If Microsoft really is considering its own “Surface” smartphone, the business decision would be a callous, cold-hearted one that could alienate future partners and leave just two other manufacturers of Windows Phones. But as history has shown, this kind of bold move could pay off.
Boy Genius Report claimed Tuesday that Microsoft plans to release its own Windows Phone 8 smartphone under the “Surface” name, although the phone’s release wouldn’t come until the second round or so of Windows Phone 8 devices. That report has apparently been confirmed, or at least echoed, by the China Times.
Microsoft's official comment almost seems to indicate that the BGR report is on target. A company spokeswoman didn't deny the accuracy of the report, but underscored Microsoft's commitment to its partners. “We are big believers in our hardware partners and together we’re focused on bringing Windows Phone 8 to market with them,” she said.
Just for the record, I suspect Microsoft has indeed designed its own smartphone as a back-room project, although it's probably using an Asian contract manufacturer for a prototype. BGR’s report seems reasonable, although the company would risk severe consequences if it did release a phone: the loss of Samsung.
Just Do It, Microsoft!
But just because Microsoft could build its own smartphone, does that mean it should? Speaking as a consumer, absolutely.
No one believes in the value of a platform or product more than the company that designed it; my brief hands-on time with the Surface convinced me of that. Microsoft has the engineering knowhow to bring a Surface phone to market, especially if it can sit back and learn from the mistakes of its partners. But the effort would also take hundreds of millions of dollars at the very least, and a commitment to the platform all the way up to Steve Ballmer himself. I think that commitment is there.
Microsoft hasn’t always succeeded. The company launched the Zune, a dedicated MP3 player to compete with the iPod, just months before Apple convinced the world that its iPhone could play music just fine, too. But the Zune failed because the market left it behind, not because it didn't offer world-class industrial design. Microsoft has shown a commitment to quality on the hardware front, and a polished, poised and publicized Windows Surface Phone could elevate the platform to the upper echelons of smartphone society.
Unfortunately, Microsoft has also tried a smartphone before: the Kin, which debuted in two models in 2010. Microsoft took the Danger smartphone it acquired, slapped the Windows Phone operating system on top of it, asked Sharp to build it, and hoped consumers would buy it. They didn't, although Verizon was assigned some of the blame. Some key features of the Kin now appear in Windows Phone: cloud storage, for example, and the prominent social connections that the Kin called the Loop.
Anaysts Don't Agree
Analyst Carolina Milanesi of Gartner said that she believes there's no reason for Microsoft to debut another smartphone itself when its partners could fill the bill.
"This seems to be a recurrent rumor started after the [Surface] tablet was announced," Milanesi wrote in an email. "I still do not believe that Microsoft needs to have a phone when it can get Nokia and now HTC and Samsung to deliver. In the tablet space Microsoft had to show vendors the kind of tablet they feel better fits the Windows UI. I do not see what Microsoft would gain or be able to deliver through their own phone that they cannot do with their partners. The last time they tried to make a phone it did not last a quarter in the market; since then, the competitive environment has got worse, not better."
Still, you could make the same argument about Google, which now releases its own co-developed "Nexus" line of phones and tablets for its own premium experience.
What If Microsoft Did Release Its Own Surface Smartphone?
The delay in a Microsoft “Surface” phone would presumably allow Nokia - whose chief executive, former Microsoft employee Stephen Elop, has bet the company’s future on Windows Phone - breathing room to establish its own Windows Phone 8 phones, alongside Samsung and HTC. The three primary Windows 8 phones at launch are expected to be the HTC One X+, the Nokia Lumia 920 and the Samsung ATIV S.
By now, most smartphone aficionados know where Microsoft stands in the smartphone opearating system hierarchy: well down the list. In fact, Gartner’s worldwide smartphone report for August places Microsoft’s market share at just 2.8%. That’s just a hair behind the Bada OS, a mobile phone operating system that few have actually heard of, let alone use. Google's Android controls 64.1% of the market, followed by Apple’s iOS (18.8%), Symbian (5.9%) and RIM's Blackberry (5.2%).
Samsung, for its part, is the world’s largest smartphone manufacturer, with 21.3% of the market, up from 21.6% the year before. Nokia is second, with 19.9% of the market; HTC is eighth, with just 2.2%.
Shaking Up The Smartphone Market
So far, Samsung has remained a staunch Google partner: its Galaxy S III tops sales charts of Android phones, and it manufactures Chromebooks and Chromeboxes using Google's Chrome operating system. Samsung's sales volume commands gives it clout that both Nokia and HTC sorely lack. Nokia, of course, has basically bet the farm on Windows Phone 8. HTC, once a darling of the Android market, has fallen back into the pack of “me-too” Android phones, and needs something to differentiate it. Betting on Microsoft and Windows Phone seems their best course of action, no matter what Microsoft decides to do.
Basically, Nokia and HTC need Microsoft more than it needs them. And that’s been the relationship Microsoft has long enjoyed with most of its hardware makers, at least in the PC space.
The threat, of course, is the Xbox. Microsoft launched the console in 2001, disrupting the Nintendo-Sony-Sega hegemony, and for the past year has outsold all other game consoles in the U.S. Granted, Microsoft didn’t have any partners to irritate with the Xbox. But the company successfully built a mass-market hardware product, developed Xbox into a product and brand, committed to it, and grew it into a platform that has attracted its own products and services. That seems to be the same strategy that Microsoft has adopted for Windows Phone 8. If the partners can’t do it, the argument goes, Microsoft will.
its tablet, Surface. Surprisingly, that approach may not be causing insurmountable problems. I didn’t hear a lot of Surface-related reluctance from Microsoft’s tablet partners at the Intel “Clover Trail” launch last week. Granted, there was only about one tablet per manufacturer on display, which one partner said indicates a cautious approach to the market. “It’s fairly easy to bring follow-on products to market, with different feature sets, if the market justifies itself,” a partner representative said then.I suspect that Microsoft feels the same about
I still don't know for sure if Microsoft is really planning on releasing a Windows Phone 8 "Surface" phone. But I'm confident it could create a viable product without seriously alienating partners it can't live without. When you look at it that way, why wouldn't Microsoft make a smartphone?
Lead image source: Nokia.