Nokia Admits that a Surface Phone Could Spell Trouble for Them

It wasn’t terribly long ago that Stephen Elop stated that the idea of Microsoft making a Surface phone wasn’t a bad one and could even “be a stimulant to the ecosystem”. Interestingly enough, a recent report indicates they might not exactly feel the same way anymore.

For those that don’t know, Nokia is required by the U.S. Securities and Exchange Commission to provide disclosures about market risk, and so while a filing about risk isn’t any big surprise, it is a little strange to see the Surface phone and Windows Phone in general listed as part of that risk.

The Form 20-F filing was released yesterday and states that Microsoft could create its own smartphone, similarly to what happened with the Surface tablet line. The filing also indicates that Nokia will end up owing around $650 million as result of the partnership.

The report further indicates that a release of a Surface phone could lead Microsoft to focusing more on their hardware, and less on helping their partners be successful in the Windows Phone market. Another interesting comment is that Nokia is having trouble convincing Microsoft to create “the features or functionalities for the Windows Phone platform that we deem most important.”

So what does it all mean? It could just be a standard business filing that indicates potential risk, and nothing more. Or it could mean that Nokia is truly starting to worry about their future with Microsoft.

Nokia has been a major partner in the phone world for Microsoft, and the Nukia Lumia line has been a big part of the newly found success with Windows Phone 8, but at quite a high cost to Nokia as well. Add in the idea that Microsoft could bring their own hardware and shift their advertisements to the Surface phone instead of the Lumia 920, and it isn’t surprising to know that Nokia worries a little.

Will a Surface Phone come, and if it does, will it matter?

Many of my colleagues at Windows 8, particularly Onuora Amobi, have had strong opinions about the subject of the Surface phone. Onuora in particular feels that Microsoft should have made the move along time ago.

Personally, I don’t agree. The Surface tablet was needed to really create a “gold standard” for Microsoft tablet products, but even after all this time, it isn’t exactly a runaway success. Developing a smartphone from Microsoft puts them in the position of again creating a gold standard product that may or may not be popular.

Considering Nokia continues to push the envelope, why bother? If Nokia continues to show a lack of faith in the platform, or even decides to go cross-platform with Android, then it might be a good idea. Until then, Microsoft needs to put most of its focus into the Windows desktop and tablet market.

What do you think, should Microsoft release a Surface phone? If Microsoft did, would Nokia have much to worry about or do you think there are enough Nokia fans to keep them going in the right direction even with Microsoft as a competitor? Share your thoughts below.

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