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HTC First flop is another painful loss for struggling Asian OEM

After early delays due to a snub by a camera part supplier and issued with the anodized finish on the black model, HTC Corp. (TPE:2498) is starting to see sales of its HTC One 1080p flagship Android smartphone pick up steam.  But in the face of growing employee defections and failures of other key products, HTC still appears to be in very bad trouble.

I. First is a Flop

The smartphone industry is one of tech business's most viciously competitive sectors and is not for the faint of heart.  HTC bet big with its HTC First, and it appears to have lost big.

After a much-hyped April launch event, partner Facebook, Inc. (FB) promised HTC a period of exclusivity on its Android reskin "Home", which the HTC First comes preloaded with.  Such exclusivity could have given some customers incentive to buy the HTC First.  Instead, Facebook went back on its original plan, releasing the reskin to HTC's competitors like Samsung Electronics Comp., Ltd. (KSC:005930).

In addition to the exclusivity loss, Facebook's Home suffered horrible reviews from Android users who complained that it was clunky and at times nonfunctional -- nothing like the slick appearance Facebook gave in its media preview.  Sales of the HTC First have been nonexistent, as evidenced by the recent price cut from $99 USD to 99 cents.  A source close to the company tells The Verge that the hyped handset has been "a disaster".
HTC First
Reportedly the phone may be discontinued.

II. Employees Jump to Other Firms

Meanwhile HTC is suffering internal issues as well, bleeding employees.

It's important to take the wave of defections and departures with a grain of salt; after all many of them come from the marketing department, and new marketing chief Ben Ho is in the midst of a major revamp to the company's marketing direction.

That said, the situation at HTC is rumored to be struggling to pay top engineers and marketers the top salaries that its more-successful rivals are offering.  One source close to HTC's user design unit, led by Drew Bamford in Washington State, tells The Verge, "Anyone who's heard of them in Seattle doesn't want to go work for them right now. They're like T-Mobile two years ago.  They're in utter freefall."

HTC's Chief Product Officer, Kouji Kodera, reportedly quit the company last week.  Other recent departures include Jason Gordon, the company's vice president of global communications, global retail marketing manager Rebecca Rowland, director of digital marketing John Starkweather, and product strategy manager Eric Lin. And we’ve just learned that HTC Asia CEO Lennard Hoornik has also left the company.

Mr. Lin and Ms. Rowland have joined Microsoft Corp. (MSFT) while Mr. Starkweather has joined AT&T, Inc.'s (T) ranks.  Mr. Lin fired a parting shot at his former employer, writing:

It's unclear whether it’s the cause of or effect of the departure, but HTC's Marketing CMO Ho is reportedly preparing to transfer the marketing and product development departments back to Taiwan (from Seattle, Washington).

It remains to be seen if HTC will suffer its highest profile loss yet -- the departure of its long-time CEO Peter Chou.  Mr. Chou promised to step down if the HTC One was not a success.  While the handset is seeing modest sales, it's reportedly being heavily outsold by Samsung's Galaxy S IV, which moved 10 million handsets in under four weeks.

III. A Road to Recovery?

Ultimately, some industry observers question if HTC can continue to compete.  Apple, Inc. (AAPL) is king of supply negotiations and has pricing and parts inventory flexibility that HTC can't hope to match.  Plus it has its own international retail footprint dedicated exclusively to marketing its products.  HTC doesn't have that.

Likewise Samsung has unique advantages of its own -- via its display and processor units it makes much of its own hardware.  If Samsung needs a component, in most cases it doesn't have to rely on volatile suppliers -- it can simply make it itself and pocket the savings.  Again, HTC lacks this kind of capability.
 
Nokia sign
HTC could take a page from Nokia's book in its recovery. [Image Source: AFP]
 
As financial dip towards the red, handsets flop, employees leave, and suppliers squeeze HTC harder, things are looking bad for the Asian Android OEM, which is currently the fifth largest Android phonemaker behind Samsung Electronics Comp., Ltd. (KSC:005930), LG Electronics Inc. (KSC:066570), Huawei Technologies Comp. (SHE:002502), and ZTE Corp. (SHE:000063).

At this point about the best case scenario for HTC appears to be following a path similar to Finland's Nokia Oyj. (HEX:NOK1V) who downsized and restructured as a smaller, leaner competitor.  Nokia recently returned to profitability, albeit with a sales volume far from that of its glory days.  Perhaps HTC could hope for a similar outcome, but it's clear for now that it's farther than ever from the top and continuing on its downard spiral.

Source: The Verge



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RE: You can thank Apple...
By zlandar on 5/22/2013 2:14:36 PM , Rating: 0
HTC dug it's own grave by releasing uninspired models for far too long. It should have released a product like the One two years ago.

Intel has whipped AMD since the release of the Core processors.

See the pattern?


RE: You can thank Apple...
By Motoman on 5/22/2013 3:17:18 PM , Rating: 5
quote:
HTC dug it's own grave by releasing uninspired models for far too long. It should have released a product like the One two years ago.


That's just opinion. It's an irrefutable fact that they were massively injured by the import ban.

quote:
Intel has whipped AMD since the release of the Core processors.


You've just solidified my point. Intel's criminal activity hamstrung AMD during the time period in which AMD was not only the price leader, but also the product leader. The crimes bought Intel the time they needed to wake the f%ck up and start putting out better product. So AMD was denied the ability to truly make hay during their glory years.

The pattern that is evident is that bad behavior on the part of industry heavyweights, like Apple and Intel, can reap massive rewards for them...even when they "lose" the initial battle. Apple didn't get the permanent ban on HTC they wanted - didn't matter, the outcome is the same. Intel got caught in a number of illegal dealings and had to pay AMD a billion dollars. Didn't matter - the damage was done and AMD was robbed of the chance to take big marketshare.

One can say that no good deed goes unpunished...it may very well be that no bad deed goes unrewarded too.


RE: You can thank Apple...
By Crank the Planet on 5/22/2013 4:14:09 PM , Rating: 2
Ditto Motoman! You hit the nail on the head. During that time Intel's only innovation was "Netburst." Intel reps told us to sell it as "A better, richer internet experience." What a crock.

For both HTC and AMD, the damage was done. There's always hope, but it's pretty slim. I like HTC phones. The One-x was awesome. The One just might be my next upgrade :)


RE: You can thank Apple...
By zlandar on 5/22/13, Rating: -1
RE: You can thank Apple...
By Motoman on 5/22/2013 5:12:55 PM , Rating: 4
...are you honestly that stupid?

Intel's criminal activities prevented AMD from competing on the merits of it's product. That prevented massive amounts of sales for AMD, and caused AMD to never make unknown amounts of revenue that it could have made if it wasn't for the crime Intel committed.

Revenue that AMD could have used to continue to invest in R&D. R&D that could have kept AMD in front of Intel. Not to mention gaining momentum via marketshare.

What Intel did was to blackmail the OEMs so that AMD *couldn't* generate capital. Intel already had the capital...AMD needed to generate it during that time period.

Pull your head out.


RE: You can thank Apple...
By zlandar on 5/23/13, Rating: 0
RE: You can thank Apple...
By retrospooty on 5/23/2013 10:42:14 AM , Rating: 3
That is a good point.

AMD was really "firing on all pistons" for a time in the early 2k's. They were first with x86 compatible 64bit CPU, first consumer dual core chip and first with on die memory controller. Those are the things that had the Athlon64 smoking the Pentium4. Since then, they just... Stopped. They have been releasing marginal improvements on that same design for almost a decade now. Intel came out with the Core2 and took back the speed crown and AMD just... did nothing.


RE: You can thank Apple...
By Motoman on 5/23/2013 11:05:09 AM , Rating: 4
quote:
It's interesting how you never blame AMD for it's failure to put out a competitive product since the Athlon 64.


What's more interesting is that you expect them to do that while constantly operating at a loss, or very rarely a thin profit. There is a direct reason for that...Intel's criminal activity which prevented them from gaining the revenue and market position they deserved.

quote:
Your transparent anyway. Like Pavlov's dog if there is an article about Apple/Intel/whatever "Big Evil" company on your $hitlist you say the same old spiel.


So your position is that it's OK for Intel to become a criminal organization, and then it's AMD's fault because Intel committed the greatest crimes ever recorded in the semiconductor industry to keep them down? Do you have the slightest idea how moronic you are?


RE: You can thank Apple...
By rudolphna on 5/23/2013 11:06:23 AM , Rating: 3
You sir, sound like a real intel apologist. Let's be frank, Intel PAID OFF Dell, HP and others, to NOT USE AMD chips. Simple. That means that AMD didn't sell nearly as many chips as they probably would have when they were both cheaper, and performed better.

Because intel prevented AMD from MAKING MONEY, AMD had LESS MONEY to use on R&D to COMPETE with the Core etc. Once you end up behind in both product and money, it's hard to come back from. And AMD probably would never been in this situation if it weren't for intel paying off the PC OEMs. They would have made money, which would have allowed them to spend money on R&D.

Any idiot who isn't licking intels balls would be able to see that.


RE: You can thank Apple...
By Belard on 5/22/2013 11:45:46 PM , Rating: 2
Er no. What Intel did was prevent AMD from getting design wins with the likes of Dell during the Pentium4/Netburst era. Some Dell shareholders have SUED Dell for doing that.

When Intel, costs AMD revenue - which is NEEDED for R&D to develop competitive produces - then YES, Intel's actions are very wrong, illegal and non competitive.

Just before the release of Core2, AMD was actually just hitting over 20% of new computer sales. Because techies like *US* knew the AMD was a cheaper and much faster CPU over the intel. The AMD64 3200 (2.0Ghz off the top of my head) at $180 was faster at games and some other operations than the $900+ Pentium Extreme at 3.8Ghz. Only an idiot would spend that much money to SHOW OFF. **note, 20% in new sales doesn't mean 20% of total market share.

When you walked into an Office Depot or Staples and they had 10 desktop computers, 8 of them would be AMD.

Intel punched and kicked AMD in the nuts by (A) making a faster and cooler chip (B) at half the price of AMD normal price. AMD quickly had to reduce their price to even begin to compete. (Good for us, not so for AMD).

Current AMD CPUs are still about 15% slower than Intel. I am an AMD fan... but Since Core2, I bought the Core2Quad 6600 and currently an i5-3570K. Why? Faster CPU, less power, less heat and better price.

Yes, its AMD's fault since the Core2 that they have had trouble... up to a point. If they had double the budget for R&D, they could make a better chip. The CPUs they have now are still a bit of a sad joke. They basically made their own version of Netburst (high clock rates, low performance per clock) - that was a choice they made.


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