Rumors of a Surface phone are percolating again following a report from Windows Central that Microsoft will launch a premium handset under the brand in the second half of 2016.
The site reported that Microsoft's Surface team has scrapped plans to launch an Intel-powered Windows 10 phone in May 2016, opting instead to develop a flagship device that will come to market later in the year. The team is reportedly led by Panos Panay and is the same group responsible for the Microsoft Surface and Surface Book.
Intel is working with Microsoft on the project, according to Windows Central, but very few other details were reported. "The most obvious question is whether this will be the shoot-to-the-moon Surface phone that has been alleged ever since the first Surface tablet was announced years ago," Windows Central's Daniel Rubino wrote. "Unfortunately, details of what exactly this device is remain unknown."
Rubino notes, however, that Panay wasn't given the helm at Microsoft's devices group until late July 2015, after Stephen Elop's team was let go. Elop was the chief of Nokia's phone business and helped guide Microsoft's acquisition of the business. So the development of a Surface phone may indicate Microsoft is "sweeping out a lot of the old Nokia designs, people and strategy for something new."
Microsoft's handset business is clearly in need of something new, of course. Microsoft spent approximately $7.9 billion to acquire Nokia in a deal that was finalized in April 2014, then took a $7.6 billion impairment charge related to the acquisition in July 2015. Meanwhile, Windows' share of the worldwide smartphone market fell to 1.7 percent in the third quarter of 2015, down from 3 percent during the same period in 2014, according to research firm Gartner.
- see this Windows Central article
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