Among the buzz surrounding Microsoft's (MSFT 2.44%) Window 10 release for PCs later this summer, there's now reports that the company will release two new high-end Lumia phones later this year.
First reported by Unleash the Phones (and later published on The Verge) the new new devices will run on Windows 10, are codenamed Cityman and Talkman, with the former expected to be the company's new flagship device.
Here are the rumored specs:
| Cityman | Talkman | |
| Display | 5.7-inch QHD | 5.2-inch QHD |
| Processor | Qualcomm octa-core processor | Qualcomm hexa-core processor |
| RAM | 3GB | 3GB |
| Internal Storage | 32GB (expandable with microSD) | 32GB (expandable with microSD) |
| Camera | 20-megapixel camera (rear) 5-megapixel (front) | 20-megapixel camera (rear) 5-megapixel (front) |
Source: Unleash the Phones
Considering the phone version of Windows 10 won't be available until later this year, consumers will have to wait a bit before we see these devices on the market.
But when they do arrive, they'll be coming at a time when Microsoft needs a big win in mobile.
Why these phones matters for Microsoft
Even after purchasing Nokia's handset division last year for $7.2 billion, Microsoft is still struggling to find its smartphone footing.
While sales of Lumia phones were up 18% year-over-year in the most recent quarter, the company is losing money in its Phone Hardware division. According to an article by Gregg Keizer at ComputerWorld, the company is losing about 12 cents on every phone it sells.
Microsoft's dismal phone hardware position means the company may end up taking a partial write-off from its purchase of Nokia's handset division. In its SEC 10-Q filing last month the company wrote that,
"Given its recent performance, the Phone Hardware reporting unit is at an elevated risk of impairment. Declines in expected future cash flows, reduction in future unit volume growth rates, or an increase in the risk-adjusted discount rate used to estimate the fair value of the Phone Hardware reporting unit may result in a determination that an impairment adjustment is required, resulting in a potentially material charge to earnings."
For the most part, Windows handsets have been targeted toward the low and midrange smartphone markets, and that's likely hurt the company.
Ramon Llamas, an analyst at IDC, recently said that Microsoft needs focus its energy on more than just low and mid-range options. "Having a high-end flagship product is essential to bring attention to the rest of the product portfolio. That area has been a clear gap for Microsoft," he wrote.
The smartphone market is becoming increasingly crowded with low and mid-range competitors that essentially release similar-spec phones. Even some China-based smartphone vendors, like Huawei, are starting to realize this and are focusing their attention more on high-end devices. As Android vendors create a plethora of low-cost devices, it leaves little room for Microsoft to make much money in that market.
Of course, targeting the high-end segment means taking on the likes of Apple and Samsung. But considering Microsoft's losing money on its phones and may be about to write-off a partial loss for the Nokia handset division, the company may have no other choice than to face-off with top vendors in the high-end smartphone market. And at this point it appears Microsoft has nothing to lose.
