HTC faces “survival” battle if One M9 flops

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Analysts warn failure could be terminal for Taiwanese manufacturer and say it is also big year for Samsung

The future of HTC will hinge on the success of its new flagship handset,the HTC One (M9), which was launched at Mobile World Congress on Sunday.

This was the surprise verdict from leading industry analysts ahead of this year’s Mobile World Congress event in Barcelona, which kicked off on March 1.

The One (M9) device follows last year’s One (M8), a handset billed by many as a “make or break” handset for the Taiwanese manufacturer.

Despite positive reviews, the (M8) failed to make a significant impact in the UK. At the launch of the device, the manufacturer set ambitious targets to double its UK market share to 10pc by the end 2014. Q4 (ending December 31, 2014) figures showed its share had increased just one per cent year-on-year to 5.6 per cent, although HTC vice president of UK and Nordics, Peter Frolund, said he was “satisfied” with HTC’s performance.

Its progress has led to doubts in the channel over the manufacturer’s long-term future despite showing signs of improvement financially – posting its first quarterly profit in three years last quarter.

“The success of HTC’s products in 2015 is absolutely critical to the future of their business,” CCS chief of research Ben Wood told Mobile News. “The One (M9) is a crucial product for them, but if they were to get it wrong, there would be big questions over whether it could survive in the mobile space.”

Financial obstacles

IDC research director for European mobile devices Francisco Jeronimo agreed, adding that marketing of the (M9) will be key to it gaining success – something he claims has hampered sales in the past.

HTC claimed last year it was spending more than $1 billion on marketing its brand. Hollwyood actor Robert Downey Jr headed up its more consumer focussed campaign as it attempted to change its identity in the market. But Jeronimo argues attempts to build loyalty and a sense of differentiation are yet to show a positive impact.

The (M9) will probably match the quality of the (M8), but that won’t be enough for HTC,” said Jeronimo. “Without money or a differentiator to attract users, HTC is finding it really hard. It’s not just about building the best smartphone; the whole supply chain needs to be very efficient. If they don’t have the HTC brand awareness and loyalty like, say, Apple with its iPhone has, then it’s back to basics.”

Broadening its appeal

Kantar Worldpanel ComTech chief of research Carolina Milanesi added that broadening HTC’s strategy and appeal was an area it needs to improve on.

“Considering the slowdown in innovation the industry is facing, one device is not enough when your portfolio and scope are limited,” she said. “HTC’s strategy is narrow at present, so it will be harder for them to remain competitive.

“This is why it created a new unit that introduced the RE Camera. It needs to expand its focus to remain relevant but also explore new revenue opportunities.” HTC refused interview requests.

Samsung Galaxy S6

Another manufacturer, so say analysts, facing a crucial year is Samsung, who as expected unveiled its Galaxy S6, just hours after the One (M9).

Samsung, the world’s biggest smartphone brand, is readying a major overhaul of its mobile division following poorer than expected sales last year, resulting in a 60 per cent year-on-year profit fall in Q3. S6 web

In the UK, the Korean firm has seen its UK market share plummet from 33 per cent to 24.5 per cent in recent months.

The manufacturer said in October it would increase focus on the low to mid-end of the handset market. Analysts were critical of the “plastic” Galaxy S5 design, something they claim harmed loyalty to the brand and affected sales.

The success of the “more premium” Galaxy S6, is likely to play a key role in determining its future strategy.

“All eyes are on Samsung,” said Milanesi. “After a difficult 2014, it needs to show it has what it takes to reclaim the high-end. Design will be key on the Galaxy S6.”

Wood added: “Any talk of Sam- sung’s death is very premature. They are profitable and have unprecedented scale to outgun pretty much everyone in terms of marketing, but it made a mistake last year announcing the all-plastic Galaxy S5.It is a very important show (MWC) for Samsung as it needs to reassert itself, particularly having a flagship device that deserves that status.”

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