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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 Tony Swash on 5/23/2013 7:22:40 AM , Rating: 2
So if I can sum up what you guys are saying:

a) Not getting OS updates doesn't matter and is a feature not a bug of the Android OS ecosystem.

b) The Android operating system is charging ahead even though no significant OS upgrades or changes were announced at the recent Google IO.

c) The wonderful innovation on the Android platform really has a big impact on users and the world in general even though it takes years (years!) for the latest version of the Android OS to get onto a significant proportion of Android devices

d) Even though Google announced nothing of consequence for the Android OS at the recent IO and even though Apple's WWDC event, at which the new version of iOS will be showcased for the first, has not yet taken place you absolutely know for a fact that Google's amazing (invisible) innovation of the Android OS trumps Apple's (not yet announced) innovation of iOS.

I see you guys are still struggling with the harsh realities of the AppleSung world.

Try meditation.

RE: You can thank Apple...
By retrospooty on 5/23/2013 8:39:33 AM , Rating: 2
Sorry Tony, you have failed again. You are trying to marginalize Android's amazing 2 year run of worst to first development by throwing in older low end phones that didnt get the updates and it just doesnt fly.

a - no, that was you changing the subject. Its not Androids strongpoint as a platform for obvious reasons. Most high end Androids get updated, its the low end that doesnt and its improved greatly over the last year. Dont forget, you arent dealing with one phone from one maker with marginal improvements, you are dealing with a different beast. Androids strength is is flexibility. If OS updates are your bag and you arent technical enough to do it yourself, then Nexus devices get you there.

b - Yes, we are referring to the past 2 years and how Android is firing on all pistons. Google said prior to the show that Android 5 is about ready, but they are holding off to polish it and give manufacturers time to catch up and get ROM's ready to avoid the lack of update impression at or near release.

c - Again, see a above. If you bought a low end phone over a year ago you probably arent getting the latest. Your high end phone will. Really not an issue as you make it out to be.

d - That is just looking at Apple's history. It hasnt change much at all since IOS3. OS I6 should really be called 3.3. If OS7 somehow comes out with far more of an improvement than 3-6 then fine, we will see but there is no reason to suspect that to be true. So far all we are hearing is that they are copying WP8's flat interface. But if you want to hang your hat on your OS version and forget what it actually does for you then go right ahead.

RE: You can thank Apple...
By elleehswon on 5/23/2013 3:25:54 PM , Rating: 2
i'd rather you try and refute my points than switch topics. :)

RE: You can thank Apple...
By Cheesew1z69 on 5/23/2013 3:28:05 PM , Rating: 2
He can't, that's why he switches topics.

RE: You can thank Apple...
By Cheesew1z69 on 5/23/2013 3:51:26 PM , Rating: 2
Or, he just ignores the post and moves on to something else. Last week sometime, I showed him links proving IOS has malware after he claims IOS get none and Android has it all, he ignored it and hasn't responded. When he is wrong, he just flat out refuses to respond or switches to something else. It's his standard MO.

"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken

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