It has been all but confirmed that Microsoft is working on a Surface Phone.
After the huge success of its Surface Pro 3 and beyond. There has been numerous unconfirmed reports that the Panos Panay (The Surface Creator) is working on a Surface Phone.
Not much is known about this device or what it will be able to do. But there are tons of rumors on the internet about features that are coming with this Surface phone, which is rumoured to launch in the 2nd half of this year.
Unconfirmed reports say the Surface Phone could be powered by an Intel processor, it will be able to run win32 apps (desktop applications), It will support stylus pen and so on.
Microsoft has not confirmed the development of Surface Phone but this latest revelation is concrete evidence straight from Microsoft that they are indeed working on the Surface Phone. I recently typed in the address bar www.surfacephone.com and got redirected to Microsoft's Surface webpage.
If you don't know, typing www.surface.com also redirects to Microsoft Surface website.
But sorry, there is no www.surfacebook.com
Microsoft owning www.surfacephone.com is a confirmation that a SURFACE PHONE is coming.
There has been unconfirmed reports that Microsoft was ending the Lumia brand and that the Lumia 650 coming next month is the last Lumia branded phone. This makes sense now as Microsoft could re-brand them as "Surface Phone"