HTC's custom component bet backfires as One smartphone delayed

Summary:HTC's supply chain bites back as the smartphone maker can't procure enough components to launch its One smartphone in time.

HTC's bet that it could use custom components and line up its supply chain amid declining sales has delayed its One smartphone. And the timing is terrible.

The Wall Street Journal confirmed what analysts had been saying for weeks---HTC can't get enough components to launch its comeback phone. The HTC One is the company's best hope to turn around declining revenue and regain its past glory.

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I noted that HTC's decision to go custom with its camera parts was one of its five big blunders .

Also:  The HTC One is the best smartphone I have ever used (review)

Morgan Stanley analyst Jasmine Lu highlighted the component problems for HTC recently:

Innovation becomes a risky strategy without scale: Weak Feb sales imply 1Q revenues might hit the low bar owing to weaker than anticipated sell-in strength restrained by critical component supply (i.e. actuator for its new “ultrapixel” cameras”) on our checks. This affirms our view that it is a bold move for HTC to use tailor-made components for its new HTC One, causing low yield at the initial stage of ramp up.

The HTC One was introduced in February for a March launch. The problem for HTC is that Samsung also recently unveiled its Galaxy S4 to launch in April.

HTC faces the following issues:

  • Staff turnover. 
  • HTC isn't seen as a key smartphone player so it can't push suppliers around. 
  • Declining sales hurt employee morale and have backed HTC in a corner.

These issues are unfortunate and not only for HTC. There's an opening for an Android smartphone maker to step up with a more pure version of Google's operating system. Samsung's big move with the Galaxy S4 was to relegate Android to the background, pretend it didn't exist and tout its own software innovation. That strategy may leave an opening for HTC and its One phone.

Topics: Smartphones, Android, Bring Your Own Device, HTC

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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