Microsoft Shoots Down Smartphone Rumors

A fed-up Microsoft this week made its plans for a Microsoft-branded smartphone abundantly clear: There isn't going to be one.

Rumors of Microsoft making its own smartphone have swirled for more than a year and have been further fueled by Microsoft continuing to invest and update its Windows Mobile operating system, which is used on partner vendors' hardware. But that's where it ends, so says Microsoft.

The speculation reached its crescendo Thursday, when Broadpoint AmTech analysts Rob Sanderson and Mark McKechnie threw gasoline on the fire in a research report that said "multiple industry sources" have clued them in that Microsoft is gearing up to launch its own smartphone come the second half of this year.

This time, however, Microsoft nipped the rumors in the bud, with a spokesperson telling The Wall Street Journal plain and simple: "Microsoft is not doing a phone."

While Microsoft is never one to purposely volunteer information on its planned product road map and a company known for its secrecy, it wouldn't be a surprise that the software giant would keep out of the smartphone game, where competition is stiff and everyone is jockeying for a piece of the pie. Also, Microsoft's emphatic denial of a planned smartphone goes against its usual tactic of refusing to confirm or deny industry speculation.

Still, the rumor will likely persist as mobility watchdogs look for the next big development in the smartphone market. And Microsoft is never one to back down from competition, especially to the likes of the Apple iPhone and Google, its chief rival and maker of the Google Android open-source mobile operating system.

"We find Microsoft's strategy as a bit puzzling --- may be frustration that the Windows Mobile product is not getting the mind-share [and] market share with [BlackBerry-maker] RIM, Apple and even Google Android stealing the thunder," the pair of analysts wrote in their research note.

Perhaps Microsoft did have a smartphone strategy in play, but abandoned it after seeing how the Zune portable music player crashed and burned compared to the Apple iPod. The Zune fiasco could have forced Microsoft to be content providing the software for smartphones instead of building one on its own.

Smartphone or no smartphone, Microsoft CEO Steve Ballmer is set to take the stage at the Mobile World Congress in Barcelona this month to talk about Microsoft's mobility strategy. It's unlikely that Ballmer will pull the curtain off of a smartphone, but he may announce updates to Windows Mobile.

But if by some chance Microsoft does announce a smartphone at Mobile World Congress, it will be in elite company, with a host of other unconventional mobile device manufacturers like Acer, Dell, Garmin-Asus and Toshiba planning to launch new devices at the event.

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