Microsoft Corp. this week said that it had no plans to develop its own smartphones in order to compete against Apple iPhone and other popular devices. Instead, the firm will focus on software and operating system, leaving manufacturing and marketing of phones to other companies.

“We are in the software business and that is where our business will be focused,” Tivanka Ellawala told investors at a conference in San Francisco, reports the Wall Street Journal.

The executive made the statement in response to an inquiry about rumors that the software giant is working on a new smartphone.

Microsoft Corp.'s Windows Mobile operating system is quickly losing market share to competing platforms, including Android, Blackberry, iOS and Symbian. Sometime in October Microsoft plans to release its new operating system called Windows Phone 7, which it believes will help to fight back the market from competitors.

In an attempt to ensure high quality user experience, Microsoft reportedly has imposed very specific hardware requirements for Windows Phone 7-based devices.

“So there is more predictability in what it takes to make the hardware work with the software,” said Mr. Ellawala.

After disastrous launch of Microsoft Kin phones earlier this year, the company not only cancelled the release of the smartphones in Europe, but also stopped to sell them in the U.S. It would be strange for Microsoft to try design a smartphone again, especially when it has requirements for compliancy with Windows Phone 7. Nonetheless, before launching Zune, the Redmond, Washington-based software giant also said that it plans were to leverage its music services for third-party phones and not to release its own.

Tags: Microsoft, Zune, Windows Phone, Kin