Lenovo's Motorola Mobility purchase seals HTC's fate

Lenovo's Motorola Mobility purchase seals HTC's fate

Summary: There will be two giants in the Android ecosystem: Samsung and Lenovo. That reality means smaller players like HTC are going to struggle even more than they do today.

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Lenovo's move to buy Motorola Mobility from Google in a deal valued at $2.91 billion is likely to spur an Android ecosystem consolidation wave because smaller players aren't going to have the scale to compete.

Lenovo buys Google's handset business, US plan for $2.91 billion 

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Google's Motorola Mobility detour: Running the numbers

The first casualty in this consolidation wave is likely to be HTC.

For Google, one advantage of selling Motorola to Lenovo for $2.91 billion is that it creates two big dogs in the Android ecosystem: Samsung and Lenovo. Lenovo has the scale to compete with Samsung eventually. Today, Lenovo is working on its supply chain efficiencies as it tackles emerging markets. If Google didn't create another Android giant it would rely too much on Samsung.

Also: HTC's revenue slide continues as Q4 ends with December thud

Without Lenovo, the Android ecosystem would be led by Samsung, which dominates and a bevy of smaller players like ZTE that can make some noise, but not enough to really diversify the hardware landscape.

HTC looked like it was going to be an Android player for a while, but its recent sales have been abysmal. HTC's One product portfolio has promise, but doesn't have the sales.

Assuming HTC isn't going to have a miracle turnaround, I only see the following options:

  1. Sell out to another rival, say Lenovo.
  2. Keep fighting a war that it'll ultimately lose, but go for one miracle design to save the day to put off the inevitable. 
  3. Go back to its roots as a company that makes smartphones and designs for partners.

In any case, there isn't a clear path for HTC. A bulked up Lenovo in smartphones will pressure HTC, which is already squeezed by Samsung and a host of Chinese rivals with inexpensive handsets.

It's game over for HTC. It's just a matter of time.

htcmonthly-2013-413x519

 

Topics: Smartphones, Android, HTC, Mobility

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26 comments
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  • More choices is always better than one or two monolithic giants

    I love HTC phones. It will be tough for me if they go away. I tried a few galaxy phones and they are not my cup of tea at all. If HTC goes away I guess I would try LG next. Lenovo can definitely drive something into the ground. Will be interesting to see how long it takes them to tank Motorola.
    wharfrat70
    • HTC legacy phones were terrible!

      My wife got an HTC 4G Evo Shift and a co-worker of mine got the original HTC EVO and neither of them aged well at all. My Samsung Galaxy S1 was far more sturdy and held up much better by comparison. Today my wife is on a Windows 8 Nokia phone and I'm using a Galaxy Note 3...another friend of mine in SF who had an HTC 4G Evo Shift was so angry with his phone as it aged poorly that he got an iPhone 4 and hasn't looked back.
      DonRupertBitByte
    • I loved my HTC Thunderbolt

      But I like it's replacement - an iPhone 5 - much better. HTC makes some really good hardware, Android is a decent OS, but I really did not care for the whole ICS update debacle.
      athynz
  • What if HTC went all-in on Windows Phone?

    What if HTC went all-in on Windows Phone? It might get more attention if it really gave it its all and released some distinctive hardware at different price points.
    cybersaurusrex
    • WinPhone

      Has been getting hammered by Samsung. It will not be good for MS to have another big dog in the Android market
      krossbow
      • WinPhone

        It is being hammered in the US, in expanding markets it is doing well. Some analyst think it could pass Apple in number of sales this year, if not in dollars of sales.
        hayneiii@...
    • Maybe MS should buy HTC and do an Apple

      Maybe MS should just buy HTC, rapidly establish stores in stores and pop up stores globally, to control the Windows Phone retail experience, and do an Apple. Apple's iPhone business is super profitable, and is bigger than all of MS - revenue wise. So instead of bending over backwards to get a lot of OEMs to license WP, MS should focus on selling its own devices, in ways that maximizes its profits. Whether or not OEMs want to license WP should hardly matter, as long the company lots of money. MS however has to own the retail experience as much as it can, since this appears to be limiting its ability to sell higher end phones.
      P. Douglas
      • Eh ?

        Have you been living in a cave for the last 12 months ? They already did in buying Nokia's handset division.

        Note to slack hack journalists - MS bought Nokia's handset division and not Nokia.
        Alan Smithie
    • Why - what about Nokia

      Didn't MS purchase Nokia, at least the HW part? Why would they then add HTC to the mix? Cheaper manufacturing?
      tbuccelli
    • HTC winphone yes!

      My HTC Windows phone is the envy of everyone who uses it.
      Alsteen
      • 8X

        If the 8X came in a 32 GB variety, it would be the no-brainier best WP out there.

        But it doesn't. And it looks like HTC has abandoned WP so there will probably never be a phone like it. It remains the best-feeling phone I've ever held.
        x I'm tc
    • I'm wondering if MS is going to pull WP from other OEM's

      and use it exclusively on their own, since it is moving in the right direction

      This would definitely kill HTC, IMHO.
      William.Farrel
    • There is almost no market for WinPhone

      and the small market that exists is almost entirely held by Nokia.
      1,2,3
  • Just business

    Also sealed the fate of the 2500 soon to be former Flextronic employees outside Dallas who were making the Moto phones
    Barney Rubles
  • What are you basing this on Larry?

    Of course HTCs sales have not been stellar in the last year but why does Lenovo buying Motorola affect HTC? Because Lenovo is bigger than HTC? You failed to mention that the Android landscape already has significant players in LG and Sony - both of whom dwarf Lenovo (about 10 times as big, depending on how you measure). Lenovo will still be a minnow compared to Samsung, Sony and LG.

    Seems like very vague, hand-waving, journalism to me.
    adamopolis
    • Uh...not true

      If you are doing an apples to apples comparison. Lenovo is the 3rd or 4th largest handset maker in the world. Lg is big but not in the top 5 (maybe 5th) in smartphone manufacturing. Sony and LG make their revenues in other industries like home appliances, tv and games, not on phones.
      casualsuede
  • HTC spent too long

    Not listening to what customers wanted, largely because they were too busy with internal conflicts. Too late now (even though the one was pretty)
    theoilman
  • After some quick Googling

    LG is the third biggest manufacturer:
    http://www.androidcentral.com/sites/androidcentral.com/files/imagecache/w550h500/postimages/444537/idc-shipments-q2-2013.png
    and you also have ZTE and Huaweii and Lenovo all on around 5% of the market. Samsung, Huaweii and Apple also make their revenue in other industries (Samsung is like a Korean GE).
    So my point still stands, HTC has always been battling much bigger players, that one of them buys a small player (dont think Motorola even makes the top 10 any more) that sells primarily in the (now saturated) North American market doesn't change much. The real battleground is the Asian market - this is what will define the fortunes of smartphone makers in the next 5 years.
    HTC does have its problems, and they may get worse. But I see no reason that Lenovo buying Motorola will "seal their fate"
    adamopolis
    • Q2? Try Q4 stats.

      http://gadgets.ndtv.com/mobiles/news/samsung-sells-record-86-million-smartphones-in-q4-widens-lead-over-apple-report-476221

      "Samsung took 29.6 percent of the global smartphone market in the fourth quarter, ahead of Apple's 17.6 percent, as strong low-end market growth led by Chinese vendors continued to shake up the smartphone industry, the data showed.

      Apple sold a record 51 million iPhones in the year-end quarter although its market share slipped from the previous year's 22 percent, as Huawei Technologies Co Ltd and Lenovo Group Ltd rose to become the world's No.3 and No.4 respectively.

      Huawei sold 16.6 million smartphones and Lenovo sold 13.6 million, each taking 5.7 percent and 4.7 percent of the market."
      casualsuede
  • You have one serious flaw in your arrgument

    We like HTC, Moto wasn't selling and Lenovo is a non-player. Sure, they will be releasing phones, but we haven't bought them in the past and getting stuff from Moto we weren't buying isn't going to change that.

    One word...One. It's the best phone, and will remain so for awhile still. HTC can build on the One line and do exactly the same as Sammy did with the Galaxy line....oh, one big difference. The One feels like quality, the Galaxy line...plastic.
    timspublic1@...