Microsoft Tests Smartphone With Asia Suppliers
TAIPEI—Microsoft Corp. is working with component suppliers in Asia to test its own smartphone design, people familiar with the situation said, suggesting the computer-software giant is increasingly adopting a variation of a business model favored …
Context & Ripple Effects
The report lands four days after Microsoft formally introduced new smartphones running a revamped version of its mobile operating system at its late-October event, and two weeks before its high-stakes trial against Google's Motorola Mobility unit was set to begin. It also revives a familiar thread: the company ran an earlier phone experiment back in 2010, and the claim here is unconfirmed — sourced to people familiar with the situation rather than the company.
What makes the timing pointed is the pattern around it. Amazon was reported over the summer to be testing its own smartphone, and Apple's suppliers were reported in February to be testing a smaller-screen tablet on Apple's behalf. The pickup was broad — eight outlets from Bloomberg to TechCrunch carried the story within a day — reflecting how sensitive the question is for every Windows Phone licensee.
First-order effects
- Hardware partners who launched Windows Phone 8 devices on October 30 — HTC among them, which has studied building its own software since 2010 — now face the possibility that their operating-system supplier becomes a competing handset maker.
- Asian component suppliers gain a potential new design win with one of the largest software companies, but only if the rumored project survives testing.
Second-order effects
- If Microsoft moves from testing to shipping its own design, it would follow the same vertical playbook as Amazon and Apple, forcing licensees to weigh how much of their roadmap to stake on a partner that may compete with them directly.
- Component vendors would face a pricing and allocation shift as platform owners' in-house designs begin competing for the same supply chain capacity as their licensees' phones.
Third-order effects
- Google and Microsoft historically sat back while hardware partners used their software to make tablets and phones; if both keep drifting toward first-party hardware, the pure licensing model that defined the PC era gives way to integrated hardware-software platforms across the industry.
- Regulatory and antitrust scrutiny of platform owners competing with their own licensees becomes more likely as that integration deepens, though no such action is on the table as of this reporting.
The trend: Software platform owners are steadily absorbing hardware design into their own operations, converting licensee ecosystems into vertically integrated ones.