HTC has reportedly cancelled plans to build a Windows Phone 8 device with a large screen. The reason behind HTC's decision is based, in part, on the resolution limitations of Windows Phone 8. HTC believes that a WP8 device with a large screen can't compete with the best Android devices thanks to the display quality, Bloomberg reports.

Microsoft expanded the screen sizes and resolutions supported in Windows Phone 8 significantly, but not far enough to please everyone. Handset makers can choose displays with 800 x 480, 1280 x 720, or 1280 x 768 pixels. The first was the original and only resolution supported in Windows Phone 7/7.5; the latter two are new.

Earlier this year, HTC debuted the Windows Phone 8X and 8S. The 8X has a 4.3-inch 720p display; the 8S has a 4-inch 800 x 480 display. The 8X's 4.3-inch screen (which looks great) is apparently as big as HTC is willing to go with Windows Phone.

[ Apple's been pleasantly surprised by the popularity of its 7-inch iPad. See Apple Doubles iPad Mini Display Orders. ]

HTC offers several Android-based smartphones that have 720p displays (One X, One X+, and EVO 4G LTE) measuring 4.7. All three are quite good.

The real gem in HTC's device lineup, however, is the Droid DNA, which is sold in the U.S. by Verizon Wireless. It is one of the first smartphones to ship with a full 1080p HD display. Windows Phone 8 does not support that resolution. If HTC were to stretch a 720p display to 5 inches or larger, the pixel density would drop (though it would hardly be terrible). HTC isn't worried about competing with other Windows Phone 8 devices, however. It's worried about the displays on competing Android devices.

Right now, the largest display available on an Android device is the 5.5-inch monster on Samsung's Galaxy Note II. The resolution is 1280 x 720 -- and it looks great. In fact, it's one of the best displays available on a smartphone right now, which leaves to question HTC's decision-making process.

The pixel density of the Note II's display is more than adequate, so why would HTC think that the pixel density of a smaller (5-inch) screen would look bad? Is HTC worried about the Galaxy Note III, which may have a 6.3-inch 1080p display?

At this point, HTC has not said.

It's worth pointing out that companies work on -- and then scrap -- plans for products and devices all the time. Perhaps the device Bloomberg is reporting about was a prototype that failed for other reasons.

HTC's worldwide share of the smartphone market has plummeted during the last 12 months, despite the solid lineup of Android and Windows Phone devices. At this point, HTC needs a hit to help carry it through 2013.

Upgrading isn't the easy decision that Win 7 was. We take a close look at Server 2012, changes to mobility and security, and more in the new Here Comes Windows 8 issue of InformationWeek. Also in this issue: Why you should have the difficult conversations about the value of OS and PC upgrades before discussing Windows 8. (Free registration required.)