A Microsoft smartphone: Could it be true?

The speculation at the recently concluded Microsoft Worldwide Partner Conference in Toronto was high that the Redmond, Wash.-based software giant would develop and release its own branded smartphone before the year was out.

Today comes a story from BGR.com writer Zack Epstein that Microsoft Corp. (NASDAQ: MSFT) has plans to release its own Windows Phone 8 smartphone in the coming months.

The speculation from the partner conference was centered on Microsoft’s own Surface branded tablets that would run Windows 8. It was noted Dell CEO Michael Dell made an impromptu appearance at the event to learn more about Surface and how, as a Microsoft alliance partner, he would be competing. So far, while OEM vendors have complained none have pulled the plug on a Microsoft Windows 8 partnership.

And Microsoft has been smart in positioning the Surface as a Microsoft store or Web site only sale, leaving vendor alliance partners to work with channel partners and other big box retailers for themselves.

According to the Epstein story, his source would not divulge any further details except that the smartphone would be a high-end model to compete with the Apple iPhone 5 and the Samsung Galaxy III models.

The China Times reported that the Microsoft smartphone would carry the “Surface” branding.

CDN has contacted Microsoft Canada for comment and received a message from subsidiary president Max Long. Long said that Microsoft does not comment on rumour or speculation. But he added that he and the staff at Microsoft Canada are all pretty excited for Windows Phone 8 and what it will deliver to Canadians along with operators and OEMs.

Microsoft’s hardware division took a huge hit with the overall failure of the Zune product and if this story is true it might be another salvo from the company to diversify beyond software.

Industry analyst Rob Enderle of the Enderle Group said this past June that Microsoft was fundamentally changing its strategy and becoming more of a hardware player.

Microsoft’s model of being a software provider for all the hardware vendors worked exceptionally well for the better part of two decades. But Apple’s success has opened up the idea that hardware can be profitable.

Nick Tidd, the vice president of global sales for Condusiv Technologies, told CDN recently that margins from software were a lot better than hardware. Tidd ran 3COM’s channel business and was the president of D-Link in North America.

But is that notion changing? With the Surface tablet not being subject to price discounts from channel partners and big box retailers, it will be protected from competitive pricing. Microsoft can charge what ever it feels like inside the Microsoft store, the same way Apple has been doing with its product inside the Apple store.

By making a product itself, Microsoft can sink or swim on its own designs and not be left to the creative whims of HP, Dell, Lenovo or Acer. By creating its own tablet and smartphone Microsoft regains a certain amount of control. This is a big change for Microsoft and it would also mean a lot of stress for channel partners.

Enderle made an excellent parallel to IBM. Today, more of IBM’s revenues come from services than actual hardware. The market place maybe questioning the identity of Microsoft, but if they do release a smartphone product as the BGR report states it may lead to a full-blown identity crisis.

You can read the entire BGR story here.

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Jim Love, Chief Content Officer, IT World Canada

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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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