It's near impossible to continue building smartphones when:

[Guest smartphone-web.com]

High Tech Computer (HTC) stood by its 2003 financial forecast of generating NT$24.955 billion (about US$720.6 million) in sales, despite achieving less than a third of that target as of the end of May.

(...)

In addition to technical issues, sales decisions such as exclusivity make it difficult to get volumes up, which is suspected to have been a big problem for the XDA initially. Some major manufacturers are even looking to China as their window of opportunity since its telecom requirements are not as stringent and volume can be made much faster, thereby reducing overall components and royalty costs.

Other major manufacturers such as Compal seem to have delayed their Microsoft smartphone plans since they were able to attract much larger (three million plus) GSM/GPRS handset orders from Motorola and others. It is near impossible for Taiwanese smartphone manufacturers to continue building smartphones if volume is not big enough.

The PDA market is not only small but also shrinking. According to International Data Corporation (IDC), worldwide handheld device shipments in the first quarter fell by 21.3% compared with the same period last year and sequentially by 26.5% to 2.45 million units. (...)

In smartphones, although Microsoft announced several smartphone deals last month, most of these mobile phone operators so far are smaller carriers. T-Mobile International's decision to shelve a Microsoft smartphone launch indefinitely was probably a big blow to HTC. Radio stack issues relating to T-Mobile's infrastructure are rumored to be the biggest technical challenge. Upcoming Java OS's will definitely put a crimp in Microsoft's mobility plans as well.

Full Story here: Digitimes