SEATTLE (Reuters) - Microsoft Corp is looking at making its own smartphone to kickstart sales of its Windows mobile software, according to a Wall Street analyst who has followed the company for many years.
The talk - unconfirmed by Microsoft - comes a day after the company unveiled its latest Windows Phone 8 software, and the same week it announced an own-brand tablet, signaling a break with 37 years of focusing on software and leaving hardware manufacturing to its partners.
"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.
Microsoft did not confirm or deny the speculation. A spokesman said the company was a "big believer in our hardware partners and together we're focused on bringing Windows Phone 8 to market this year."
Windows Phone 8 is the latest version of Microsoft's mobile software, set for release in autumn. So far, the software giant has struggled to make a mark, with Windows-powered smartphones taking only 2 percent of a worldwide market dominated by Apple Inc's iPhone and devices running Google Inc's Android system.
Microsoft built its business on creating software to be used on other companies' hardware, but the success of Apple's iPhone and iPad have demonstrated that making both and integrating the two smoothly has its benefits.
Microsoft charted a new course this week by announcing two own-branded tablet PCs, although doubts remain whether that was a move to invigorate hardware makers or a genuine attempt to compete with its partners.
A similar move in phones could make sense, and the company has little to lose by trying its own handset, said another analyst, considering the strategic importance of smartphones and poor sales of Windows phones.
"Microsoft can't afford not to have phones sell. They have to find a way of selling it," said Sid Parakh, an analyst at fund firm McAdams Wright Ragen. "It's a significant piece of their long-term vision of integrated devices."
If Microsoft did make its own phone, it would be a blow for struggling Finnish handset maker Nokia, which pledged to use Windows software in its smartphones under a multi-billion dollar pact last year. If Microsoft wanted to be in the handset business, it might even consider buying Nokia, suggested Parakh, although he said that was unlikely.
Such a move would also bring Microsoft into competition with Samsung Electronics, HTC Corp and Huawei, which are slated to bring out new Windows phones later this year.
Microsoft has experimented unsuccessfully with handsets before. It bought fashionable phone designer Danger and developed a phone in-house called Kin, which was pulled off the market months after launch in 2010.
(Reporting By Bill Rigby; editing by Carol Bishopric)
Typing on tablet computers can be a struggle for those accustomed to PC's physical keyboards. Microsoft Surface offers a solution with a lightweight keyboard attachment that clicks into place and doubles as a cover for the device. <a href="http://www.microsoft.com/en-us/news/press/2012/jun12/06-18announce.aspx" target="_hplink">According to a Microsoft press release</a>, the 3mm detachable Touch Cover unfolds into a "unique pressure-sensitive" keypad that offers an alternative to the device's on-screen virtual keyboard. For those who crave the feel of physical keys, a 5mm-thin version, called the Type Cover, features moving keys and a <a href="http://www.wired.com/gadgetlab/2012/06/microsoft-dives-head-first-into-mobile-hardware-with-a-pair-of-10-6-inch-tablets/" target="_hplink">multi-touch track pad</a>.
Options For Casual And Power Users
Before picking up a Surface tablet, potential buyers should <a href="http://www.microsoft.com/global/surface/en/us/renderingassets/surfacespecsheet.pdf" target="_hplink">consider which version best fits their needs</a>: The Windows RT version, a more traditional tablet that's slim and light and performs basic tasks -- with a presumably iPad-like price tag; or the Windows 8 Pro configuration, a slightly beefier and slightly pricier tablet that's more closely related to a laptop and capable of running heavy-duty software. <br></br> <a href="http://www.microsoft.com/global/surface/en/us/renderingassets/surfacespecsheet.pdf" target="_hplink">Surface tablets running Windows RT</a> are built around an ARM processor. <a href="http://money.cnn.com/2012/03/09/technology/arm-ipad-intel/index.htm" target="_hplink">According to CNN,</a> chipsets made by ARM are found in 95 percent of other mobile devices, including the iPad. <a href="http://www.microsoft.com/global/surface/en/us/renderingassets/surfacespecsheet.pdf" target="_hplink">Windows 8 Pro models</a> are built around an Intel chip and will run applications that one would expect to find on traditional laptops: <a href="http://www.pcworld.com/article/257840/microsoft_announces_surface_tablet_pc.html" target="_hplink">Photoshop, Word, and Excel.</a> <br></br> "Those looking for a complete Windows experience in the form of a tablet will obviously need to pony up for the Windows 8 Pro model," <a href="http://www.engadget.com/2012/06/18/microsoft-surface-tablets-the-differences-between-rt-and-window/" target="_hplink"> Engadget writes.</a>
Microsoft is keen on packing convenience into its new devices. Each Surface comes with a built-in kickstand that pops out from the back panel and props the device at an angle, letting the user enjoy media or type comfortably on a flat surface. "No extra weight, no extra thickness, no separate add-on. It's integrated, just like the software and hardware are integrated into Surface," said Windows and Windows Live president Steven Sinofsky, <a href="http://www.youtube.com/watch?v=jozTK-MqEXQ" target="_hplink">per the Verge's video of the Surface unveiling</a>.
Digital Ink And Stylus
Microsoft designed the <a href="http://www.microsoft.com/global/surface/en/us/renderingassets/surfacespecsheet.pdf" target="_hplink">Windows 8 Pro version</a> of the Surface tablet to accept stylus input. The company's demonstration of how the digital ink works gave the impression that writing, highlighting and underlining on the tablet is easy. <a href="http://www.slashgear.com/microsoft-surface-to-feature-digital-ink-stylus-support-18234493/" target="_hplink">Writes SlashGear</a>, "The distance between the screen (digitizer) and the stylus is only .7mm thick, and allows for it to be highly accurate, making you feel like the ballpoint of a pen is actually writing on the 'surface.'"
Both the RT and Win 8 Pro versions of Surface will run the Microsoft Office productivity suite, though the Windows RT version <a href="http://www.pcworld.com/article/257840/microsoft_announces_surface_tablet_pc.html" target="_hplink">will get a mobile-optimized app</a>, instead of the full program. Meanwhile, iPad owners must settle for <a href="http://www.engadget.com/2012/06/05/nyt-office-for-ipad-is-still-on/" target="_hplink">speculation of the long-rumored native iOS Office app.</a>.
Plenty of people weren't happy when the iPad launched <a href="http://store.apple.com/us/question/answers/ipad?tqid=QJ9CA7CXXFHDFUUU7PT47A24U4YAUH79K" target="_hplink">without USB ports back in 2010.</a> Microsoft seems to have taken that to heart. The <a href="http://www.microsoft.com/global/surface/en/us/renderingassets/surfacespecsheet.pdf" target="_hplink">width of the Surface</a> offers just enough space for a traditional USB. Both the RT and the Windows 8 Pro versions of Surface boast two USB ports. "These ports open up the possibility of extra storage, printing and other external capabilities that should be easier and quicker than the workarounds iPad users need involving cloud storage, Wi-Fi connections and the like," <a href="http://www.cnn.com/2012/06/19/tech/microsoft-surface-ipad/index.html" target="_hplink">CNN reports.</a>
An Angled Approach
Just like the iPad, the Surface tablet includes <a href="http://www.microsoft.com/hardware/en-us/webcams" target="_hplink">two built-in webcams</a> for snapping pictures or video chatting. The Surface's kickstand, however, angles the device at 22 degrees, pointing the front-facing camera up at the user's face. <a href="http://www.microsoft.com/surface/en/us/about.aspx" target="_hplink">Microsoft set the rear-facing camera into the device at 22 degrees</a>, so that the user's not shooting down at the table when filming a subject.