In what shouldn't come as a massive surprise, Microsoft is indeed working on a Surface Phone, and it's set to come out in the second half of 2016, at least if a detailed report from Windows Central is to be believed.
The report starts by saying that a metal-bodied phone developed by Microsoft and with Intel inside has allegedly been canceled. The device was expected to be released around May 2016, and appeared to be a carryover project from Nokia, but due to issues it will not be seeing the light of day.
However, the cancelation of the aforementioned smartphone has meant that the Surface team, headed by Panos Panay, has the green light to develop a flagship Surface Phone. The project is still in its early days, and Microsoft is experimenting with a bunch of hardware options, but it appears as though a Surface Phone is actually happening.
According to Windows Central's information, Intel is still working with Microsoft on this project, and that could be to develop an x86-based SoC to power the handset. This could potentially give the Surface Phone the ability to run desktop x86 apps through Continuum, although this feature hasn't been confirmed.
As the Surface Phone is still in the early stages of development, it will be a while before it's released. The report suggests Microsoft may release the device alongside the next major Windows update, Redstone, sometime around August 2016. While this date isn't exact, the phone is expected to come out in the second half of next year.
The Surface Phone could be just what Microsoft needs to breathe some fresh air into Windows 10 Mobile. While the device is still quite some time away, and pretty much every aspect of it is still up in the air, if the Surface Phone is anything like the recent tablets and hybrids from the company, it'll be a pretty compelling product when it's released.