Microsoft 'testing' own smartphone in Asia: report

Microsoft is reportedly "testing" its own-branded smartphone with Asia component suppliers, according to sources speaking to The Wall Street Journal, suggesting a further push by the software giant into the hardware market.

"Officials" at some of Microsoft's component suppliers said Microsoft is "testing a smartphone design," but "isn't sure if a product will go into mass production." The sources say the device measures between four- and five-inches -- a display size-range comparable to the 4-inch display Apple iPhone, and the 4.8-inch display Samsung Galaxy S III.

It's the rumor that just won't die.

Last week, Microsoft chief executive Steve Ballmer left the door open on the potential for Microsoft to make more hardware, possibly a smartphone, and maybe even a smaller 'mini' Surface to help compete in the 7-inch market.

He said:

We have committed ourselves on a path where we will do whatever is required from both a hardware and a software perspective -- and the cloud innovation perspective -- in order to propel the kind of vision that [Microsoft] has.

But Microsoft still has strong ties with Nokia with the Lumia smartphone range, in spite of Nokia's crumbling financial situation. In October, the Finnish phone maker saw a Q3 loss of $754 with net sales down by 19 percent on the previous quarter, and the company is burning through its cash by $450 million a quarter.

That said, Nokia isn't the only phone maker Microsoft is saddling up to. HTC and Samsung, to name two, are also purveyors of Windows Phone-powered smartphones, and the software giant's ties to its remaining partners shows that Microsoft is not putting all of its eggs in one Finnish basket. 

ZDNet's Mary Jo Foley went with similar sentiments: "Leaving the door open with evasive non-answers is likely to hurt Microsoft's premier Windows Phone partner Nokia," she said. Of all reasons for Microsoft to develop a smartphone: "Nokia's fiscal health would be a far more believable reason, in my opinion."

Microsoft keeps dropping hints that it may (or is) developing a smartphone. The business implications are interesting. Microsoft's venture into own-branded tablet computers sufficiently riled some of its PC makers, notably Acer, whose chief executive warned the software giant to "think twice." By heading down a similar route in the smartphone space may open Microsoft up to more partner attacks -- in spite of how "laughable" they were -- but also damage existing relationships with hardware makers.

Windows Phone currently has 3.6 percent of the market, according to comScore figures, compared to Android's 52.6 percent and Apple iOS' 34.3 percent.

Microsoft still has a way to catch up, and it's not widely believed that a range of own-branded phones will make much of a difference. After all, the Lumia line-up and bevy of other Windows Phone-powered handsets hasn't done much good.

ZDNet has put questions out to Microsoft, but did not respond outside U.S. business hours.

Image credit: James Martin/CNET.