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Will HTC join the likes of RIM and Palm? The handset maker has gone from sales superstar to treading water

Even as the death knells sound for Research in Motion, Ltd. (TSE:RIM), the smartphone industry may be close to claiming another casualty.  Faced with slumping sales and unable to compete with slick handsets from Apple, Inc. (AAPL) and Samsung Electronics Comp., Ltd. (KS:005930), Taiwan's HTC Corp. (TPE:2498) is seeing shareholders jump ship as revenue and stock prices decline.

In 2010 and 2011 HTC was on fire.  Its handsets like EVO 4G propelled it from obscurity as a company who manufactured other companies' devices (an original device manufacturer) to an original equipment manufacturer (OEM) role.  Sales quadrupled in 18 months, and stock prices tripled.  At one point HTC was estimated to be the top smartphone seller in the U.S.

Then in late 2011, sales began to decline and profits plunged precipitously.  Today they stand 70 percent off their peak and HTC looks lost.  The company just released its chief financial officer Winston Yung and enlisted the help of ex-Goldman Sachs Group, Inc. (GS) financial veteran Chia-Lin Chang to salvage the leaking ship.

HTC Phone Quietly Brilliant
Quiet brilliance is no longer achieving success for HTC [Image Source: Reuters / Pichi Chuang]

While the shakeup may help HTC slightly on the financial front, the elephant in the room remains how the company can manage to attract customers.  Increasingly Apple versus Android has started to look like Samsung versus Apple, with fifth place HTC fading fast.

The situation may soon further deteriorate as Samsung has reportedly bumped its Galaxy S3 launch to May 3 in London, England.  HTC is reportedly scrambling to figure out what -- if any -- handset in its lineup can keep pace with Samsung's latest flagship entrant, which is virtually guaranteed to pack a gorgeous display, bleeding edge hardware internals, and slick packaging.

One thing's for sure -- with hungry players like Nokia Oyj. (HEL:NOK1V) lusting for a piece of HTC's rapidly gained market share, things are looking increasingly troublesome for the Taiwanese gadgetmaker.  It needs a new game plan -- and fast.

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RE: Begun the Patent Wars have....
By drycrust3 on 4/17/2012 8:39:42 PM , Rating: 2
quote:
For those who don't know, HTC has a far smaller patent portfolio than other players and much less cash to defend itself against these larger foes ... HTC has to pay Microsoft a whopping $5 per headset sold.

I am surprised this is just "an HTC" issue, surely this whole thing is "an Android issue". Why, for example, wasn't a version of Android made which avoided the patents that cost a lot to licence? For example, if we use the famous Apple "slide to unlock" patent as an example, maybe HTC could supply Android with a different type of unlock system, e.g. pressing the volume switch up and down in quick succession to unlock the screen may be sufficient to avoid the Apple patent infringement claim.


By sprockkets on 4/17/2012 9:03:05 PM , Rating: 2
quote:
For example, if we use the famous Apple "slide to unlock" patent as an example, maybe HTC could supply Android with a different type of unlock system


They did. They had the ICS method of unlocking before they did.

However they also did the "bounce" while AOSP (aka the standard version before customization) did the glow, avoiding one patent hurdle.


RE: Begun the Patent Wars have....
By Solandri on 4/17/2012 9:30:18 PM , Rating: 3
quote:
Why, for example, wasn't a version of Android made which avoided the patents that cost a lot to licence?

Because Microsoft wasn't telling anyone what the patents were. They were threatening to sue for patent infringement, and requiring companies sign an NDA before they'd disclose the patents. The NDA prohibited revealing what the patents were to anyone else. Meaning there could be no public evaluation, no public search for prior art, no public consensus on the validity of the patents. Each handset manufacturer had to go into a room, alone, with Microsoft to negotiate a deal.

Barnes & Noble was the company which signed the NDA, concluded the patents were ridiculous, and broke the NDA to call Microsoft out on it.
http://www.groklaw.net/articlebasic.php?story=2011...

Really, stuff like this should be illegal. When dealing with the government, we have a 6th Amendment right to know what we are being accused of. While companies are not per se bound by the Constitution, clearly Microsoft's tactic violated the spirit of the 6th Amendment. If you believe someone is violating your government-granted patents, you should be required to publicly state which patents you believe they are violating. You should not be able to extort money from them with the legal threat of vague, unspecified patent violations.


RE: Begun the Patent Wars have....
By neiljay6 on 4/18/2012 6:07:15 AM , Rating: 2
quote:
Barnes & Noble was the company which signed the NDA, concluded the patents were ridiculous, and broke the NDA to call Microsoft out on it. http://www.groklaw.net/articlebasic.php?story=2011...


Wow. Now that is really sad and low on Microsoft's part. Why is this not mentioned more. New reason for me not to try WP7.


By Reclaimer77 on 4/18/2012 1:05:45 PM , Rating: 2
quote:
Really, stuff like this should be illegal.


Great post, and I agree Solandri.

The whole system is just getting out of hand.


"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer











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