HTC unravels: 5 key blunders

HTC unravels: 5 key blunders

Summary: HTC said its monthly sales will stink (again). How did a former smartphone darling get whacked so hard? Here are five reasons.

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In what's becoming a monthly ritual HTC told investors that its sales will be lower than expected. The February version of HTC's ongoing debacle saw monthly sales fall 44 percent from a year ago to the lowest level since February 2010.

At this point, HTC's best hope is becoming obvious---the company needs to go back to being a contract manufacturer and designer for other smartphone makers. HTC got its start that way, performed well and then rode Android to be a player and ultimately develop a strong brand. The problem is that HTC got Samsung-ed, couldn't match scale with larger rivals and fell behind the design curve.

HTC's latest device, the One, has received strong reviews but can't hang with the smartphone juggernauts of Apple's iPhone 5 and Samsung's Galaxy line. In other words, HTC is being squeezed from above by Apple and Samsung and below by rivals such as Huawei, ZTE and others looking to gain share.

Also: HTC revenues plunge by half, hitting three-year low | HTC predicts further slide in sales in Q1 2013, plans cheaper phones | HTC: Our competitors were 'too strong' last year

If you take a walk down HTC's memory lane you could say that the smartphone maker peaked in 2010 with its 4G Android devices and then officially jumped the shark in mid-2011. Here's a look at five key HTC miscues over the last 18 months or so brought to you by hindsight 20/20.

Feb. 2011: Samsung launches the Galaxy S II. HTC fails to respond. At the 2011 Mobile World Congress, Samsung launched the Galaxy S II, a device that was slim and sported a large screen that seemed a bit odd at the time, but caught on. HTC had no answer for the thin profile of the Galaxy S II or its larger screen for months.

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Feb. 2011: As Samsung was launching its uber phone, HTC was unveiling its first tablet, the Flyer. HTC added a few services and exuded "the iconic style and build quality HTC is known for." Don't remember the Flyer? Me neither. HTC has largely abandoned Flyer sales in the U.S. and doesn't actively sell the tablet

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HTC had big brand ambitions that bordered on delusional.

Aug. 2011: HTC teams with Dr. Dre's Beats Electronics company. HTC became a partner and investor in Beats for $300 million. The goal was to bring high-performance sound to HTC devices and become a huge brand. At the time, I called HTC's Beats deal an expensive case of Apple envy. HTC argument that its brand could be on par with Tiffany is still one of the more comical investor presentation slides ever.

July 2011: HTC buys the outstanding shares of S3 Graphics Co. for $300 million to get patent protection from Apple. Of course, HTC isn't large enough to warrant much Android patent lawsuit attention these days. Apple and HTC settled a lawsuit and entered a 10-year licensing agreement in November.

April 2012: HTC launches its comeback smartphone line dubbed One. The devices looked strong, garnered good reviews and had unique features. The problem? HTC lost its brand mojo and now has very short windows of opportunity between Apple's iPhone and Samsung's Galaxy launches. The innovation cadence, as well as HTC's revenue, is off. Also HTC made a critical strategic error by using tailor-made components for the HTC One. HTC had a limited window to make the One a hit and then was hit by supply constraints.

Morgan Stanley analyst Jasmine Lu elaborates:

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.

Topics: Mobility, HTC, Smartphones

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  • HTC largest blunder is singing an agreement with Apple

    Having used HTC Sensation and Galaxy S3 for a very long time. I have found the Sensation to be a better product.

    HTC lacked quality, its cases would chip and ding. If they payed attention to detail and capability to make their produces remain shiny for a two year period, the internals work great!

    The Galaxy S4 with all its hype is nothing. I have used the first Galaxy (Vibrant) and the S3 from ATT. Vibrant was an OK buy, but the GPS would not work. The S3 NFC transfer doesnt work with other Android devices. Simply put, trusting Samsung is stupid. Hardware wise, if you drop it, the voice on it goes or something internally breaks, the quality of its construction is extremely cheap. Its simply hype and a horrible good buy. So again, Ill skip all Samsung devices until they have a transparent flexible device out (2014 or so). My experience with Samsung on phones has been real bad (and I do like Android over IOS!), but even an IOS device is better than a Samsung Android device!

    Back to HTC. If HTC wants to regain market share. It should make Sense a Google APP for their devices, let users chose what they want. Sell Stock Android devices and improve in the quality of their screens an cases. This will steal all market share from Samsung in a heart beat. And they should renegotiate the deal with Apple, after Apple keeps losing its patents!
    Uralbas
    • paid not payed

      Uralbas: payed is letting out a rope or something similar. doesn't not doesnt,
      avmail@ :your not giving you're
      On the subject, have not owned any but Motorloa, so can't comment on any others.
      someone said something about battery life being two days, he must be using his a lot as mine goes about three days or so. Mostly use it as a phone.
      dhays
      • Semicolon, not comma

        dhays:

        You should capitalize the first letter of a sentence ("Someone said something...") not "someone said...").

        Also, the comma between "days" and "he" should be a semi-colon instead.

        If you're gonna criticize...
        clfitz
    • Really?

      Your still talking about the original galaxy phone? , the GPS issue was resolved in the Galaxy S2. Judging Samsung phones by that first iteration is just ridiculous. Unfortunately your right about the S3 beam feature, hopefully samsung will make their beam feature compatible with google's standard Android beam.

      All smartphones break and chip is not handled properly, I've owned many samsung and htc devices and never had a issue, breaking an iPhone is much easier than breaking a samsung or htc phone, it's almost all glass.
      movielover76
      • "All smartphones break and chip is not handled properly,"

        That is why you purchase a bumper! Ooh Ooh and those little silicon plastic protector covers. You got me all excited, I am going to zagg and buy some right now!
        wiseoldbird
    • One thing you did not explain

      is how you feel that HTC "blundered" by signing an agreeent with Apple - Perhaps if Samsung had done the same we would have been spared the whole back and forth in the courts...
      athynz
    • ....

      Hmmm odd since what your dislikes are are things many people find to work great. I own both HTC and Samsung items. Samsung is better built but HTC sense is a better rom. I think HTCs issues are they aligned most of their best phones with AT&T which means they are not even options. Smart companies will stop the exclsuive contracts and offer their line ups on all carriers. I like many of the HTC products but can't use them due to carriers they are offered on. Now the Galaxy 3 is just plan awesome same as the galaxy note 2 . These 2 phones are tops in the smartphone arena. I cant even put the iphone in the top 5 smartphones and barely in the top 10 list.
      Fletchguy
    • Uh, no Uralbas.

      Nothing what you said will bring HTC back. Speak to ANY sales rep in teh store. The customer comes in asking for a Samsung Galaxy or Apple iPhone. This has been PROVEN even with HTC's own data!

      It used to be about Retail Recommendation, it used to be about software. IT is not about Software, removeable battery, MicroSD ports, the number of apps, blah blah blah. All these are (at best) checkmarks that may provide a bit of sway.

      It is now about 3 SIMPLE THINGS.

      1. The Marketing message and what the Brand represents: How easy they make their product KSP to understand and relate to. No one cares about NFC, but they did because of the way Samsung talks about it. No one cares about Panorama Camera software, but they did because of the way Apple talks about it. And look at the commercials from each company. Whether you like them or loathe them, you know when you see a Samsung commercial (because they invest so heavily in media) or an Apple commercial (because they do not change their creative model).

      2. Price point and Momentum: Consumers are willing to pay for a little more for a device they believe in, or at least, what is being used by other people. Apple have been building the iPhone brand for more than 7 years (starting with iPod, which the iPhone was inspired by). Samsung has been growing the Galaxy Series for 2~3 years. HTC can't stay with a model line or strategy for more than a year. Also, Apple and Samsung are the masters of lifecycle management. They drop the price of the previous Galaxy/iPhone when the next one comes out. Also, the iPhone 4 and GSII, which is stil is being sold, is nearly 2 YEARS OLD! Why come out with a cheaper model when you can take your older flagship and make it cheaper.

      3. Availability at most carriers: The fact that the device is available at most of the carriers, make is a no brainer for the consumer. HTC is learning this, but it took a year to learn it.

      It's not rocket science, but it takes discipline, talent and the will to invest in a brand over several years. HTC has not been able to do have any of it.
      casualsuede
      • Sales Reps...

        Actually if you talk to any Sales Reps they practically push the Samsung and Apple phones while ignoring the HTC, Motorola, LG and Nokia devices. The popularity of the S3 and iPhone series from Apple carries over with the sales staff and it certainly does hurt the competition.
        krustykanuck
  • HTC started the android revolution

    HTC started the android revolution, but now everybody else is selling more androids than HTC because of silly mistakes from HTC. Nobody is giving a big deal about beats audio.

    HTC should have remained faithful to Windows Phone, now even WP users has abandoned HTC because they are focusing on Android. They should have released the HTC One on WP8.
    Owlll1net
    • exactly

      I had to go to 3 stores just to find a nokia 920 in stock, and had to settle for my 2nd choice of color.

      Asked are the HTC phones selling, "nope, not at all" says the guy

      An HTC one with WP8 might of kept me with Verizon
      everss02
      • Nokia 920 in Stock

        Is that 'cos they are selling like hotcakes, or they have not replenished disappointingly slow sales since last November.
        neil.postlethwaite
        • I know!

          From what I have read those windows phone and RT devices are flying off the shelves so fast, Microsoft has had to greatly discount the OS - to even get it on developer's devices and get anyone other than Nokia interested.

          This is the biggest bit of fanboi tripe I have ever read.
          wiseoldbird
        • The other possibility is:

          They are not being stocked.
          wiseoldbird
        • ....

          Obviously sales have been so bad it will not survive. I live in Chicago with millions of phone users and you never see a windows phone user never. I have seen maybe 3 in last 2 years. Iphones are going away since the kids no longer are interested in them since Android and Samsung are the top of the line stuff to have now.
          Fletchguy
          • iPhone

            My retired dad and his wife both use iPhones. It is just like the Samsung ad.
            wiseoldbird
      • ......

        Windows on htc wouldnt help. they had windows on the htc phones and the issue is no one is buying wp8 phones. Its a failed os that gave windows lovers absolutly nothing that a windows user would want to own. Ugly phones, crappy os oh and those damn horrible tiles. Windows 8 metro tiles killed Microsoft thank Ballmer for running the company into the ground.
        Fletchguy
    • htc wp8

      I just don't get all the negativity of the HTC brand. I recently purchased the wp8x and found it to be better than any Samsung I have owned. It is an outstanding fast LTE with very nice features.
      Has all the android ad IPhone features and perhaps some others. Beats audio is outstanding great nearly full range Hz . Lots of apps and better battery life than Samsung and previous HtC phones. I can go two days without having to charge the built in battery. Bluetooth feature is very fast and connect instinctively the minute you click on Bluetooth regardless of other Bluetooth devices. Love MS Notes and SkyDrive feature. Great memory also. Photos and Video are top notch and touch works great with other phones. Love the scanner and use when shopping. Sorry guy, your not giving this latest wp8x phone a respectful review. In fact all I read was how negative you painting their phone. Most users of android and iPhones are I the dark about the Windows Phone. When I show them they are impressed. HtC should do some media advertising to wake up users of this brand. Beautiful as well ...thin light and built well.
      avmail@...
      • 8x

        I have the 8X, too, but only because Verizon didn't carry the Nokia Lumia 920. The 8X is a decent phone, but Nokia's flagship offering is better--and Nokia keeps coming out with great exclusive apps while HTC twiddles its thumbs.
        ParrotHead_FL
    • Windows Phone will save HTC?

      HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA!
      wiseoldbird