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(Pocket-lint) - Microsoft is finally working on a Surface-branded smartphone, it's claimed.

Microsoft has been betting on hardware in recent years, with the launch of the Surface tablets, the acquisition of Nokia's phone unit, and more recently, the debut of Surface Book. And so it's not too surprising to hear the company is now building a Surface-branded phone.

Make no mistake: This is not the rumoured Intel-powered Windows 10 phone thought to launch next May, according to Windows Central, which spoke to unnamed sources and now believes that metal phone has been cancelled in favour of an all-new flagship phone led by Panos Panay.

Panay led the team of engineers who developed the Surface and Surface Book. But now he's putting his efforts toward a phone. It will presumably be the long-awaited Surface phone and could be ready for a release in late-2016. Windows Central said Microsoft is still hammering out details, such as design, hardware, and features, and that stuff won't be finalised until mid-2016.

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This won't be a Nokia device; it'll be a Microsoft Surface one. Also, Intel has apparently been moved to this new project since the other metal phone, which was a Nokia design, has been scrapped. Intel is supposedly co-developing a chipset for the Surface Phone that'll surpass what Qualcomm offers, meaning the device could not only run Windows Store apps but also classic Win32 apps.

The next big OS release from Microsoft, dubbed Windows 10 Redstone, will likely arrive in August, and so Microsoft might try to unveil the Surface Phone by that timeframe. It might not release until October or November however, lining it up alongside an autumn refresh for Microsoft hardware.

If that's the case, we might see an October event for Surface Pro 5, Surface Book 2, Band 3, and the first Surface Phone.

Writing by Elyse Betters. Originally published on 2 December 2015.