According to the Wall Street Journal and its anonymous sources, Microsoft appears to be designing its own phone. Asian component suppliers have been asked to test the design, although it is unknown when and even if the device will begin mass production.
In recent interviews, Microsoft CEO Steve Ballmer declined to answer questions regarding a Microsoft phone. "Whether we had a plan to do something different or we didn't have a plan I wouldn't comment in any dimension." Ballmer told the Journal. The CEO has been spending a great deal of time in the spotlight in recent times, thanks to the company's multi-pronged launch of Windows Phone 8, Windows 8, Office RT and Surface.
Although this remains only a rumor, Microsoft developing their own WP8 smartphone doesn't seem far-fetched. We've seen the company try this approach already with Surface -- a Microsoft-designed tablet built around its Windows 8 and RT operating systems. Apple, particularly with its iPhones and iPads, may be the poster child of this type of vertical integration and it has proved highly successful for the company.
Unfortunately, Surface has elicited sharp criticism from partners like Acer, who accuse Microsoft of undercutting their business. Because Microsoft can offer its own software (i.e. Windows, Office) at little to no cost, the company has a distinct cost advantage.
This rumored device wouldn't technically be the first phone the company has produced, either. The Microsoft Kin -- a phone which launched just a few years ago -- was the software maker's first attempt at a smartphone. However, due to underwhelming domestic interest, the company promptly canned the product before it saw its International release. The cancellation came just 48 days after its initial launch, even earning itself a mention (but not a place) on our list of the biggest tech failures of the last 10+ years.