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Can Amazon save HTC from its troubles?

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Amazon has been rumoured to be working with HTC in making a line of smartphones. The ecommerce giant is well-known for its Kindle line of tablets, which are based on Amazon’s fork of Android. Amazon is one of the few well-known manufacturers to fork Android and make its own version, one in which Google’s services have been removed in favour of Amazon’s own content ecosystem.

It has been alleged that Amazon is working to create a new line of mobiles so that it can offer consumers a wider choice of devices to try out its Amazon Prime streaming services. The move will also be a fruitful one for HTC, who has had a disastrous year thus far. Last quarter saw the manufacturer posting its first quarterly loss, and the situation is exacerbated by the fact that a lot of high-level officials have headed out the door this year.

HTC’s downfall

Consumer interest in HTC mobiles is also dwindling. The Taiwanese manufacturer had a market share of 10.3% in 2011, which was reduced to just 2.8% by Q2 2013. This year saw the launch of great devices like the HTC One, but HTC was not able to cash in on the device as it faced a lot of manufacturing delays, and was only able to launch the device a month after Samsung’s Galaxy S4 went on sale.

HTC also collaborated with Facebook in launching the HTC First, the first device to feature Facebook Home, an alternate launcher that brought Facebook services to the lockscreen. However, Facebook Home was inherently flawed, and as such the HTC First was discontinued less than two months after it was launched. Last month, it was revealed that Beats Electronics bought back its stake from HTC, making it another setback for the manufacturer.

This week, there have been rumors indicating that HTC is looking to manufacture a tablet that is based on Android, and is also thinking of getting into the wearable technology arena. HTC’s CEO Peter Chou has stated that he will be handing over some of his executive duties while he focuses on HTC’s product portfolio and further innovation at the Taiwanese manufacturer. HTC’s chairwoman Cher Wang will be taking on the additional workload.

Meanwhile, Amazon’s growth is uncontested

While HTC’s year has been dismal so far, Amazon has seen a strong year. In the hardware segment, the technology giant introduced its new line of Kindle tablets, which come with better hardware than their earlier variants.

The new line of Kindle tablets include the new 7.0-inch Kindle Fire HD, along with the 7.0-inch Kindle Fire HDX which comes with a 7.0-inch full-HD screen and high-end hardware in the form of a 2.2 GHz Qualcomm Snapdragon 800 CPU, 2 GB RAM, 16/32/64 GB ROM and LTE connectivity. The third tablet is the Kindle Fire HDX 8.9, which has an 8.9-inch WQXGA (2560×1600) resolution screen and the same great internal hardware as its 7-inch sibling.  The 7.0-inch Kindle Fire HDX is targeted to go against Google’s Nexus 7 2013 and costs $229 for the 16 GB model, while the 8.9-inch Kindle Fire HDX is a great high-end Android tablet and costs $379 for the 16 GB version.

Kindle tablets are unique in that they do not feature any Google services. Amazon instead offers its own store for games, movies, music, books and other content. This ensures that Amazon makes a better margin on any content that gets sold from tis stores. Samsung has tried to go a similar route in the beginning with Bada, but has failed to do so. Now, it is looking to the likes of Tizen to see if it can create a viable ecosystem.

Another selling point for the Kindle series is their affordability. It has been estimated that Amazon makes a loss on every sale of a Kindle device, but manages to cover its losses from the content that is sold on the device. It is a marketing model that has served the organization well.

Can Amazon save HTC?

In a short word: No. HTC is a member of the Open Handset Alliance that oversees the development of Android.  Google distributes Android as an open-source offering, but that doesn’t mean that there are no caveats. One of the rules of the Open Handset Alliance states that a manufacturer is contractually prohibited from launching any devices that do not feature Google’s services. And since HTC is a member of the Open Handset Alliance, building a device for Amazon would mean that it would get kicked out of the alliance, and as an extension would not be able to get a license to Google’s services to use in its own Android handsets.

This is one of the major reasons why there are not as many Android forks as there should be. While Android in itself is offered for free, Google’s core services, which include the likes of Gmail, Maps, Google Now, Hangouts, YouTube, and the Play Store, are not. They are tied to a license that a manufacturer has to obtain from Google. The easiest way to get such a license is by joining the Open Handset Alliance. Once a manufacturer does so, they cannot build devices that do not bundle Google’s services.

Therefore, Amazon cannot go to any of the major handset vendors like Acer, Asus, Dell, Foxconn, Fujitsu, HTC, Huawei, Kyocera, Lenovo, LG, Motorola, NEC, Samsung, Sharp, Sony, Toshiba, and ZTE. This is why Amazon contracts its Kindle tablets to Quanta Computer, a vendor who is known for building Apple’s Macbook lines and other notebooks for well-known manufacturer.

And even if Amazon were to find a manufacturer willing to build its devices, it will have a tough time integrating software features. If Amazon is intent on making a mobile device, it should figure out how to ingratiate navigation features and cloud services. Doing so might prove to be a difficult undertaking.