HTC: Is it 'Quietly Irrelevant'?

HTC: Is it 'Quietly Irrelevant'?

Summary: HTC's outlook indicates that it's stuck between Samsung and Apple without a lot of wiggle room.

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HTC's tagline is quietly brilliant. The smartphone maker's second quarter results and third quarter outlook indicate that the company may become quietly irrelevant.

The company's second quarter results (CNET, Techmeme) missed estimates with a net profit of NT$7.4 billion on revenue of $91.04 billion. But the outlook for the third quarter was more worrisome. HTC projected third quarter revenue of NT$70 billion to $NT80 billion.

In other words, HTC launched a series of new products in the second quarter---HTC One, Desire, EVO 4G LTE (review) and Droid Incredible 4G LTE (review) and barely held the fort. HTC's outlook indicates that those new devices are aging rapidly.

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Barclays Capital analyst Dale Gai said that HTC could be "quietly irrelevant" if it doesn't get its act together. Meanwhile, HTC offered little direction on strategy or plans to cut costs. Gai said that HTC may lose cloud with carriers over subsidies and mostly compete on price.

The issue for HTC is that it just can't compete with Samsung on scale or marketing. Like Nokia and RIM, HTC is looking at being collateral damage as Samsung and Apple form a smartphone duopoly. As Knowledge@Wharton noted, the smartphone industry is due for a shakeout.

Macquarie analyst Daniel Chang handicapped HTC's outlook and earnings on Friday:

As we pointed out, Apple and Samsung will have a combined market share over 70% in 4Q12 if our and the street’s forecasts of iPhone shipments (60m units) and Samsung sales (60m+) are correct. This implies HTC may face a larger drop in shipments in 4Q12 since HTC’s target market overlaps in various regions with these two giants.

HTC's master plan is to grow its share of China, increase marketing and sales efforts in Europe and North America and continue a push into Asia's various markets.

Simply put, HTC's playbook will look more of the same. HTC has plenty of cash, but so it won't disappear. Instead, HTC could be on the path toward being another irrelevant smartphone maker without a dramatic move.

Topics: Mobility, Smartphones

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26 comments
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  • A Real Shame

    HTC makes great phones, and I suspect that for many of us out there, Android and Sense were pretty much synonymous for a long time. I love my Evo 4G and I love my Flyer. And I fully intend to go with an HTC Phone when I upgrade (probably an Ev0 4G LTE). Hang in there guys!
    dsf3g
  • HTC: Accept no substitutes

    For many of us HTC represents excellent build quality and superb performance. When it recently became necessary to upgrade on Verizon in order to protect my grandfathered Unlimited Data Plan I didn't hesitate to go with the HTC Rezound. Coming from my HTC Droid Incredible it seemed like the natural choice and I'm happy to say the Rezound doesn't disappoint. With the OTA ICS upgrade yesterday, a great phone has been made even better. Read: http://www.epinions.com/review/HTC_Rezound_epi/content_594739498628 for my real world assessment of the Rezound.

    It would be a shame for this excellent manufacturer to fade to insignificance. Their phones want for nothing. But they have to seriously amp up their advertising and marketing activities if they're going to be heard above the din of Apple and Samsung.

    If ATT was a viable option in South Florida, the HTC One X would have been a given for me. But then there was that Unlimited Plan to protect on Verizon.
    RudiXeno
  • Microsoft should buy HTC

    HTC hardware has always been awesome. Durable. And, the Titan is no exception. Have not got my hands on the Titan II - waiting for the next Windows Phone, and hoping it will be on HTC. The features and integration capabilities for any business user should be a no brainer. It just works, and works well.
    James Hevener
    • The Titan?

      It was a great device if you overlooked the fact that it was horrible as a PHONE.
      Michael Alan Goff
  • iPhone @ VZW/Sprint

    was going to cut into HTC sales. They need to ride out that storm and hope iSheep get bored of 5 year old iOS and tiny-screen devices with bad battery life. Of course the 5-6 hour HTC One doesnt' solve the battery issue. LOL.

    WP8 and Carriers will have a huge influence (make or break) on all smartphone players not named Samsung and Apple.
    chinch987
    • OMG a 5 year old OS... How ancient, except NOT!

      Seriously 5 years old and that is all you have to say against an OS is that it's established and works well? THE HORROR. My iPhone has a great battery life, and the screen size is fine so your rant was about what again?

      Pagan jim
      James Quinn
      • They actually try to sell that stuff in public

        You're obviously just an Apple shill. iOS is at rev. 5. It's ancient. Windows 8 is new and exciting!
        Robert Hahn
        • Microsoft shill...

          You're an idiot.
          Mojonixon88
  • Seem Like Good Phones

    The HTC phones that some people at my company have seem to be very good phones. In setting one up I was impressed by the screen and the build of the phone. Also, the user interface tweaks from HTC seem to work pretty well.

    My phone from my company is a Motorola Droid 3 because at the time I got it that was one of the few phones that would work with our VPN (I think the Android 4.x series has changed that). I do like the physical keyboard on my phone. That's the only thing I'd miss going to one of the HTC models I've seen. I think I'd still like the HTC phones quite well.
    CFWhitman
  • HTC and Asus - a good match, maybe

    HTC, like many other OEMs, stumbled on their rush to the tablet market. Had their Flyers been as technically impressive (if not commercially so - at this point no tablet larger than 7" can compete with the iPad) as the Asus Transformer, they might have won the bid from Google to make the Nexus 7.

    Speaking of Google, weren't HTC the original maker of the Nexus 1? Now they lost that deal to Samsung.

    The winner-takes-all nature of the mobile-device business has never been more punishing. HTC, Nokia and RIM are suffering, each with its own reasons, but all losing market share to the ever-litigious pair of Apple and Samsung.

    Asus (or another Taiwanese rival, Acer) doesn't have a line of smartphones yet, but don't rule it out from entering this difficult market -- Asus does have a concept of phone-in-a-tablet-in-a-laptop hybrid device. A merger with HTC might give the combined entity the edge it needs to stay in the game.
    Tech watcher
    • I don't think HTC "lost" the contract for the Nexus ....

      .. I'm pretty sure they just told Google NO.

      Nexus 1 was a total failure no matter how you look at it. Not only it didn't sell ... Google actually had to give away more than 80% of the inventory to push it out. HTC manufactured 120K units and Google failed to sell even 20K out of them. The other 100K they gave it way to employees and people attending conferences.

      I honestly doubt that HTC (or any company) would agree to manufacture another losing device. And BTW, Samsung's version of the Nexus is not a winner either.
      wackoae
  • HTC and Windows Phone 8

    While in the Android phone market HTC is an also ran, part of its future will depend on the success -or failure- of Windows Phone 8, with companies like Nokia and HT in the driving seat (Samsung's Windows Phone did not fare well, with update problems, etc). The Android market is going to get quite crowded, with Chinese companies entering it in addition to the better established Huawei and ZTE: it may become a commodity market, with volume rather than margins driving it. That's not going to happen to Windows Phone, if Microsoft listens to its customers (it seems to have done so with Windows Phone 8). A replacement for Zune seems necessary, and straightforward synchronization with Outlook (not only MS 365 or Exchange) would have been a plus, though one sees the logic of using Hotmail/Live/Outlook.com for keeping eveything up to date from various sources including contacts.
    gilesrm
  • Nah

    By releasing the One X with no expandable storage they killed that phone!

    That is the one thing that prevents anyone I know from buying it and that's really a shame.
    slickjim
    • Switch to Sprint

      Switch to Sprint: the EVO 4G LTE is basically a One X with a microSD slot and a kickstand. The only bummer is that there's no replaceable battery (well, that and the fact that Sprint's LTE network is still... er... "nascent.")
      dsf3g
      • Nah..

        Here in Tampa AT&T just upgraded their network and it is the best in the area... I have the note and I am very happy with it.
        slickjim
        • Definitely ...

          Definitely go with what works best in your area. The Note's a pretty crazy/awesome looking phone, though I do feel that I'd probably use it with a Bluetooth headset mostly, if I owned one.
          dsf3g
      • Sprint?

        Is Sprint still in business?
        Mojonixon88
  • HTC can regain its relevance by coming out with

    a WP8 hero phone. Samsungs focus, like all it's lame android phones like the g3, suffers from Samsungs horrible plastic fantastic low build quality. HTC can use WP8s huge superiority over android if they focus there and establish themselves as a WP frontrunner early in WPs market share grab
    Johnny Vegas
    • wow

      sorry, I thought you were not an idiot until you dissed Samsung for build quality.

      yes, HTC should probably do a wp8, but they'd do even better if they embraced the Android environment by releasing an polished but agressively priced phone with stock Jellybean on it. release Sense as an app or optional add-on package and make a little more money. moves like stock OS, unlocked phones and not treating skins as a form of lock-in would give HTC a certain amount of distinction in the Android market.
      markhahn
      • Are not skins a carrier thing?

        Do you mean cheap when you say aggressively priced? You do realize the point of being in business is to actually make money right? Not make you a cheap phone. A lot of android OEM's who strangely enough are making cheap phones are struggling to make ends meet. While Apple who does not make cheap phones has been and is doing very well indeed:)

        Pagan jim
        James Quinn