A Microsoft Smartphone? After Surface Tablet, It Might Just Happen

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NEW YORK (TheStreet) -- After releasing its own branded tablet, Microsoft (MSFT) is now reportedly exploring the possibility of producing a Windows 8 smartphone under its own label.

According to a Wall Street Journal story, the Redmond, Wash.-based company has been working with a number of Asian manufacturers to create prototypes of Windows phone designs under the Microsoft brand, just as it's done with the Surface line of Windows 8 tablets and similar to the way rival Apple (AAPL) successfully markets its wares.

People with knowledge of the situation believe the prototype has a screen somewhere between the size of the Apple iPhone 5's 4-inch screen and the Samsung Galaxy Note II's 5.5-inch display. That spec could also describe most of the new phones currently in the process of being released by Microsoft's partners that run the Windows Phone 8.

For the first time ever, Microsoft's phone operating software is now based on the full-blown Windows OS (NT kernel). It can run only on new hardware. Minimum new-phone specifications include faster Qualcomm (QCOM) S4 Snapdragon processors, 512 MB of RAM, 4 GB of built-in storage and microSD memory card support.

The experts believe Microsoft is far from making a decision on the smartphone. That move would probably not be appreciated by its current hardware partners including Nokia (NOK) (which has bet everything on producing Microsoft-based OS devices), HTC and Samsung, among others.

As you might expect, Microsoft isn't saying much.