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Is Microsoft Eyeing HTC Devices?

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Bloomberg reported that Microsoft Corporation (MSFT - Free Report) has been in talks with HTC Corporation about the possible addition of its Windows Phone operating system to Android handsets manufactured by HTC at practically no extra cost. This is obviously an attempt on the part of Microsoft to increase its mobile market share. There has been no confirmation of the report from either of the companies.

Microsoft had recently acquired Nokia’s (NOK - Free Report) handset business for $7.2 billion to facilitate hardware and software integration. It also hoped to target the lower-end of the market, especially in developing countries where Nokia is still a much-loved brand. Nokia’s Windows-based phones have also been doing rather well in Europe, so it was expected that more compelling offerings would help the company take market share.

Other phone-makers using the Windows OS would naturally view this as increased competition from Microsoft itself, so this could be the reason Microsoft decided to woo HTC.   

HTC has manufactured both Windows and Android phones in the past. However, seeing the falling demand for Windows Phone, it has not launched any new Windows-based handset since June this year and has no plans of launching any in the near future.

Microsoft normally charges a license fee for every Windows Phone sold but now as an endeavour to boost sales it has even agreed to give HTC certain concessions in the form of reduction or elimination of license fees.

There has been speculation about a hypothetical phone, which may run Windows and Android simultaneously or allow users to select a default system. It is also unclear whether the data for an application running on a specific operating system would be available on the other one, including contact details and photos.

As per reports of market research firm IDC, in the second-quarter of 2013, Google’s Android OS was the leading smartphone operating system with a 79% share of the total market, followed by Apple’s (AAPL - Free Report) iOS with a 13% share and Windows trailing behind with 3.7%.

Microsoft Corporation develops, manufactures, licenses, sells, and supports software products. The company operates in five segments: Windows & Windows Live Division, Server and Tools, Online Services Division, Microsoft Business Division, and Entertainment and Devices Division.

Currently, Microsoft has a Zacks Rank # 3 (Hold).

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