Does Surface Pro 3 offer clues to Microsoft's next flagship phone?
Microsoft's focus on productivity will be evident in the impending top-of-the-line smartphone, poised to launch alongside Windows 10.
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"There are a few clues on a device like this," Elop said in an interview as he grabbed a Surface Pro 3 on the table.
Elop, who runs the company's devices and services group, touted the stylus and handwriting capability of the Surface Pro 3 tablet, as well as the ability to share information in meetings, as key features that Microsoft continues to focus on. "What do you do," he asked, "to take those classes of experience to a new level, in a way people have never seen before?"
His comments signal potential areas of interest like a stylus, which could help Microsoft build a premium smartphone strong enough to compete with the likes of Apple's iPhone 6 and Samsung's brand-new Galaxy S6 . Having a flagship device in the portfolio is critical to Microsoft clawing its way back up the smartphone ladder because it targets consumers in mature markets like the US and Europe, while giving the entire brand an aspirational lift.
Elop said that a flagship smartphone would arrive with the launch of the Windows 10 operating system, but Microsoft hasn't given a specific time frame. In the meantime, the company has been focusing on an array of affordable smartphones targeting emerging markets and budget-conscious consumers, including Monday's debut of the Lumia 640 and Lumia 640 XL .
Microsoft pushed the themes of productivity hard at its press event at the Mobile World Congress trade show here, stressing that universal apps on the forthcoming Windows 10 operating system will transfer a person's work seamlessly from the laptop to the tablet to the phone and back again.
"The most important thing is getting the user experience that works across multiple platforms correct," Elop said.
Stylus a tough sell
The number of devices launched with stylus support for writing and navigation are extremely low in the post-iPhone era. The stylus is a technology that Apple founder Steve Jobs despised.
"If you see a stylus, they blew it," Jobs said at an Apple event in 2010.
Samsung's Galaxy Note series is the poster child for the tool, culminating in the Galaxy Note 4 .
Galvanized by Samsung's surprising success with the Note, LG included a stylus in two of its phones, most recently the LG G3 Stylus.
Even without a specialized pen, plenty of apps make use of a person's index finger rather than a separate pen attachment, so Microsoft could go in that direction rather than bundle in a discrete tool.
Microsoft is eager to get Windows 10 rolling because it'll be the first time the company will have a common platform across all of its devices, including smartphones, tablets and desktop PCs. The company plans to upgrade hundreds of millions of people to Windows 10.
"It takes a lot of work to get there," Elop said.
Still, Windows Phone is in a tough position. In 2014, it held 2.7 percent of the market for smartphone operating systems, down from 3.3 percent a year ago, according to market researcher IDC. In comparison, Android solidified its lead by growing its share to 81.5 percent.
Then there is the rise of low-cost smartphone manufacturers like China's Xiaomi and India's Micromax, which are beginning to dominate their local markets with low prices and decent specifications -- the same philosophy as Microsoft -- but running on the more popular Android devices.
"We think about them all the time," he said.
While companies like Xiaomi have hit upon capabilities that are relevant to the local market, "there are certain experiences that transcend that," he added.
The Lumia line originated with once potent phone maker Nokia and came to Microsoft through its $7 billion acquisition a year ago of Nokia's devices business, which had traditionally struggled in the US. Things aren't any different now. "The United States is our most challenging market," he said.
But Elop hopes that the combination of a flagship smartphone and Windows 10 could shake things up.