HTC Corp. (2498) has scrapped plans to introduce a full-sized tablet computer with Microsoft Corp. (MSFT) (MSFT)’s Windows RT operating system on concern it will meet with lackluster demand, according to people familiar with the matter.
HTC decided not to make the device because it cost too much and demand for RT machines has been weak, said one of the people, who asked not to be identified because the plans are private. The company still plans to release a 7-inch tablet running the software, a version of Windows 8 for chips based on ARM Holdings Plc (ARM) (ARM)’s technology, later this year, the people said.
HTC is coping with a sales slide, market share declines and management turnover, prompting the company to be more selective with the products it brings to market. Microsoft’s Windows RT sales have lagged since the product’s October introduction, with just 200,000 tablets running the operating system sold in the first quarter, according to researcher IDC.
A tablet with a screen of about 12 inches was too pricey both in terms of components, and what HTC would have to charge customers, said the person. The company expects lower costs and higher demand for a smaller tablet to be delivered around September or October, the person said.
HTC chose Qualcomm Inc. (QCOM)’s Snapdragon processor for its tablets, the person said. Bloomberg reported that HTC was developing devices with Microsoft’s software in December.
“We don’t comment on rumors or speculation,” HTC said in an e-mailed response to Bloomberg News. Greg Chiemingo, a spokesman for Microsoft, also declined to comment.
Rather than concentrating on larger tablets, HTC is focusing efforts on its One smartphone, which runs Google Inc. (GOOG)’s Android mobile software, seeking to reverse a decline in global market share to 2.4 percent in the first quarter, from 4.5 percent a year earlier, according to IDC.
HTC also plans to sell a 7-inch tablet based on Android around the same time as the version with Windows RT is introduced, the person said.
The market for tablet computers will surge 59 percent to 229.3 million units this year and overtake personal-computer shipments in 2015, IDC said this week.
Microsoft and its partners have released a total of five Windows RT devices since October. However only the company’s own Surface RT is widely available in stores, Tami Reller, chief financial officer of the Windows unit, said in an interview earlier this month. That’s left Microsoft short of products to help it boost Windows revenue amid the biggest drop in PC sales on record during the first three months of the year.
The RT operating system, a variant of Windows 8, was aimed at helping Windows tablets compete with Apple Inc. (AAPL)’s iPads, which use ARM-based chips that enable longer battery life and thinner, lighter devices.