Sources told The Wall Street Journal that Microsoft is currently “testing” the smartphone with Asian component suppliers, although the same sources did say that they weren’t sure if the product would go into mass production.

Nonetheless, the Microsoft smartphone is believed to have a 4 to 5-inch display and will be presumably run the Windows Phone 8 operating system. Other details at this time remain few and far between.

Just before launching the Surface tablet on October 26, Microsoft’s Steve Ballmer told reporters that the company will look to make more hardware in the future, but decided not to go into more detail.

Any such move would consolidate Microsoft’s own plans to do battle with Apple, but would undoubtedly cause concerns amongst hardware partners like Nokia who are betting big on Windows 8.

Indeed, Microsoft has already faced some criticism from hardware manufacturers for launching the Surface tablet.