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HTC Said to Halt Larger Windows Phone on Display Resolution

By Tim Culpan
December 17, 2012 10:48 PM EST 22 Comments
Microsoft Corp.’s Windows Phone 8 start screens.
Source: Microsoft Corp.
Microsoft Corp.’s Windows Phone 8 start screens.

HTC Corp. (2498) scrapped plans to produce a large-screen smartphone using Microsoft Corp. (MSFT)’s operating system because the screen would have had lower resolution than competing models, a person familiar with the project said.

The Windows software doesn’t support resolutions as high as that on Google Inc. (GOOG)’s Android platform, said the person, who asked not to be identified because the information isn’t public.

Chief Executive Officer Peter Chou’s decision to halt the project using Windows Phone 8 software leaves HTC with only Android for phones measuring larger than 5 inches diagonally, dealing a blow to Microsoft in its efforts to win share from Google and Apple Inc. (AAPL) Taoyuan, Taiwan-based HTC had planned to introduce the device next year to claw back share from Samsung Electronics Co., which offers Galaxy Note devices with larger screens using Android.

Cheryl Chang, a Taipei-based spokeswoman for Microsoft, the world’s biggest software maker, declined to comment. HTC declined to comment in an e-mail.

Windows Phone 8, released in October, supports screen resolution of 720 horizontal lines, lower than the 1,080 lines in displays available on Android phones and tablets. Microsoft also limits which processors can be used with manufacturers’ devices.

Google, Apple

HTC concluded that a larger-screen Windows Phone 8 phone wouldn’t be competitive against Android devices from HTC, Samsung and others, the person said.

The company’s stock rose as much as 1.5 percent, the most since Dec. 12, before trading at NT$277 at 11:44 a.m. in Taipei today, stemming losses this year to 44 percent.

HTC’s share of the global smartphone market dropped to 4.6 percent in the third quarter from 10.3 percent a year earlier, as Samsung’s lead widened, according to data compiled by Bloomberg Industries. HTC’s share of the U.S. handset market fell to 3.6 percent from 11.6 percent, according to the data.

HTC is regaining U.S. market share by offering larger, 5-inch screens and full HD resolution, with its Droid DNA being the first model listed as a flagship product by Verizon Communications Inc. in almost two years, Fubon Financial Holding Co. analyst Jeff Pu wrote in a Nov. 29 report.

Android snared 72 percent of the market in the third quarter, while Apple’s iOS software had 14 percent, according to Gartner Inc.

Last month, Redmond, Washington-based Microsoft said it’s selling four times as many Windows phones as this time a year earlier, helped by the new version of its software.

HTC’s revenue this quarter will be about NT$60 billion ($2.1 billion), the lowest since 2010, the company said Oct. 26. Last month it announced a settlement with Apple, ending patent lawsuits that threatened shipments to the U.S.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net.

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