It turns out that the email we reported on last week by HTC CEO Peter Chou was, in fact, accurate. HTC does indeed have a fix they're currently testing for beleaguered video lovers with HTC devices.
Brighthand is reporting that HTC has released a statement confirming that they have a software fix that “dramatically” improves performance, one they hope to release soon.
The fix isn't a video driver - that would, as we gathered from our insider Q&A, be a massive undertaking involving (we suspect) nearly as much work as just flat-out making a new device. It's not ideal (as HTCClassAction.org fully explains), but maybe it's enough to tide us over. Maybe?
Here's the statement:
Some of our top engineers have investigated video performance on our devices and have discovered a fix that they claim will dramatically improve performance for common on-screen tasks like scrolling and the like. The update is in testing and we hope to release it soon.
However this fix is not a new video driver to utilize hardware acceleration; it is a software optimization. Video drivers are a much more complicated issue that involves companies and engineers beyond HTC alone. We do not want to lead anyone to believe they should expect these.
After the break (because we somehow managed to not post it when Engadget originally reported it back on January 25th), HTC's original, official statement on the issue.
HTC does plan to offer software upgrades that will increase feature functionality, over the air wireless speeds, and other enhancements for some of the phones being criticized, but we do not anticipate including any additional support for the video issues cited in customer complaints. It is important for customers to understand that bringing this functionality to market is not a trivial driver update and requires extensive software development and time.
HTC will utilize hardware video acceleration like the ATI Imageon in many upcoming products. Our users have made it clear that they expect our products to offer an improved visual experience, and we have included this feedback into planning and development of future products.“
To address lingering questions about HTC's current MSM 7xxx devices, it is important to establish that a chipset like an MSM7xxx is a platform with a vast multitude of features that enable a wide range of devices with varied functionality. It is common that devices built on platforms like Qualcomm's will not enable every feature or function.
In addition to making sure the required hardware is present, unlocking extended capabilities of chipsets like the MSM 7xxx requires in-depth and time consuming software development, complicated licensing negotiations, potential intellectual property negotiations, added licensing fees, and in the case of devices that are sold through operators, the desire of the operator to include the additional functionality. To make an informed decision about which handset suits them best, consumers should look at the product specification itself instead of using the underlying chipset specifications to define what the product could potentially become.

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I for one accept HTC's promise and plans. The lack of an optimized video driver isn't really the issue. The issue is poor graphics performance on a device that is advertised video capabilities.
I work in consumer electronics and have spent part of my career testing video drivers and software updates. I agree that it's a major undertaking to suddenly roll new video drivers in to the HTC Roms and have them be relatively bug free.
The issue is that the AT&T Tilt has PATHETIC graphics performance. I believe that the performance could have been better on other devices, but it wasn't until the Tilt that it became so bad that it was obvious. Web page scrolling alone is slow on the redraw and has worse performance than less-capable devices. It's actually quite ridiculous that just scrolling a web page isn't smooth. Video playback leaves something to be desired, but even simple scrolling and redrawing is poor.
Any effort to optimize the graphics performance should bring the Tilt up to par, provided they did identify the performance bottlenecks.
So I don't think we should care about the ATI drivers. Just a fix for the obvious issues.
I commend HTC for taking the effort they did and standing behind their product, to actually deliver what was advertised.
I for one will be happy if they do what they think they can do.