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Why HTC's Current Strategy is Flawed

Steven Blum
11

HTC has posted their 2nd quarter revenues, and things don't look too hot for the Taiwanese smartphone maker. Revenues were $3 billion (91.04 billion Taiwanese dollars), down nearly 27% since the same quarter last year, while profit was down by more than 30% to $819 million ($24.59 billion NT).

Not only that, but HTC is predicting things will only get worse in the third quarter of this year. HTC expects that in Q3, revenues will drop further to around $2.3 billion, when the newest iPhone is released. 

While the HTC One X and One S didn't make quite as big of a splash as I'd expected, they were both largely favorably reviewed and had stirred up a considerable amount of buzz. So what is going on here? Why is HTC failing?

Sadly, it looks like HTC is failing both at delivering high quality models to top-tier customers and budget options for the lower-tier customers. According to HTC, the European and American markets – the most lucrative per-capita – were too competitive for them to gain the upper hand. HTC simply isn't spending enough on advertising to be able to compete with top dogs like Samsung and Apple. 

Meanwhile, HTC is struggling in emerging markets as well. While Samsung offers emerging markets a range of lower-priced smartphones, HTC has recently committed itself to only producing top-tier phones, abandoning the lower-cost models that help companies like Samsung pad their bottom line. While that may be smart for the brand in the long term, it'll likely hurt revenue in the short term; earlier this year, we reported that the company had completely bailed from Brazil, among the largest emerging markets. 

Can HTC make a turn-around? It's possible, but they're in an unenviable position, in many respects. While Samsung, their closest competitor, has a diversified portfolio of phones, TVs, chips and other devices, HTC only makes phones, so if they're outsold in this market, their entire business suffers.

I think in order to succeed, they will need to begin spending more on advertising, continuing to provide emerging markets with lower-priced options, and experimenting more with niche phones like the Rezound, HTC ChaCha and HTC Rhyme. While these phones may not create as much buzz as models like the HTC One X, they appeal to specific kinds of customers who may not have wanted to buy a smartphone in the first place. 

How do you think HTC can get out of its current rut?

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Comments

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  • Ti Mo Aug 3, 2012 Link

    Lol like 4 to 5 months ago every other commercial in the US was for the htc rezound.

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  • Steven Blum Aug 3, 2012 Link

    Yeah, I suppose that's a problem with writing about this from Europe. There's a lot of ads here for HTC phones as well, but I'm sure they're being far outspent by Samsung.

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  • chinu Aug 3, 2012 Link

    htc needs some better designs and betteer UI of their (non)sense.... and low end phones to be in d pond....

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  • Raed Saad Aug 3, 2012 Link

    I agree htc need to work on advertising more than before the market is way tight and wont tolerate with companies that dont have a good and smart approach to customers needs.

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  • Will H Aug 3, 2012 Link

    The models they produce are quickly superseded. Better to produce fewer models with distinct market aims.
    I'm due to replace my desire this month. should I go for the one x or s3?
    I've always been very happy with the build quality of this desire.

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  • Niels Christiansen Aug 3, 2012 Link

    Will: See if you can sample both at a store. Even (re)read reviews. HTCs have a great build quality, but their less capable GPS implementation coupled with no upgrade to the DHD is a showstopper for me, but that shouldn't ruin your party. :)

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  • headshrinker Aug 4, 2012 Link

    I haven't seen a single HTC commercial here (Philippines). My first Android was HTC Wildfire, I owned it briefly before moving to the Galaxy line. Seriously, it was also a great experience with HTC. You're probably right, they could probably try aggressive ads to make people want their products.

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  • Michael Seow Aug 4, 2012 Link

    Good article, Steven. I have some humble comments. Last year when i first got my HTC. Evo 3D, i was impressed with the phone. The built was solid and the software (HTC sense) is helpful and i dont have to install 3rd party apps or widgets.
    From an user experience, i can tell you i prefer using htc rather than samsung. The main answer to why htc flawed is their slogan, QUIETLY BRILLIANT. According to htc, quietly brilliant is doing things in a humble way, with the belief that the best things in life can only be experienced not explained.

    This could be a good slogan for a person but not for business. Why i say it this
    way? Often my friends (iphone user) keep on laughing at me merely they are using 'world greatest' phone. But i kept quiet. Coz i did use iphone 3gs before i blindly bought a Samsung s2 by reading ads on newspaper. And i know what is the real performance of an iphone.. Basically is a crap.

    Why this slogan QUIETLY BRILLIANT doesn't suit a business company? If you havea good product, and you want to market it, u cant sit quietly. I never saw any htc tv ads in malaysia.

    Hence i give a try. I dun sit quietly. I teach people what is htc phone, what is htc sense. I pushed and mentioned htc phones when ever people talks about phone with me. I showed then how efficient is a htc phone. Downloaded the htc history video and show them. Guess what i manage to them switch to htc.

    If i can do this. Why not htc.? I even start to make a blog http://htcsenseandme.blogspot.com im now using htc evo 3d as personal phone, htc one x as working phone, htc flyer, motorola xoom and galaxy tab (rooted) as media and entertainment.

    Simple things to do.. The slogan QUIETLY BRILLIANT need to change.

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  • chinu Aug 4, 2012 Link

    agreed.. michael...

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  • Michael Robinson Aug 5, 2012 Link

    When HTC released the One X series amid excitement everyone loved the specs BUT most glaring was no SD expansion and no removable battery. What are you doing HTC? So when the head to head competition began with the release of the SG3, for me at least, it was a no brainer. Even if you don't use that much space on your phone, it is good knowing that it is there if you need it. HTC simply needs to listen to customers and give them what they want, not what they (HTC) wants to give them. The beauty of Android has always been choice. Take that away and you are no better than Apple. I really hope they find their way because I used to like HTC phones, but when dealing with a fairly well educated user base, you have to listen. People are locked into two year contracts that most fulfill. In my opinion, this stumble when pitted head to head with a fierce competitor was fatal.

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  • CJ Brown Aug 9, 2012 Link

    Maybe if the HTC Rezound wasn't such a piece of sh@t it would sell stronger for Verizon, maybe if Verizon was smart & implemented an HTC Droid Incredible 4G that took the best things from the HTC One series (vs ignoring them) they wouldn't be left with a replacement for the original DINC that's good (but should've been better), maybe if HTC made sure there was a 4G HTC One series for every cellular service provider (& came out with models that have 32gig memory) vs only 2 carriers, maybe if HTC offered more 4G models under no contract (HTC EVO 3D comes with ICS via Virgin Mobile & its 4G) vs just an HTC ONE V (which is 3G & that's not going to cut it), maybe if HTC actually marketed their Android Smart Phones (vs relying on the hype of BEATS audio - which was a bad idea), maybe if HTC saw what Samsung was doing & got a clue ....

    I <3 HTC, I <3 my DINC, I just want HTC to step up their game

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