News came early Friday morning that the former "software only" company Microsoft (NASDAQ:MSFT) is currently working with Asian suppliers to test out a proprietary smartphone. This is a huge deal because it will bring the company closer to Apple's (NASDAQ:AAPL) wildly successful software-and-hardware model.

The company has not released a lot of information on the smartphone. What we do know is the phone will probably be about 4 inches to 5 inches, which makes it a direct competitor of the IPhone. If Microsoft comes out with its own hardware, it's likely that consumers would find a more fully integrated device more appealing than current offerings.

Things are still very much up in the air for the company. Get the full scoop in the following video with Fool.com analyst Lyons George.

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