Nokia acknowledges possibility of Microsoft smartphone as a risk to its business

Alex Wagner
Editorial Director of News and Content from  Omaha, NE
| March 9, 2013

Steve Ballmer Stephen Elop Windows Phone

Last year, Microsoft took the wraps off of the Surface tablets, its own Windows RT and Windows 8-powered slabs that would be released later in 2012. The move surprised many in the tech industry because Microsoft isn't really known for creating hardware like that, opting instead to license out its software for use on devices from other companies. Unsurprisingly, the debut of the Surface tablets have led to rumors that Microsoft could eventually introduce its own Surface smartphones as well. Microsoft has shot down that possibility in the past, saying that it's satisfied with its ecosystem of Windows Phone partners, but it looks like one of those partners feels that a Surface phone is still a possibility. 

In a recent SEC filing, Nokia outlined several risks and uncertainties that its partnership with Microsoft is subject to, saying that they could "significantly impair" its ability to compete in the smartphone market. Some of the risks named by Nokia include an inability to influence Microsoft to introduce Windows Phone features that Nokia feels are important or a decision by Microsoft to reduce its investment in Windows Phone or discontinue it entirely. One of the most interesting risks named by Nokia, though, is when the Finnish firm suggests that Microsoft could make decisions that would be detrimental to Nokia. That includes  the possibility that "Microsoft may broaden its strategy to sell other mobile devices under its own brand, including smartphones." 

Despite the fact that Microsoft has denied the rumors that it's building its own smartphone, sources speaking to The Verge claim that the company is in the "early stages" of prototyping just such a device. Microsoft is reportedly still laying out plans for what the phone could look like, though, and so it's entirely possible that the Redmond firm could ultimately choose not to bring the Surface phone to market.

As we've seen before, just because a company says that it has no plans to bring a particular device to market, that doesn't mean the firm won't change it's mind and launch the very piece of hardware that it shunned. One example of this is Apple. Former Apple CEO Steve Jobs famously said that he didn't like 7-inch tablets because users would need to sand down their fingers to use them, but Apple went on to introduce the iPad mini, which features a 7.9-inch display. That's why it's not a surprise to hear that Microsoft is at least testing its own smartphone. A Surface phone alone likely wouldn't cause a major growth in Windows Phone market share since app selection and ecosystem are still important parts of a platform's success, but it'd be interesting to see what kind of hardware Microsoft would release. Do you think Microsoft should launch its own phone?

Via Nokia SEC filing, The Verge