Last week saw a lot of rumors running around that Microsoft would be releasing their own Windows Phone next year. WPCentral, BGR and The Verge had "trusted" sources confirm the release of a Windows Phone next year (2013). Even Forbes got into the mix saying it would be a good idea.

There are a lot of ways this would be difficult for Microsoft. They do not have distribution with the carriers, and that takes work. They have also burnt some bridges along the way ("Remember the Kin" I think is a Verizon rallying cry). They have also invested a lot in their relationship with Nokia.

If they are REALLY looking to get into the mobile phone business, they would just buy Nokia. Microsoft makes money from nearly every Android device sold and Nokia makes money on every iPhone sold. Having your competitors help pay for your developers as you try to take market share is fun. There is also a ton of Intellectual Property that Nokia brings to the mobile space that Microsoft can realize benefit from. Their mapping technology is one of the top two (if not top) in the industry. They also have excellent native apps that Microsoft could leverage natively for all of their phones. Moving away from a Nokia partnership could set Microsoft back, especially if the relationship changes in a way that they lose their mapping technology.

Lots of the speculation is that Microsoft would be making an unlocked device that they could sell directly to consumers, ala the Google approach with Nexus. I don't think that is going to happen. What I think is going to happen is that Microsoft is going to make a portable Xbox based on Windows Phone. Let's call it the XBox Surface.

What do we know.

New Xbox Next year - Microsoft is rumored to be releasing a new version of the XBox next year. There is also rumors/confirmation that the new Xbox will be based on the same core as Windows 8. You can be pretty sure that the new Xbox will be launching later next year, in time for the Holiday season. Both of the previous version of the XBoxes launched in November.

Windows Phone - The upcoming release of Windows Phone 8 is also reworked to be based on the Windows 8 OS. With all of the secrecy it is hard to say, but it SEEMS that Microsoft has not totally baked this through. Next year, you can expect it to be more fully integrated. Also, Microsoft traditionally updates their OS in October/November time frame.

Windows 8.Next - Microsoft has stated they would like to get into quicker rev cycles for both Office and Windows. The Windows RT side of the OS seems like this would be readily doable. We can assume that this would happen about a year after the release, which gets us into September/October

One OS To Rule Them All - A good deal of Microsoft's success comes from the ability to make developers productive and create apps. Recently, Microsoft has been promoting a "Shared Windows Core". This makes it easier for developers to create applications once and deploy to Windows 8 or Windows Phone, and one assumes Xbox.Next. While this is coming along, it doesn't feel like it is totally completed. I think it will be MUCH closer to fully baked next year.

So what do we have... Rumors that Microsoft is building a Windows Phone Surface type device, a new version of the XBox and the assumption of new Windows Phone and Windows releases next fall. I think you throw this all into a blender, and Microsoft will not be releasing a Surface Phone, but a handheld Xbox based phone.

The Xbox Surface would be based on the next version of Windows Phone 8, which I believe will be tightly integrated with the next Xbox. It will allow developers to much more easily create applications for both the next Xbox as well as the phone. Obviously you will not play Halo 5 on the phone, but you could maybe have a lighter graphic version of the FPS as well as augmented second screen for play if you wanted. Think the next version of Microsoft's SmartGlass on steroids, which will be more close to what Nintendo is doing with the WII U.

Microsoft has had tremendous success with the Xbox in the consumer space. It is a brand consumers trust. They do not have a competitor to Sony's PSP line. It is well past time they create one. With the upcoming release of the new Xbox it is my guess you will see one and it will be based on Windows Phone. And hey, if your new Xbox portable gaming device makes phone calls, well that is just a bonus.

And just like that, Microsoft has a path to gain traction in the phone space.