A Microsoft executive has come out and said that Microsoft does not currently have plans to release its own smartphone. Windows Phone Corporate VP Terry Myerson shot down speculation that Microsoft would be releasing a Microsoft-made phone anytime in the near future.
Myerson was then asked what it would take for Microsoft to release their own device:
It would have to be something where Nokia or HTC or other primary partners were not providing the consumer experience we think was possible on our platform.
Myerson then added that he feels current Windows Phone devices already provide a great experience. However, Myerson's comments don't preclude Microsoft from releasing a Surface Phone sometime in the future. I definitely wouldn't count Microsoft out of the mobile device market quite yet, though their Surface tablet experience may have rethinking plans.