HTC: It can and will get worse

HTC: It can and will get worse

Summary: HTC is betting on a slew of devices to save the day in February and March at the Mobile World Congress, but don't bet on a quick fix.

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HTC reported dismal fourth quarter sales and the first quarter is probably looking worse. HTC is betting on a slew of devices to save the day in February and March at the Mobile World Congress, but don't bet on a quick fix.

The smartphone maker---once a darling---reported preliminary fourth quarter sales of NT$101.4 billion, down 25 percent from the fourth quarter and 2 percent year over year. Profits were also disappointing.

Now what? HTC is getting creamed by Samsung, which is also riding the Android wave with better success. Analysts are now expecting Samsung to continue to thump HTC. In fact, the first quarter may be worse than the fourth, according to Macquarie analyst Daniel Chang.

Related: HTC's statement | HTC posts poor Q4 results: Loses Android mojo to Samsung, Apple | Samsung expects record profits: Patent wars barely dented sales | Techmeme | Smartphone shake-out looms as hardware herd may thin

In many respects, HTC finds itself in a rut that plagues all hardware companies. If you miss a product cycle you're doomed. HTC needs thinner devices with better battery life. The problem is those devices will arrive just as thinner and lighter will be the norm. HTC's alleged Facebook phone will arrive right around the time Apple launches an iPhone 5.

If this script sounds familiar it's because RIM and Nokia face the same problem. Chang said in a research note:

We believe HTC will launch several flagship models during MWC in Feb/March which focus on thin and lightweight form with longer battery life. We remain skeptical on the competitiveness and sell-through of these devices as we believe most smartphone players will launch similar devices for their high-end line, especially we have not seen much hardware upgrade which HTC could benefit from their R&D strength. For 2H12, Facebook phone which is coming out during summer could have more potential given high subsidies, but we continue to flag that iPhone 5 launch in June/July with new design and upgrade spec (LTE) will be a bigger threat to high-end focused player such as HTC.

It's possible that HTC's new phones near the second quarter matter, but keep in mind that it is already behind the Samsung Galaxy line and the Motorola Droid Razr in the thin and light department.

KGI analyst Richard Ko said that HTC's prognosis won't look better until it gets more competitive products. "We think HTC’s product line up will remain in a weaker position than that of global peers until it launches its new flagship products during the MWC. We estimate HTC to ship 51.3mn units in 2012, up 14% YoY, far lower than estimated industry growth of 30-40%," he said.

Topics: Mobility, Hardware, HTC, Smartphones

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11 comments
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  • and so it starts...

    one by one the android army will fall of its own weight... Moto, LG and Sony haven't made profit for about 2yrs now either.. Moto has Google to prop them up now and LG and Sony have other businesses units to prop up them up.. but how long will they maintain business units that continue to lose money or just barely brake even? Samsung is the only manufactures that actually turns a profit making android phones.. and maybe it should be looking over it's shoulder because the North American version of Nokia's N900 looks VERY competitive super slick, unique.. maybe MS does have a chance via Nokia..
    theFunkDoctorSpoc
    • RE: HTC: It can and will get worse

      @theFunkDoctorSpoc The Market is going to balance out and stronger competitors will emerge.
      slickjim
      • RE: HTC: It can and will get worse

        @Peter Perry Always love CES. Just found this great article for an outstanding solar gadget http://www.forbes.com/sites/jenniferhicks/2012/01/06/solar-powered-kindle-cover-introduced-at-ces/
        sreeseche
  • Apple, the 8,000lb gorilla, kills another "competitor"

    It is a sick market. We all lose.
    toddybottom
    • RE: HTC: It can and will get worse

      @toddybottom

      If anything, the competition is doing a great job of killing themselves.

      Apple sets a standard that shows what people are willing to pay for. Then the "competition" tries to copy that standard, but ignores many of the reasons that make it so good/appealing.

      There's nothing stopping any other company from going off and trying to do what Apple has done. Look at Amazon and the Fire. Any phone manufacturer can try to "upset" the mobile industry and put together a complete solution just like Apple. The problem is they don't see things the same way. They want a quick buck and build things with that mentality.

      To blame the market is wrong. To blame Apple is wrong. Blame the manufacturers with no real vision.
      tk_77
      • Where did I assign blame?

        @tk_77
        If anything, I have blamed the "competitors" in my other posts. I've never blamed Apple.

        Apple was smart. They played their iPod monopoly to perfection, using it to break into the smartphone market and absolutely crushing everyone who was there before. For any competitor to win, they can't attack the bits and pieces that Apple sells, they have to wait about 20 years to build up an ecosystem that is as powerful as Apple's. In 20 years, we have a chance of seeing real competition. We won't see anything before then.
        toddybottom
      • RE: HTC: It can and will get worse

        @tk_77 no, Apple had the music, movies, and Apps and most of the others cannot supplement their phones like that. This is why the Fire is the real threat to the iPad and an Amazon Phone would also challenge the whole Market.

        HTC is positioning themselves to not only challenge Apple but to beat that in the Multimedia Market.
        slickjim
  • RE: HTC: It can and will get worse

    This is discouraging, HTC's strengths are in design and interface, so it's disappointing that the much maligned MotoBlur and Samsung Touchwiz interfaces are not easily falling behind to the outstanding and beautiful efforts of the HTC team in their work on Sense. It's also unfortunate in that I can't imagine getting another Samsung device after the utter disaster that was support for my last one, the Galaxy Tab. It didn't make it through one OS upgrade cycle, and has had Samsung attempting to lock down the system a couple times. Now Samsung is on my to be avoided list. Conversely, my HTC Evo was the first non-developer phone to get it's Froyo update, the HTC Flyer and it's comparable Evo View were the only tablets to get upgraded from Gingerbread, leaving Samsung bobbing in their wake with all their pre-existing tablets ignored and unsupported, which is especially discouraging because reports are the Galaxy S and Tab share the same hardware specs as the Galaxy Nexus, yet for some reason, they aren't getting upgraded and supported.

    In the end HTC has been the best with excellent hardware, fast devices, and systematic software updates. They will continue to have my business as long as they keep up their already established pace of support and upgrades.
    SeanBlader
  • RE: HTC: It can and will get worse

    Android phones are a race to the bottom. Eventually, the consumer is going to sway away from that. To see this isn't surprising.
    The one and only, Cylon Centurion
    • RE: HTC: It can and will get worse

      @Cylon Centurion To what, Mediocrity?
      slickjim
  • RE: HTC: It can and will get worse

    HTC Spent a pretty penny investing an one of those investments will pay off bigtime as they license Beats technology and pitch their product as the multimedia phone to have.

    All of their new phones running Beats will attract Hip Hop Fans everywhere and that will be enough for them.

    Oh and did you happen to see that the Rezound is the highest rated smartphone on the market for many reviewers?
    slickjim