Microsoft is testing its own smartphone design, preparing for the possibility of developing its own device, but the company hasn’t decided whether to take the device into mass production, according to the Wall Street Journal, citing unnamed officials at some of the company’s parts suppliers.

It’s the latest in a series of rumors and reports pointing to the possibility of Microsoft making a phone — presumably its own Windows Phone device — following up on the release of the company’s Surface tablet last week. The company is increasingly expanding beyond its traditional practice of solely supplying software and operating systems for devices and computers, and moving into the realm of hardware development.

As with the Surface tablet, the release of a Windows Phone device from Microsoft could pose a competitive threat to the company’s hardware partners. However, the relatively small market share of Windows Phone could make those partners more open to this type of move from Microsoft, as a way of sparking the market for Windows Phone overall.

Asked about the possibility of a Microsoft-developed phone recently, Nokia CEO Stephen Elop said, “It’s certainly a stimulant to the ecosystem. As I said earlier, we’re encouraging of HTC and Samsung and Microsoft or whomever to have devices in the market and to be making whatever investments that help spur the ecosystem on.”

Microsoft CEO Steve Ballmer has declined to comment on the possibility in recent interviews. Introducing Surface earlier this year, he said it would be part of “a whole new family of computing devices” from Microsoft, stirring speculation about a Surface phone.

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  • Guest

    All right! Can’t wait to get my hands on one. Big Mike is in the house! (And in my laptop bag, and in my hip pocket…)

  • Kevin

    Does that mean my current WIndows phone is NOT smart?

    • Michael Hazell

      Could be, but from what I see it as is just another phone but made by Microsoft themselves this time.

  • AnotherGuest

    It seems Microsoft is trying out a few more pages from Apple’s playbook. Where Apple did not have an ecosystem of vendors/OEMs/partners, Microsoft does and those partners generate a considerable amount of cash for Redmond. The uncertainty alone that Microsoft could be competing with its partners by launching a smartphone will at least raise some eyebrows. Wonder what will happen to Mr. Elop and Nokia after having bet the farm on Microsoft only to possibly be left behind. Or will Microsoft buy Nokia after all now that Nokia can be picked up for a few cents on the dollar? Acer’s decision to put Surface-like tablets on the backburner shows it’s not all honky dory in Microsoft’s ecosystem. What will a Microsoft smartphone do to that ecosystem? As a company reinventing itself it will be interesting to see how Microsoft will pull that off without loosing their partners and a considerable amount of revenue. Looking at the latest smartphone shipment figures, Microsoft’s insignificant 1.2% share is definitely not enough. Then again, if Microsoft could strike a deal with Facebook to launch the Facebook phone then things will definitely look better for Microsoft.

    • lan

      I’d say it’s more a play from Google’s playbook than Apples. Did OEMs refuse to make Android phones and tablets because google is making the nexus line? No. Not sure why the same partners would care if MS does the same to a much smaller portion of their mobile business.

      • Guest

        Because the OEMs don’t have to pay Google for licensing Android. That creates a level playing field. MS charges their OEMs for WP, which puts them at a serious disadvantage to MS’s own devices (especially in mobile devices where the margins are cut-throat).

        • guest

          Androids OEMs don’t pay Google, but they pay even more than what MS charges for a license in legal fees and/or patent royalties related to Android. So your logic isn’t compelling.

  • StephenElopSoooperGenius

    Elop is either a stooge or an idiot. The whole reason Nokia went “all in” with Microsoft and Windows Phone was to be a “special partner” and basically be the showcase of best-in-breed Windows Phones.

    If Microsoft is building their own phones, then those not Nokia will be the showcase phones.

    Microsoft has already cut Nokia off at the knees by giving HTC equal treatment around WP8. And the WP8 annoucement in August pretty much killed Nokia WP sales until WP8 ships (real soon now, really).

    It’s just painful to watch Nokia now. It’s like a bad relationship where one person gives everything up in devotion to their partner, but the partner keeps cheating on them and treating them badly.

    It’s pretty clear that Elop is a Trojan Horse and is looking out for Microsoft’s best interests rather than Nokia’s. Watch: he’ll land back at Microsoft after Nokia’s a smoking ruin with a hero’s welcome, a host of mobile patents gotten cheaply, and some developers who will get folded into the Microsoft phone team.

    • lan

      So are you suggesting Microsoft keep putting all it’s eggs into one partner’s basket, one who isn’t performing?

      Elop took over a sinking ship, you can’t blame it all on him. Do you really think the board picked him, then sat back and asked him to pick a platform? No, they picked him because the board had decided to go WinPhone. Nokia was stuck on Symbian for far too long. If they jumped on the Android ship early, they’d probably still be the mobile king.

    • guest

      They are a special partner. They get more access than any other and more direct payments. That said, it was never exclusive. And so far, at least, Nokia hasn’t been impressing on the sales side. Not that MS has done everything well either.

  • Guest

    Microsoft is known to be a back-stabber and Elop himself came from Microsoft so what does Nokia expect from either of them. They’re toast. Nokia + Windows = NoWin

    • guest

      Yeah, guess that explains why they have one of the largest partner channels in the world. /s

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