Many bloggers and journalists have been speculating about the production of a Microsoft branded smartphone for some time. There are always such rumours. But this one has been boosted with the publication of an article in Taiwan’s China Times which says “it is understood” that Microsoft s developing its own smartphone and has selected Taiwanese company Pegatron and other unnamed companies as “assembly partners”.
They are assembly partners because Microsoft will not actually physically make the phone, just as Apple doesn’t physically make the iPhone. Virtually all the world’s electronics come out of factories in southern China and Taiwan. Conditions in these factories allow for very low costs of production, as highlighted from time to time with unrest among such subcontractors as China’s Qualcomm. It is an enormous industry.
A Microsoft branded phone would see the company attempt to emulate Apple’s complete ecosystem, in which it owns the design, manufacturing, and operating system, and controls apps and distribution. Microsoft can hardly be unaware of the success this business model has brought Apple. It is also the direction in which Google and Amazon are moving.
Microsoft has form in this area, with the Xbox and its ill-fated Zune music player (a word that doesn’t even appear in Microsoft Word’s dictionary – it is being airbrushed from history). It also briefly had a Microsoft branded phone called the Kin, which never came to Australia and which fortunately no-one remembers. And Microsoft branded Surface tablets will also be available real soon now. It is likely any Microsoft smartphone will carry the Surface model name.
The China Times article says the Microsoft Surface Windows 8 smart phone (let’s call it that) will be released “in the first half of next year”. Any such phone will compete directly against devices from announced Windows Phone partners like HTC, Nokia, Samsung and Dell. They may not be happy, but what can they do? With the exception of Samsung, they need Microsoft more than Microsoft needs them.
The IT industry is always awash with rumours and speculation. This one has legs. Apart from the fact that the journo in Taipei seems to be in the know (maybe his uncle is an assembly line procurement manager or something), it's just logical. "Follow the money".