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It is looking like the much ballyhooed transformation of phone giant HTC from a mainly Windows Mobile shop to an Android vendor has hit a snag…apparently they can’t get some of the damn things to work.

Digitimes is reporting that HTC’s next Android handset, designed from the ground up for AT&T with the intention of being released in Q3/09, the Lancaster, has run into serious problems. Industry sources are saying the handset is either delayed or cancelled (some blogs are already reporting that it is definitely cancelled) because the Android based, sliding QWERTY smartphone has failed to pass AT&T validation process, and the problem goes beyond just the Lancaster.

Clearly fumbling the Lancaster will cut into HTC’s revenues and exacerbate their already declining smartphone market share in the US (dropped to 5.6 percent on the year from 8 in 2008). On top of that, after waving lots of flags and burning lots of bridges a few months ago, saying that Android based phones were going to be the main focus for the future of HTC, that policy is now being “adjusted” according to sources. No word if the policy is being delayed, rethought or flat out abandoned, but I would not be at all surprised if the problems they have with the Lancaster are being repeated on other HTC Android handsets in development.

Of course, this comes at a terrible time for HTC. Declining market share aside, there are perhaps as many as twenty Android handsets on the horizon, from major players such as Motorola, LG Electronics and Sony Ericsson. While the Lancaster was previewed to be a solid, middle of the road sort of design, the fact that it was being released ahead of that wave was considered important. Even if they continue the project and just delay it, the Lancaster will likely now be lost in the mob.

So, as their Android development is faltering, where is HTC looking to for salvation? Redmond, of course. Two major HTC handsets running Windows Mobile 6.5 will be released in October for AT&T, the Warhawk (Touch Diamond 2) and Fortress (Touch Pro 2). These should have a fair impact on the market, especially as they will be early examples of WinMo 6.5 (Windows Phone) and sequels to highly successful models.

Zealot (469 Posts) - Website | Twitter | Facebook

By day a department manager and writer for a major network device vendor...by night Zealot stalks the mean magnetic streets, striking fear into the hearts of bandwidth abusers and theme park mascots. Zealot has been involved with mobile devices for more than a decade now, starting off with dumb phones, moving to PDAs and then to smartphones, notebooks and netbooks with the odd PMP thrown in. Most of his mobile time currently is spent on a Treo Pro, Zune HD, Thinkpad T61, Gigabyte M912M or a Hackintoshed Compaq Mini 704. He proudly groks the Geek community and considers himself a Neo Maxi Zune Dweebie (thanks Will Wheaton!).