RUMOR: Microsoft Will Release Its Own Smartphone - Business ...

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Microsoft CEO Steve Ballmer

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Microsoft is going to dive back into the smartphone market with its own home-built phone, Zach Epstein at BGR reports.

The Microsoft-built smartphone will be released in the coming months, according to Epstein, though he doesn't have a specific date.

This is one of those stories that has long been rumored. It makes sense and it doesn't make sense. We'll dig into both angles below, but first a word about the source of this rumor.

BGR is a great tech blog that covers the industry well. However, it has a mixed track record when it comes to breaking news. For instance, before the iPhone 4S launched, it said, "Sprint will be getting the iPhone 5 ? yes the real iPhone 5, not the iPhone 4S ? as an exclusive. And it will be a 4G WiMAX device." That didn't happen. It also said the iPhone 5 would have NFC. It didn't. (Maybe it's just getting bad information on Apple?)

Because of BGR's mixed record, we're hesitant to fully believe Microsoft is all systems go with its own phone. That said, the China Times also reported Microsoft is working on its own phone. Plus, it's not a completely off-the-wall idea.

Why would Microsoft do its own phone? Its business model doesn't translate to smartphones, so it needs to figure out a new way to make money in mobile. Traditionally, Microsoft makes Windows, then sells licenses of the software to computer companies ~$50 per device. In mobile, it charges a smaller fee. So it won't make as much money. Apple is making insane profits selling phones, so Microsoft might want to try that business model on for size.

Aside from the business model, Microsoft might want to control its own destiny, not letting companies like Nokia, HTC, and Samsung make and market Windows phones. HTC and Samsung are more focused on Android than Windows Phone.

However, Nokia is all-in on Windows Phone, and that's why ultimately it doesn't make sense for Microsoft to do its own phone.

Microsoft is building the Surface tablet because companies like HP and Dell aren't committing their resources to building great tablets. Microsoft had to build the Surface because Apple was running away with the market selling a high-end tablet that PC manufacturers couldn't compete with.

In the smartphone market, Nokia has delivered critically acclaimed smartphones with state of the art technology, premium parts, and high-end design. Nokia is betting the company on its Windows-based smartphones. If its Windows-phones flop, then Nokia is toast. If HP or Dell make bad tablets, then they don't go out of business, at least not right away.

Therefore, Microsoft launching its own phone is not comparable to launching its own tablet.

Other than trying on a new business model, the only real reason we can think for Microsoft to make its own phone is that it either thinks Nokia is going out of business, or it really doesn't like the Lumia.

Source: http://www.businessinsider.com/rumor-microsoft-will-release-its-own-smartphone-2012-10

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