HTC, the maker of the first Google-branded smartphone, might be left out of Microsoft's next version of Windows software, Bloomberg reported, citing "people with knowledge of the matter". The sources spoke under condition of anonymity because negotiations between HTC and other companies are private.
"Microsoft locked out HTC from the development of products using the newest version of its operating system on concern that HTC doesn't sell enough devices or have ample experience making tablets," Bloomberg reported.
If the rumors prove to be true, HTC's revenue outlook could be severely affected. According to Bloomberg, HTC has already cut its second-quarter sales forecast by 13 percent. Moreover, the HTC's stock has declined as much as 68 percent in the last year, and doesn't even come close to competing with Apple or Samsung in terms of software or device manufacturing.
"Every consumer knows about Samsung's Galaxy platform and the iPhone, and you are starting to see consumers coalesce around them," Avian Securities Analyst Matthew Thornton, who cut his rating on HTC to negative, told Bloomberg. "Things just get worse from here. It's a very bleak outlook."
Microsoft's Windows RT
Microsoft plans to launch its next Windows operating system in time for the holiday shopping season, as the first OS to run on ARM chips. The ARM version of the new software, called Windows RT, is designed for tablets in an effort to compete with Apple's iPad. Other tablets and computers will feature chips based on Intel's technology. The software bearing the same name of Windows 8 will be packed in devices from companies like Toshiba Corp. and Asustek Computer Inc. later this year, Bloomberg reported.
In an emailed statement to Bloomberg, Microsoft spokesman Frank Shaw said HTC is a strong partner now and for the future, but did not provide any specifics. Moreover, HTC U.S.-based spokeswoman Sally Julien told Bloomberg that HTC plans to support future versions on Windows, but is not commenting on specifics of its product plans. Meanwhile, IDC analyst Ramon Llamas noted that HTC "has been unable to either develop its own software or hardware or sell enough devices to make it the first line for its suppliers," wrote Bloomberg. "Controlling the supply chain or influencing the supply chain is one fo the things that takes you to success," explained Llamas. "It can very quickly turn on you if you're not controlling everything in-house."
HTC Excluded from First Round
Microsoft has closely monitored the number of ARM-based devices it is supporting in order to ensure quality. After initial discussions with HTC, Microsoft chose not to work with the struggling Taiwanese manufacturer for the first round of devices, but with other vendors that had greater sales volume and more tablet experience, said Bloomberg's sources.
According to the unnamed sources, HTC engineers wanted to build a Windows device with a customized home screen, but Microsoft refused, excluding HTC from the list of companies provided with early versions of the software. HTC, however, may release a Windows device later, in a second batch of devices to come next year, said one of Bloomberg's sources.
