Hot off the heels of its Surface tablet announcement is word that Microsoft is thinking about building its own flagship Windows Phone 8 smartphone to directly compete against the iPhones and Androids out there.
Up until now, Microsoft has licensed its Windows Phone OS out to phone makers who would build the hardware. Aside from its partnership with Nokia and its Lumia smartphones, Windows Phone 7 has been a huge flop. It's a well-designed OS, but it just has no pull to it.
But now with Microsoft joining the hardware game with the Surface tablet, it makes sense for Microsoft to consider building a Windows Phone 8 smartphone that marries software and hardware to create one super phone.
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According to Nomura analyst Rick Sherlund who has followed Microsoft for years:
"Our industry sources tell us that Microsoft may be working with a contract manufacturer to develop their own handset for Windows Phone 8," wrote Nomura analyst Rick Sherlund in a note to clients on Thursday.
"It is unclear to us whether this would be a reference platform or whether this may be a go-to market Microsoft-branded handset," wrote Sherlund, who covered Microsoft for Goldman Sachs when the bank brought Microsoft public in 1986.
The timing couldn't be better. Microsoft's hardware partners have repeatedly failed to showcase why Windows Phone is special; why anybody should pick it over iOS or Android. It's time the Redmond-based company takes the lead.
We've highlighted the best of Windows Phone 8 from yesterday's announcement and from the sound of it, Microsoft's next OS seems to be ready to party with the big boys.
Of course, we've all been duped by rumors before, and again, Nokia is the frontrunner and unofficial face of Windows Phone hardware. Why would Microsoft jeopardize its partnerships? Perhaps, for the same reason why it's building its own tablet: to show everybody else how a proper mobile Windows device should be done.