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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 11:27:20 AM , Rating: 2
(waiting for the incoming retort about apple's profit or some other crap no one cares about)

Question: Company A has 25% market share and 75% profit share. Company Z has 75% market share and 25% profit share.

Which company is doing better?

Answer: If you said anything other than company A, then you are dumber than a doorknob. Any intelligent person would take company A’s profit share over that of company Z’s market share.

Lifted from this excellent article - you should give it read :)

Contains this pleasing graphic

RE: You can thank Apple...
By retrospooty on 5/23/2013 2:30:40 PM , Rating: 2
Its funny how you keep having conversations no-one else is having. Even in your reply you quoted the guy sarcastically saying "waiting for the incoming retort about apple's profit or some other crap no one cares about"

You then proceed to ask which company is doing better financially. No-one was asking. He was even making fun of you for countering technical issues with "Apple makes more money" and you STILL came out with "Apple makes more money" as your comeback. The conversation had nothing to do with money, other than him making fun of you because he knew you would go there. LOL.

You are really slipping old man. You used to put up more of a debate, now its just silly. I am wondering, are you slipping after years and years of the same exact talking points, or are your talking points losing more and more merit every year as the world passes Apple by as Apple sits idle. Perhaps both.

Anyhow, when you go to buy a product, do you seriously evaluate which product makes more money for the company or which company makes more money overall? I would really hope you evaluate which product does the most for you and not the company that makes it... Never mind. Look who I am talking to. You just by the Apple product regardless.

RE: You can thank Apple...
By Cheesew1z69 on 5/23/2013 2:57:07 PM , Rating: 2
The author of that article from techpinions....

John Kirk John R. Kirk is a recovering attorney. He has also worked as a financial advisor and a business coach. His love affair with computing started with his purchase of the original Mac in 1985 . His primary interest is the field of personal computing (which includes phones, tablets, notebooks and desktops) and his primary focus is on long-term business strategies: What makes a company unique; How do those unique qualities aid or inhibit the success of the company; and why don’t (or can’t) other companies adopt the successful attributes of their competitors? - See more at:
Tells me all I need to know about him. Gotta love BIAS authors. Tony seems to be able to sniff them out like a dog sniffs his own ass.

RE: You can thank Apple...
By retrospooty on 5/23/2013 4:03:38 PM , Rating: 2
"Tells me all I need to know about him. Gotta love BIAS authors."

Yup... "My point is weak, so let me change the subject to finance and then post a link to an article with an opinion/bias just like mine... That will show 'em". I dont get what he is trying to prove. Apple makes money? I think we all know that.

"Tony seems to be able to sniff them out like a dog sniffs his own ass."


RE: You can thank Apple...
By Motoman on 5/24/2013 8:33:43 PM , Rating: 2
I wouldn't necessarily skewer someone because their first computer was an Apple.

My first computer was a Commodore 64. Then I got an Amiga 500...and then my first 486sx PC. Which, naturally, I took apart to see if I could put it back together ;)

Beyond that, I took my first computer classes when I was in 5th grade...on Apple IIs. I completed all of the coursework there was for all grades through high school in one semester. When I got into HS, our lab was all Apple IIs still. With one IBM clone that no one knew what to do with. My HS programming work was on the Apple IIs. Didn't get that first PC until I was in my 3rd year of college.

So all in all, I was as primed as anybody to be a lifelong Apple fan. But if you've paid attention, you've probably guessed that I'm not. I'm also not giving Microsoft any free passes either...which you've noticed lately especially around Win8 if you've paid attention.

All of which I only bring up because you can't simply point at someone's first computer as being indicative of how they're going to be for the rest of their lives.

RE: You can thank Apple...
By Cheesew1z69 on 5/25/13, Rating: 0
“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls

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