Microsoft May Develop It’s Own Windows Phone Device (Like Android’s Nexus Series)

The launch of Microsoft’s Surface resulted in talks of Microsoft directly competing with its long time hardware partners, although Microsoft had clarified that their partners had a heads up about it. However, if financial analyst Rick Sherlund is to be believed, they have more reasons to be concerned about.

According to his industry sources, Microsoft is probably working with a manufacturer under contract to make their own device for Windows Phone 8. It is not clear whether this device will be a Microsoft branded handset or something to be used as a reference device by others. However, he believes that this move isn’t a surprise since Microsoft brought out Windows 8 on a tablet they developed and manufactured themselves.

The statement gives indications that the device may be only a reference platform, but that may not be the case when taking other considerations into mind. Microsoft’s hardware development already exists and is undergoing tests. The dual core Snapdragon S4 chipset is already the benchmark standard for the upcoming Windows Phone 8, and it makes no sense for Microsoft to design and develop a reference platform. Moreover, with the Surface tablets, Microsoft’s made it clear its ambition to manufacture its own tablets; a committment it has not made for Windows Phone yet.

The big question is whether Microsoft can build a winning smart phone. Microsoft’s Kin disaster should have given Microsoft enough lessons how to go about building and marketing a smart phone. Critics were satisfied with the Surface hardware, which clearly shows that if they want, Microsoft can make a good device. The catch here is whether Microsoft should do that, since their OEMs wouldn’t react positively to such a move, particularly those who are also PC manufacturers. Google underwent a similar situation, after buying out Motorola, but it didn’t give up on its OEMs.

Among such OEMS are Nokia, and to some extent HTC. Nokia has switched almost exclusively over to the Windows Phone platform for its devices. With Nokia losing market share to Samsung and Apple, it might just cave in; whatever might be Microsoft’s decision. Microsoft is potentially insulated from that collapse if it has its own hardware division.

There is also a financial incentive for Microsoft to make such a move. With Apple and Samsung taking home 90% of mobile profits with their combined 55% market share, Microsoft has an incentive to control their own supply chain and make more profits. Microsoft has a gamble to make. With Windows Phone not exactly growing exponentially, OEMs may abandon Microsoft if it starts to directly compete with them.