HTC Corp. (2498) plans to make tablets based on the Windows operating system, giving Microsoft Corp. (MSFT:US) another ally in its challenge to Apple Inc. (AAPL:US) and Google Inc. (GOOG:US) in the $63.2 billion market, people familiar with the matter said.
HTC, excluded earlier this year from the first batch of Windows tablets, is working on a 12-inch device and a 7-inch version that can also make phone calls, according to a person familiar with the company’s plans, who declined to be identified as the information isn’t yet public.
Microsoft Chief Executive Officer Steve Ballmer is racing to get more Windows-based tablets into stores, making up for delays that have made it harder to catch Apple, Google and Amazon.com Inc. (AMZN:US) in a market projected by researcher NPD to almost double to $123.5 billion in 2015. Microsoft will end the year with a 2.9 percent share, compared with Apple’s majority and Google’s more than 40 percent, according to IDC.
“No matter where you look, there’s not a breadth of devices to look at,” Wes Miller, an analyst at Directions on Microsoft, said in an interview. While “more variety of hardware might help,” he said, “good devices with good battery life and price,” as well as compelling applications would have to come together.
Sally Julien, a spokeswoman for HTC, and Mark Martin, a spokesman for Redmond, Washington-based Microsoft, declined to comment.
HTC’s products, to debut in 2013, will be based on the Windows RT version of Microsoft’s operating system, designed for machines with chips using technology from ARM Holdings Plc (ARM), according to a person familiar with the plans. Delays in those machines, as well as another version running on Intel Corp. (INTC:US)’s chips, have meant Microsoft has few Windows devices capable of challenging Apple’s iPad.
A 7-inch tablet would be the first of that size for Windows RT, as Microsoft tries to compete with the iPad mini, Amazon’s Kindle Fire and Google’s Nexus 7 in the market for smaller, cheaper tablets.
HTC’s tablets are tentatively scheduled for release in the third quarter and would run on chips from Qualcomm Inc. (QCOM:US), one person said. Production details and exact schedules haven’t been finalized, the person said.
HTC had also been considering a tablet with Windows 8 running on Intel, but scrapped those plans because the company determined it would have to charge too much -- around $1,000 -- for the device, making it difficult to sell enough of them. Microsoft’s own Intel-based Surface tablet with Windows 8, will cost $899 or $999, depending on the model, when it goes on sale next month.
HTC was turned down for participation in the initial round of Windows RT devices, a process Microsoft controlled tightly, people familiar with the matter said in June. As it turned out, most of the devices greenlighted through that program weren’t ready for sale when Windows RT was released in October. Toshiba Corp. (6502)’s machines have been scrapped altogether.
That may have left Microsoft, which has grown closer to HTC in the smartphone market in recent months, on the hunt for more willing partners.
Sales of Microsoft’s own Surface tablet have been disappointing, according to analysts such as Craig Berger at FBR Capital Markets & Co. He and other analysts have expressed concern that it’s hard to find many Windows tablets at retail outlets. Microsoft hasn’t disclosed Surface sales figures.
Taoyuan City, Taiwan-based HTC is looking for new revenue opportunities as it has lost share of the Android phone market to Samsung Electronics Co. HTC in October forecast fourth- quarter revenue that would mark its lowest sales in 11 quarters.
Earlier this month, HTC also canceled a project to make a larger-screen version of its Windows Phones because of concerns the screen would have a lower resolution than competing models, a person familiar with the matter said.
To contact the reporters on this story: Dina Bass in Seattle at firstname.lastname@example.org; Tim Culpan in Taipei at email@example.com
To contact the editor responsible for this story: Tom Giles at firstname.lastname@example.org