China has a huge population which makes it one of the best markets to launch new products. If it’s a hit in China you’ll be raking in the billions in no time at all, but if not that’s too bad because you’ll be missing on out huge profits.  For the mobile industry, China is seen as a perfect market for two reasons: it has a huge population, and it’s an emerging market which means people are more inclined to go for devices that aren’t too expensive to test the waters first.

Sources familiar with the matter claim that HTC is now developing a mobile operating system that’s specific to China – it’ll be Chinese consumer focused, and is expected to be introduced later this year.  The development of the OS is said to be being closely monitored by HTC Chairwoman Cher Wang and will be integrated with Weibo, the popular Chinese microblogging site.

This effort could help HTC sell more devices in China, as its government is encouraging the development of domestic software to reduce its reliance on Western companies.

It is no secret that HTC has been doing poorly.  Though the HTC One received good reviews, consumers still prefer Apple’s and Samsung’s smartphones.  Question now is, will this China-focused mobile OS be able to save HTC?

Why This is a Bad Idea

The main reason why this could potentially fail is that HTC’s devoting money, time and effort into a platform that nobody might want to use.  It’s not a wise move for a company that’s already losing so much cash because its devices aren’t selling.  Also, with this effort it could lose its alliance with Google.

Last year, Acer was set to unveil a smartphone running Aliyun, Alibaba’s mobile platform, which Google claimed was a modification of Android – it’s opposition meant that the handset never went to market, because Acer is part of Google’s Open Handset Alliance that requires them to abide by policies such as not using another mobile OS that is a rip-off of Android.  If Acer went and released handsets running Aliyun, that would have gotten them kicked off the Google team.

If HTC build its mobile OS from the ground up doesn’t just opt for a modified version of Android, then it wouldn’t suffer the same fate as Acer of having its handsets scrapped.  But if it doesn’t do this, then HTC will likely continue in a downward spiral with little hope of recovering.  Google has no qualms with OEMs using other mobile OS – Samsung has it’s own Bada platform for instance, while HTC makes devices that run Windows Phone.  But what HTC has to do is make sure its OS is not an Android clone, or else its dream of a Chinese invasion will be crushed by Google before it even gets off the ground.

HTC’s Downward Spiral

In 2011, HTC was the #2 smartphone seller in the US, trailing behind only Apple.  Just two years later and its fall from grace has been little short of spectacular.  In 2012, it slumped to the 5th ranked smartphone seller in the US, while its revenue dropped to $2.39 billion – a massive decline from its $4.5 billion revenues during the same quarter in 2011.

Seeing the company as a sinking ship, a number of HTC executives made a beeline heading for the exit and even encouraged their former colleagues to do the same.  Some stated that it was because the company is uprooting and moving its whole operations back to Taipei, while others claimed that the company was hugely reliant on the success of the HTC First, the so-called Facebook phone.  The phone could have sold millions as it was the first to offer the Android launcher Facebook Home, but unfortunately Facebook immediately released Home as a downloadable app on Google Play for free.  This meant that anyone who wanted to experience what the Facebook Home felt like could download the app without buying a special phone – and even worse, they soon found out that it was crappy as hel,l so they forgot all about the app, along with the existence of the HTC First.  To make things worse, Facebook later scrapped Home, stating that it needs more work, and advised its European partners to hold off on launching the HTC First.  Bummer huh?

And you want to know the bloody cherry on top of HTC’s misfortunes?  Beats Electronics, the makers of Beats by Dre, wants to buy back the controlling shares in its company that HTC acquired, so it can look for new investors and partners to facilitate its plans of expanding into making speakers, audio systems for cars, consumer electronics and a soon-to-be-launched online streaming music service.

With all that is happening, is China really the miracle HTC has been waiting for or will it be the final nail in its coffin?