Amazon planning smartphone debut with HTC: report

Summary:The rumors are beginning to take form, as the retail and gadget giant reportedly teamed up with HTC to enter the smartphone market.

Image: CNET

Amazon and HTC may be working together on a new smartphone project, if the latest round of rumors are to be believed.

The Financial Times (paywalled), which first reported the story on Tuesday, said Amazon and HTC are teaming up to allow the retail (and cloud and mobile) giant to enter the smartphone market. In doing so, it might also give the Taiwanese phone maker a much-needed kick up the backside in the saturated mobile market amid its floundering financial situation.

The publication said one of three devices is at an "advanced stage of development," citing sources familiar with the matter. 

This falls in line with previous reports, in which Amazon was reportedly developing a lineup of gadgetry. One device was pegged to be a 3D-enabled smartphone  that will feature similar eye-tracking technology to Samsung's Galaxy S4. 

The devices are part of Amazon's wider push into its hardware development strategy. Known as the "Alphabet Projects" — with each device known by its Project A, B, C, D codenames (and so on) — the elusive devices were expected to be announced before the December holiday quarter where sales are typically higher.

However, Amazon, in a rare public reaction, refuted earlier claims it would release a smartphone this year.

But according to the report, published by The Wall Street Journal back in May , if the devices struggle due to performance, financial or other concerns, some or all of the devices may be scrapped entirely. 

A source speaking to the Financial Times on Tuesday also confirmed Amazon may not release the device if certain conditions aren't met.

Financial concerns may be an obstacle to clear, if HTC's financial statements are anything to go by. Amazon has the resources to go it alone, but working in conjunction with HTC may be a win-win for both sides.

HTC continues to sink as it continues to cut jobs in the U.S., as the firm aims to turnaround its downturn.

The company saw a 70 percent fall in net profit during its 2012 first quarter. Its revenue has fallen by shy of 35 percent compared to the same period a year ago, with the company still reeling from a painful January where revenues fell by almost 50 percent. And it also said it was  facing gross margin challenges  due to the high cost structure of its flagship smartphone HTC One, which was delayed getting out of the door.

After years of strong sales momentum, the Taiwanese smartphone maker suffered a recent dropoff in sales. Many high profile executives,  including its chief operating officer , have also left the firm.

In July 2012, Microsoft senior director of Windows Phone business development Robert Williams left the software giant and moved across the city to Amazon HQ. This led to further rumors that Amazon was ramping up its smartphone development efforts.

HTC also develops Windows Phone-based devices. The Amazon-HTC deal, if proved correct, combined with the hiring of the Microsoft director, could see Amazon produce not an Android-based device, as it previously has with its Kindle Fire range of tablets, but instead a Windows Phone-based device.

Windows Phone currently holds fourth place in the smartphone platform rankings, according to comScore, with behind Google's Android, Apple's iOS, and BlackBerry. With BlackBerry's decline, it is expected to jump to third place in the coming months.

Topics: Amazon, Mobility, Smartphones


Zack Whittaker is a writer-editor for ZDNet, and sister sites CNET and CBS News. He is based in the New York newsroom. His PGP key is: EB6CEEA5.

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