HTC has brilliant smartphones but future looking bleak

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James Pearce finds it difficult to see how the manufacturer can turn things around

So what do the letters HTC stand for? Well, according to most the major analysts we spoke to, it could well mean Headed Towards Catastrophe.

Following a bleak set of quarterly financial results that saw its revenues almost halve year-on-year, the future of the Taiwanese manufacturer has once again came in for some scrutiny.

HTC arguably built the best handset of 2014 – the One M8 bagged a load of awards, including the award for best smartphone at this year’s Mobile News Awards – but analysts still labelled the release of its 2015 flagship as make-or-break.

So to Mobile World Congress where HTC unveiled the One M9 (pictured). Like its predecessor, it is a beautiful phone but the problem is, it is too much like the M8.

Hold them up side-by-side and the two flagships look exactly the same, and with only minor upgrades to the hardware, the M9 was always going to face an uphill struggle.

Add in the fact that Samsung has returned to form with the stunning Samsung Galaxy S6 and S6 edge, and the looming presence of the iPhone, HTC had perhaps already lost the battle.

The latest round of financials – the first to include the M9 – seems to imply it has failed and that is a worrying sign for the manufacturer who brought us classics like the HTC Desire, my first ever smartphone.

To see revenue plummet from £1.3 billion in Q2 2014 to £691.7 million for the three months ending  June 30 is scary. That amounts to losses of £167 million, ending a run of four straight profitable quarters.

Sales figures don’t look positive either with Kantar Worldpanel Comtech revealing HTC accounted for five per cent of smartphone sales in the three months ending May 31, down from seven per cent for the same period last year.

When experts such as CCS Insight chief of research Ben Wood question HTC’s future in the smartphone business, you stand up and take note.

Perhaps the most worrying problem for HTC is trying to come up with a solution to its current problems. It has already made changes to its senior management team, with Cher Wang replacing her HTC co-founder Peter Chou at the head of the company in March.

Wang promised changes to HTC’s strategy that will see it diversify in to other markets, and it has already made initial steps with products including the Re Camera and its fitness band the HTC Grip.

But even then, HTC could struggle to compete with bigger players who bring much larger marketing budgets. Even when it has came up with a fantastic product, such as the M8, the Taiwanese manufacturer has struggled to gain as much traction as the strength of its products deserve.

Part of this is down to marketing – watch any Hollywood blockbuster and you expect to see products from Apple, Samsung or Sony, but less so from HTC.

Famously, they hired Iron Man star Robert Downey Jr as a brand ambassador but his endorsement seemed short-lived. Perhaps he was too busy saving the world to try and save HTC.

It may be that HTC comes along with a fantastic new product or a new device that sets the market alight but if it continues to see revenue drop, can it really keep up this strategy of trying to compete with companies like Samsung, Sony, Apple or Microsoft who all have other businesses that can prop up their smartphone arm if needed?

I would be sad to see HTC fail – I use one myself and have always been a fan of its phones – but it’s tough to see what HTC bosses can do turn this around. HTC’s motto is “quietly brilliant” but it could be that someday soon, HTC goes quietly.

2 COMMENTS

  1. Unfortunately HTC lost me after the Desire HD. They built lovely phones but the Sensation was buggy and lacked any justifiable features that were ground breaking, so I drifted towards the Samsung Galaxy S3. Unfortunately since the Samsung Galaxy Note 5 has come out, Samsung is going the same way now with me. (No Micro SD slot and IR blaster)(I own the Note 3). When Mobile (cellphone) manufacturers take a good phone and make a model with parts taken away that were in the previous model, that’s when I personally walk away.

    • I had the original Desire, then the Desire HD (both fantastic phones), before switching. Eventually, I came back for the M8 which, despite the poor camera, was brilliant. But I agree they’ve been a bit hard pressed and barring the M7/M8, they’ve lost ground to their rivals.

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