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Microsoft said to be testing its own smartphone design

In addition to building its own tablet to compete with the iPad, Microsoft may design and sell its own smartphone to take on Apple's iPhone, according to a new report.

Microsoft is said to be working with suppliers in Asia to test its own smartphone design, The Wall Street Journal reported this week. While the company is reportedly toying with the idea of building its own smartphone, officials aren't sure whether the product will actually hit the market.

The device being tested by Microsoft has a screen size between four and five inches, which is the new standard for smartphones. Apple's latest iPhone has a slightly larger 4-inch display.

Microsoft's Windows Phone platform has floundered against Apple's iPhone and devices running Google Android. The Redmond, Wash., software company hopes its mobile operating system will get a boost this fall with the debut of Windows Phone 8.

But if Windows Phone 8 continues to struggle, the company could decide to its own hardware, in an effort to spur sales.

Microsoft has designed and built Xbox game consoles for more than a decade. And last month, the company went in a new direction when it released Surface, a Microsoft-designed touchscreen tablet that runs a modified version of the Windows 8 operating system known as Windows RT.