HTC, a longtime supporter of Google's Android operating system, is developing its own OS for China, The Wall Street Journal reported Aug. 28.
According to sources familiar with the project, the OS is being "closely monitored" by HTC Chairwoman Cher Wang, who has been in close communication with Chinese government officials. Chinese officials have already received prototypes running the OS.
The OS is said to include "deep integration" with Weibo, a Twitter-like microblog, but it's unclear whether the OS was started from scratch or built on top of the open-source Android platform. HTC is part of Google's Open Handset Alliance, and in the case of the latter, would have to follow certain Google guidelines.
The OS is expected to be introduced before the end of the year.
HTC, failing to successfully compete with Samsung and Apple, has seen its market share fall off steeply in recent years. In the U.S., it has tried to make a comeback with the well-reviewed HTC One and more recently a new marketing campaign featuring actor Robert Downey Jr. and a playful approach to what the HTC acronym stands for.
In China, a unique operating system may be what HTC needs to help it stand out.
China Dominates Global Smartphone Sales
China is now the world's largest market for smartphone sales, and it has given Android—now the world's most popular OS—a considerable boost.
In 2011, 450 million smartphones were sold globally, 66 percent of which went to China, according to Ovum. The research firm has forecast that, with China's strong influence, smartphone sales are on track to reach 1.7 billion units in 2017.
During just the second quarter of 2013, 77.11 million smartphones were sold in China, of a total 90.39 million mobile phones, according to Analysys International, which cited 36 percent year-over-year growth.
China's government, however, is uncomfortable with so much of that growth being tied to Google.
"Our country's mobile operating system research and development is too dependent on Android. While the Android system is open-source, the core technology and technology road map is strictly controlled by Google," China's Ministry of Industry and Information Technology said in a white paper in March, according to Reuters.
The paper pointed out that while Android's market share was 3.9 percent in 2009, by 2012, it was 72.4 percent, giving Google an "absolute advantage."
Google's relationship with the Chinese government was severed in 2010, when Google refused to censor search results in China. Shortly afterward, Google moved its search business to Hong Kong, which was run under a separate set of laws. As early as in recent weeks, Google executives have said they have no plans for investing in China.
Samsung, another Android backer and the top-selling phone maker in China, has also invested in a proprietary OS, Bada. In January, Samsung executives said they also have plans to begin selling smartphones running Tizen—the Intel-backed, Linux-based OS with roots in the Nokia-backed MeeGo OS—later this year.
Samsung sold 15.3 million smartphones in China during the second quarter of this year.
Apple, which expects China to eventually be its top revenue-generating market, is said to be preparing a lower-cost iPhone that will be compatible with China Mobile's new 4G network. China Mobile is the world's largest carrier and the only carrier in China not selling the iPhone.
"We are very excited about the China market," HTC CEO Peter Chou said during the company's most recent earnings call, echoing a sentiment shared by each of his rivals.