Will Microsoft build its own Windows phone?

Rumors continue to percolate about the arrival of a Windows Phone 8 device built by Microsoft. And that would probably make Nokia very unhappy indeed. 

Attendees are shown during the launch of Windows Phone 8 in San Francisco in October.

Last year, Nokia and Microsoft entered into what seemed like a mutually beneficial partnership: Nokia would make the phones and Microsoft would make the software. The results, including a couple of Windows Phone 8 devices, have not broken any sales records, but they have received high marks from critics. Still, rumors continue to percolate that Microsoft will eventually decide to make both the hardware and the software for its smartphones. 

And why not? It's done something similar in the past – the Xbox 360, anyone? – and it's doing something similar right now, with the Surface tablet, a device manufactured, powered by, and sold by Microsoft. The latest snippet of gossip comes from The Wall Street Journal, which reports that Microsoft is currently "working with component suppliers in Asia to test its own smartphone design." The "Apple model," the Journal calls it.

Is the report accurate? Well, Microsoft has remained pretty coy about the whole thing. 

"We're quite happy this holiday [season] going to market hard with Nokia, Samsung, and HTC," Microsoft chief executive Steve Ballmer recently told the Journal, referring to three companies that builds Windows Phone 8 handsets. "Whether we had a plan to do something different or we didn't have a plan I wouldn't comment in any dimension."

We're going to go out on a limb here and suggest that if Microsoft did make its own line of smartphones, Nokia, Samsung, and HTC wouldn't be particularly happy. And so obviously Microsoft doesn't have much incentive to start talking about hardware opportunities.

But we believe it's likely that Microsoft is doing exactly what the Journal suggests – laying the groundwork for a phone of its own. 

After all, a pure Microsoft phone would offer the company full control over every aspect of the device – probably an alluring possibility for the tech giant. 

But over at the Register, Gavin Clarke sounds a note of caution. 

"Such a move will come [as] huge loss to the company, because Microsoft will need to absorb the licensing it would have charged others," Clarke writes. "The Windows Phone unit is already one of Microsoft’s most anaemic business units. It is unlikely that Microsoft will able able to bag top spot or even second place [in the smartphone market], though it might have done if it had more partners. However, breaking out and making its own phone is almost certainly Microsoft’s best option for coming third."

For more tech news, follow us on Twitter @venturenaut.

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