A Microsoft Surface Smartphone - What are the Odds?

Here is the answer to the question: It depends.

The Wall Street Journal had a story today on the realities of a Microsoft smartphone – one laced with innuendo, off the record voices that decline to be identified, and so on. These voices do apparently come from Asia, where most of the early iPhone and iPad leaks have tended to come from. So other than for sheer headline value, is there anything actually in this story to suggest we may see such a beast?

Steve Ballmer of course refused to provide any hints in either direction during a recent interview, leaving a lingering “maybe yes, maybe no” in the air – as any good CEO would do. As we noted in our Windows Phone 8 launch article earlier this week, there was absolutely no hint what so ever from Microsoft that any such thing is under consideration. Last week, during Microsoft’s Windows 8 and Surface RT launch events no such thing was hinted there either.

Interestingly, a Microsoft Surface Smartphone coming together would require what we consider two of Microsoft’s brighter talents coming together – Joe Belfiore, who we like to refer to as the godfather of all things Windows Phone, and Panos Panay, the man behind the Surface machines. Both of these guys are able to inject the right collections of critical technical and business elements into their thinking (as well as a hugely refreshing lack of typical Microsoft hubris and arrogance) – which in turn have produced exactly the kinds of products Microsoft needs to have in place to finally deliver on what has proven to be highly elusive success on the mobile front.

What this means is that we would be thrilled to see a Microsoft Surface smartphone! We can anticipate a cool, thin, lightweight piece of VaporMg-encased hardware using the latest processor technology, likely with the same four inch, 16:9 aspect ratio screen size of the iPhone 5, possibly running some interesting WP8 enhancements ahead of the curve from the rest of the industry. Certainly we would also be able to tie the Xbox team into this as well in terms of future cutting edge capabilities, although of course Xbox is already tied into Win 8 and WP8. What’s not to like?

Here’s the first thing we can assume: Yes, Microsoft is working on such a device with Asian-based vendors, if for no other reason than to keep its smartphone hardware partners on their toes. It would likely look as follows:

OK, perhaps that is cheating – but we are 100 percent sure of this UI look! Here is another look, courtesy of techeblog.com:

The images above are based on the Surface tablet, and there is no reason to think that an actual Surface smartphone may not look like this. It strikes us as a cross between an iPhone 5 and a Motorola Droid. At the very least it needs to come very close to delivering on the iPhone 5’s weight and thinness level, and perhaps it might even sport some sort of Nokia Pureview camera technology (not that Nokia would share such a thing willingly – but Nokia needs a great deal of cash, so who knows?).

Here is the second thing we can assume: Unlike with the Surface tablets - which certainly test the mettle of Microsoft’s PC hardware partners but which do not in any way put undue strain on those partners’ businesses or survival (think of it more as a gentle kick in the butt), a Microsoft Surface smartphone would likely prove harmful – potentially very harmful - to Nokia and HTC sales. Nokia and HTC are in very fragile stages of their business lives, and Microsoft cannot afford to put in play any hardware that would push either of them over the cliff. Yet.

Steve Ballmer was very careful to note that he and Microsoft are exceedingly happy with the products that Nokia, HTC and Samsung are putting into the market over the next few months. They are all solid devices (our own opinion is that Nokia’s Lumia 920 is the best of them), and they will all play as part of the 2012 holiday season. This moment in time represents the very first time that Microsoft has been able to build real momentum with a fully realized smartphone OS and a solid lineup of hardware exactly at the right time to hit the holiday buying season in full stride.

Needless to say, what Microsoft dearly wants is huge, game-changing smartphone sales numbers. And this brings us back to the original answer we provided at the head of this article to the headline question. If Nokia, HTC and Samsung deliver on amazing sales (or some number that comes close to game-changing or momentum-shifting), the odds of Microsoft bringing its own phone out next year will drop significantly. It would confuse the WP8 market to do so under those circumstances.

Some might argue that this would be a good reason for Microsoft to sell its own smartphone – why not take that page out of Apple’s playbook? We’ll see how Google does with its tablet and how Google-Motorola does on sales over the holiday season – and then return to the question.

That said, should sales of WP8 devices falter during the holiday season then all bets will be off, Microsoft’s gloves will come off and we can absolutely expect to see a Microsoft Surface smartphone quickly appear. At that point neither Nokia nor HTC would matter any longer.

So the bottom line is that Microsoft’s smartphone hardware partners truly need to deliver over the next three months. That includes Samsung, which we doubt will do well in the United States with WP8 but which will very likely do exceedingly well in other global regions.

How important are WP8 sales to all parties during the 2012 holiday season? Let’s visually put it this way – coming in with game-changing numbers would be worthy of, say, winning Kanye West’s fully gold-plated Lamborghini Aventador (aka “Project Au79”):

Pretty damn nice!

Failing to do so? Do you recall the memorable scene from the movie Glengarry Glen Ross, when a much younger Alec Baldwin noted that coming in second place on sales would be worthy of winning the following:

That’s what the odds come down to for a Microsoft Surface smartphone: it depends…on whether 2012 holiday sales deliver a gold plated Lamborghini or steak knives.