Microsoft mulls building its own Windows Phones

Redmond would be competing directly with partners

Microsoft (NASDAQ: MSFT) is considering building its own Windows Phone 8 smartphones, which would directly compete with its handset partners Nokia (NYSE: NOK), Samsung and HTC, according to a report by The Wall Street Journal.

The report said that Microsoft is working with Asian component suppliers to test its own smartphone design, according to sources consulted by the Journal.

Steve Ballmer, Microsoft's chief executive officer, declined to comment about the reports to the WSJ. "We're quite happy this holiday [season] going to market hard with Nokia, Samsung and HTC. Whether we had a plan to do something different or we didn't have a plan, I wouldn't comment in any dimension," he said.

Should these reports prove to be true, it would mark a significant departure for Microsoft, which has been content to design the operating systems and applications for computers and smartphones, and let other companies make the hardware. Rival Apple (NASDAQ: AAPL) makes both the hardware and software for its computers, smartphones and tablets.

Microsoft just unveiled its Windows Phone 8 last week. The company is hoping that the new mobile operating system will spur sales of the devices both among consumers and employees, who bring their devices to work.

Making its own phone would put Microsoft head to head against Samsung and Nokia, which are the top device makers controlling 41.5 percent of the worldwide market, according to the latest stats from Gartner. This is a tall order for a company that does not have a device manufacturing track record.  

Microsoft could leverage its dominance in the PC enterprise market to convince corporate customers to buy the complete package: handset and OS. Microsoft no doubt wants to replicate Apple's success in the mobile device enterprise market. Whether it will succeed remains to be seen.

For more:
- see the WSJ article
- check out Gartner's stats

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