HTC Corp. scrapped plans to produce a large-screen smartphone using Microsoft Corp.'s operating system because the screen would have had lower resolution than competing models, according to a person familiar with the project.
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. 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 email.
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.
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 declined 3.2 percent to NT$274 in Taipei trading Monday, extending its decline this year to 45 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, while 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.
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.