and HTC," Ballmer told the newspaper. "Whether we had a plan to do something different or we didn't have a plan I wouldn't comment in any dimension," he said.

By building its own phone, Microsoft would be sending a message to phone manufacturers that they need to step up their efforts around Windows Phone 8. It would also give Microsoft the chance to further leverage its new, online Windows Store, which offers apps for Windows 8 systems.

Such a move, however, could jeopardize the company's partnership with Nokia, which abandoned its Symbian operating system for smartphones in favor of Windows Phone.

To date, Nokia's flagship Windows Phones, such as the Lumia 920, have received generally positive reviews, but have made little impact in the smartphone market, which is dominated by Apple's iPhone and phones that run Google's Android operating system.

Microsoft has not commented on the report.

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