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Chief instructs employees not to concern themselves with "noises" from the media

"Do not be influenced by noises from the market and the industry. We are a strong player in the market and we are just having short-term challenges," Peter Chou writes in a memo to his employees, obtained by The Wall Street Journal, "Please make sure that we kill bureaucracy. Make sure [that] we are doing the right thing quick and make it work."

I. Down, But Not Out

Peter Chou has been involved with HTC Corp. (TPE:2498) since its earliest days, when it was founded in Taiwan as largely a company that high-profile foreign firms like Hewlett-Packard Comp. (HPQ) contracted to produce their designs.  Mr. Chou was there for HTC's meteoric rise in 2009, as the firm became a household name with its self-branded Android smartphones.  And he has been there as that growth has stalled, leading many analysts to issue dire warnings.

Mr. Chou writes, "HTC used to be a company where we did things quick and reacted quick. However, the fast growth from the last 2 years has slowed us down.  We agreed to do something, but we either didn't do it, or executed it loosely."

Indeed HTC's woes come largely at the hands of South Korean Android phonemaker Samsung Electronics Comp., Ltd. (KSC:005930and Californian phonemaker Apple, Inc. (AAPL).

Peter Chou
HTC CEO Peter Chou rallied his troops in an email telling them it's not to late to come back from the cliff. [Image Source: Android and Me]

HTC's losses late last year have been turned into profits early this year, and HTC's new phone lineup like the One S and One X have drawn generally positive reviews.  But the company's recovery has fallen short of analyst predictions, leading to more concern.

II. The Plan Ahead

Struggling in Europe, South America, and much of Asia, HTC is looking to focus on the Chinese market -- a market currently dominated by Samsung, but one in which HTC has gained ground over the last year.  

HTC Sign
HTC aims to expand its Chinese presence this year. [Image Source: Cult of Mac]

America is still critical to business for HTC, though, which in 2011 briefly topped U.S. smartphone sales charts.  Mr. Chou's memo was in English, as are most of his emails to employees -- a practice that's considered unusual by Taiwanese business standards, according to The Wall Street Journal.

Some believe HTC is at risk of a takeover bid, having grown too fast and then stumbled.  But despite seeing its global market share fall in half since last year, and by 50 percent since the start of this year, Mr. Chou is determined that an independent HTC will be back with a vengeance.

While talk and action are separate creatures, it's nice to at least see a chief executive of a struggling firm both acknowledging the reality of their situation, while also pushing employees to work harder to turn things around.  That approach is quite different from the incompetent management of certain other phonemakers like Research in Motion, Ltd. (TSE:RIM) whose leadership have preached that nothing is wrong amid the collapse of their business.  Acceptance of reality is the first step to recovery, and HTC's CEO is giving his employees a dose of that reality, while pushing them in a positive direction.

Source: WSJ

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RE: Android to blame.
By retrospooty on 8/15/2012 2:19:12 PM , Rating: 2
"They need to learn that you can't base a product cycle on an open source operating system version lifecycle."

Sure they could. In the latest quarterly sales results (Q2, 2012)...

Android 68%
iPhone 16%
WP7/7.5 >4%

I am pretty sure they could. It's the #1 OS out there and the one most people want by a huge margin.

RE: Android to blame.
By geddarkstorm on 8/15/2012 2:58:21 PM , Rating: 2
You know, I am curious to see how the consumer market reacts to Windows (Phone) 8, in a sense I haven't seen anyone bring up before. Do consumers want their devices to be scaled all with the same OS (basically) and look, or do they want a phone that is markedly different from a desktop?

For me, I want my phone to be its own device, it's own "thing", not a mini desktop. That's one of the subconscious allures of Android/iOS (though I personally don't like iOS at a conscious level), as it's something different and brings differentiation. If I looked at my phone and then looked at my tablet then looked at my desktop and saw the exact same Metro, I think I would feel "saturated" -- too much of the same thing on different things.

On the other hand, maybe unification is really the most alluring, as it's "all-in-one".

Whatever the case, I really want to see how WP8/W8 works out just to see which way this hypothesis goes. In the meantime, the data seems to suggest that people love Android, love having a level of differentiation between their devices, and HTC like many other companies are well entrenched in this very large, dominant market.

RE: Android to blame.
By retrospooty on 8/15/2012 6:12:39 PM , Rating: 2
My guess... WP8 will be a really good OS and get great reviews. It will have some awesome phones available for it and it still wont sell like Android or Apple. If it hits 10% marketshare I will be amazed.

RE: Android to blame.
By name99 on 8/15/2012 4:24:16 PM , Rating: 4
Android 68%
iPhone 16%
WP7/7.5 >4%

HTC's problem isn't lack of SALES, it is lack of PROFITS.
(Though the numbers of phones sold is not available because HTC follows the phone openness rule:
It seems that the more open a platform, the less is revealed about its market performance.)

Let's revisit the profit numbers again, shall we:
iOS 73%
Samsung 26%
Everyone else 1%

RE: Android to blame.
By retrospooty on 8/15/2012 5:44:51 PM , Rating: 4
Apple has an insanely profitable model, HTC wont be able to do that... Neither will Apple in the future for that matter. They inked out long term carrier deals to buy at high prices back when they were head and shoulders above the competition. For Example, Sprint wont even break even on the iPhone deal for 6 years while Apple rakes it in. Now, Android phones are not only as good, they are far better, so when time comes to renegotiate those deals, Apple doesnt have the bargaining power they once did. Also same goes for their parts vendors.

I wouldn't woorry about open platform and Profits. They will come, just like it did for Windows. 1st get the product performing better than the competition (DONE), then comes marketshare (up every quarter), then comes profits. Just like MS did to Apple's Mac back in the 90's. They simply outperformed them and its beginning with Android now.

Anyhow, for HTC... Thus the need to pare down the umpteen models and make just a few, and make those few really good so people want top buy them in mass.

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer

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