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UPDATE: Microsoft Rumored to Be Producing Windows Phone Hardware

A Wall Street analyst reportedly said on Thursday that Microsoft may be engaged in making its own Windows Phone hardware.

Rick Sherlund, an analyst with investment bank Nomura, made the claim, according to a Reuters story. UPDATE, 6/25: Greg Sullivan, a Microsoft executive, denied that the company plans to manufacture its own Windows Phone hardware, according to an interview with InformationWeek [The original article follows]. No direct Microsoft source was attributed by Sherlund, and Microsoft neither confirmed nor denied the claim, according to Reuters. Sherlund cited unnamed "industry sources" for the speculation.

"Our industry sources tell us that Microsoft may be working with a contract manufacturer to develop their own handset for Windows Phone 8," Nomura wrote to clients, Reuters reported.

Of course, Microsoft works with a number of manufacturers on integrating the Windows Phone operating system onto hardware, but Sherlund's comment comes after Microsoft announced this week that it plans to build its own Windows 8 tablets, called "Surface," representing a major shift for the company. Microsoft has traditionally billed itself as a software company that supplies OSes to its hardware partners. Adding to the Sherlund's speculation is Microsoft's announcement this week of Windows Phone 8, which shares the Windows 8 kernel.

Based on Microsoft's Surface announcement, it would seem natural that the company would want to make its own Windows Phone hardware. If so, it would represent yet another major shift for Microsoft, and a blow to smartphone hardware partners. For instance, Microsoft established a strategic alliance with Nokia on February 11, 2011 in which Nokia agreed to drop its Symbian mobile OS in favor of building Windows Phone-based devices. Microsoft needed Nokia to jumpstart its flagging consumer mobile OS, which has a global market presence in single digits, according to IDC analysis.

One claim is that Microsoft's Surface announcement simply represents a marketing ploy. For instance, a story by Digitimes cited Stan Shih, founder of computer-maker Acer, who reportedly said that Microsoft isn't really going to sell its own Windows 8 tablets over the long term but is just trying to prod equipment manufacturers to get involved.

Microsoft has had difficulty getting its consumer mobile efforts off the ground, lagging greatly behind Android and Apple's iOS. Microsoft killed its Windows Mobile OS product line in favor of going in a new direction with Windows Phone. T-Mobile stopped using a mobile service managed by Microsoft that was associated with Microsoft's Danger acquisition after T-Mobile Sidekick devices lost data. Microsoft also killed off its Kin consumer smartphone after it was available on the market for just two months.

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.

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