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HTC may now be moving a million units of its flagship smartphone or less, slips to tenth place

Once the top smartphone seller in the U.S., Taiwan's HTC Corp. (TPE:2498) has today slipped to tenth place, according to Gartner, Inc. (IT).  The company this week announced its earnings for June, revealing that it will miss analyst earning expectations despite modest sales of its well-reviewed flagship "One" smartphone.  The struggles are the latest for the company, which has seen a dramatic financial fall from grace since late 2012.

I. The Fall to Tenth Place

The embarassing plunge could be blamed on a variety of causes:
HTC gave no hard numbers on how many One smartphones it has sold, only stating that sales are picking up.  Previously, an unnamed executive had told The Wall Street Journal that by late May 5m One smartphones had been sold.  That was roughly 2 months after the global launch, and 1 month after the U.S. launch (which was delayed to late April).

But Citigroup Inc. (C) Global Markets Inc analyst Kevin Chang estimates there may only have been ~1.2m in May sales and ~600,000 in April sales.  He commented to The Taipei Times, "HTC shipments to peak in May, stay at a similar level in June and start to decline in July."

HTC One
HTC One sales appear to have seriously slid in June, after a May surge.

And reality may be even worse than that when it comes to June sales.  HTC pocketed $29B TWD ($962M USD) in May, but just $22.1B TWD ($733M USD) in June.  June's sales had erased roughly 70 percent of May's gains over April, at about twice February's record low ($11B TWD ($365M USD)).

In total HTC took in $70.7B TWD ($2.35B USD) for the quarter versus a Bloomberg analyst consensus of $72.8T TWD ($2.42B USD).  Net revenue (profit) was $1.25B TWD ($41.5M USD), well short of the $2.17B TWD ($72.0M USD) Bloomberg-surveyed analysts predicted.

HTC sign
HTC has closed several offices as part of a downsizing plan. [Image Source: Reuters]

The losses come despite aggressive cost cutting by HTC and facility closures late last year.

II. No Relief in Sight?

The future is murky for HTC. 

It's making aggressive changes on the marketing and management fronts.  It reportedly signed Robert Downey Jr. (of Iron Man fame) to a $12M USD endorsement deal, making him the face of HTC's high-tech smartphones.

Iron Man headsup
Robert Downey Jr. will reportedly give HTC marketing a boost. [Image Source: Marvel Studios]

Those high-end products include such well reviewed premium products as the overseas "Butterfly" model and the international "One" flagship device, both of which feature attractive margins.  

But overall HTC's lineup looks anemic and its recovery seems to be slowing.  There's a serious risk that HTC's long time CEO Peter Chou may step down.  Poor support for last year's mid-range devices is a troubling sign for HTC, and may be enough to scare off customers to HTC network-carried handsets.

Those things aside, perhaps the biggest looming threat is the lack of upcoming products in the pipeline, at least according to currently leaked information.  HTC is planning on launching an HTC One Mini in August that looks like a substantial step up from the Galaxy S 4 Mini.  But the Galaxy S 4 Mini is out now -- and Samsung's rumored to upgrade it around the time of the HTC One Mini launch.
 

HTC One Mini
The HTC Mini is arrive late to the party, so to speak. [Image Source: forte.delfi.ee]

Samsung is releasing specialist smartphones (like the GSIV Active and GSIV Zoom), while HTC's lineup remains small.  And while Apple's big update -- the Apple iPhone 5S -- and a faster Galaxy S IV are rumored to be on the horizon for fall launches, there's a relative lack of compelling upcoming product from HTC in the rumor mill thus far.  That's not to mention Huawei Technologies Comp.'s (SHE:002502) upcoming Ascend P6 and Nokia Oyj.'s (HEX:NOK1V) Lumia 1020.

Sure, the HTC One impressed, but did HTC tip its hand too early and fail to follow up?  That's what increasingly looks to be the case, as the next generation of smartphones to be released over the next few months aim to erase the reviews lead HTC's flagship device briefly enjoyed.

HTC can take comfort in the struggles of Apple and Samsung.  But at the end of the day the parts of the roadmap that are leaked or public known seem to suggest HTC to be at a competitive disadvantage looking at the rest of 2013.

Sources: HTC, Bloomberg



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It's a shame
By rudolphna on 7/5/2013 9:46:33 PM , Rating: 5
It's a real shame, because the HTC one is by far the best smartphone on the market. I've had mine since early May, and it's been absolutely perfect in every way. It's fast, has great battery life, has a great screen,.. I have absolutely no complaints about it. It's a shame that they aren't doing well, despite having the best phone on the market. >:|




RE: It's a shame
By StormyKnight on 7/5/13, Rating: 0
RE: It's a shame
By stm1185 on 7/5/13, Rating: 0
RE: It's a shame
By jimbojimbo on 7/6/2013 12:12:12 AM , Rating: 5
I got mine because of its beautiful screen, micrSD slot, and the fact it has wireless charging once you buy a little receiver for just $20. Now I can charge my phone wirelessly on my nightstand and in my car.


RE: It's a shame
By ihateu3 on 7/6/2013 2:00:19 AM , Rating: 2
HTC was the biggest and best Android manufacturer until Apple sued their asses off... At that point in time, Samsung wasn't trying as hard as they are now. HTC did not have the money to fight Apple back, then when Samsung was sued, not only did they fight back legally, but they made a much better phone!

The rest is history, but yes at one point in time, HTC was the cutting edge, its a sad story as they did not deserve the blows they were dealt.


RE: It's a shame
By Johnmcl7 on 7/7/2013 8:53:56 AM , Rating: 4
I would choose the S4 (or more likely the Note 3) for similar reasons, having a large beautiful screen but limited onboard memory is a real weakness for my use (my two year old Note has over twice the capacity of a One due to being able to use micro SD expansion) and with power hungry devices having a fixed battery is also an issue. I don't like the HTC design either, it seems to get a lot of praise for the way it feels but in terms of day to day durability it seems poor compared to Samsung's build (at least it was on the Sensation and S2).

I used to be a big fan of HTC when they produced highly functional devices but since they decided to dump all that for 'pretty' phones with no expansion, fixed battery and poor durability I wouldn't even consider an HTC handset at the moment.


RE: It's a shame
By half_duplex on 7/8/13, Rating: 0
RE: It's a shame
By BRB29 on 7/8/2013 12:36:37 PM , Rating: 4
people like the SD slot because the manufacturers like to charge you about $100 for an extra 16GB. You can get 16GB micro sd card for about $10 these days.


RE: It's a shame
By Solandri on 7/8/2013 1:11:28 PM , Rating: 3
quote:
Unless you're one of those guys who needs 5-25 movies on your phone, in which case you're both weird and a loser. :)

1) Smartphones are now video cameras, and the go-to video camera of choice for parents. The fact that you assumed people would want the space for ripped films says you're the one who needs to get a life (and have some kids).

2) Did you know you can stream movies (whether ripped from blu-ray or shot with the phone) from your phone to your HDTV? So not only is it a portable video camera, it's also a portable entertainment center and movie/music library. But a library is only as good as the size of its collection.


RE: It's a shame
By jimbojimbo on 7/8/2013 1:12:17 PM , Rating: 2
I'm sure you only need 512KB of memory as well right? Just because you lack the mental capacity to be able to utilize more doesn't mean others cannot. I have a 64GB microSD card in my phone and it has several movies and tv shows but guess what? You're an idiot if you just keep your storage full all the time. I can with my memory card record hours of 1080p footage. How about you? I currently have about 30GB free and I know if I needed to I can take as many pictures and video as I want without worrying about running out.
Please tell me how buying an additional 64GB of storage for $50, totaling 80GB, is worse than paying $200 more for 64GB total? Also, if I need to take my phone in for maintenance or something I can remove my card and instantly all my personal photos and videos aren't available for the techs to look at and accidentally delete. It's entirely win win.
By the way you didn't comment on my wireless charger. Is it because it's entirely impossible in those aluminum cases without buying a huge honking case to basically dock it into? Aluminum may look nice but it's only good for people who only care about what it looks like. By the way I have a case on my S4 because at the prices companies are charging for a new phone it's insane not to protect your purchase.


RE: It's a shame
By Monkey's Uncle on 7/8/2013 5:25:01 PM , Rating: 2
How exactly does dropping 5-25 HD quality movies on my SDCard mark me as weird or a loser? I can actually do it. I would say that if you can't, you are the one losing out, aren't you. ;)

I mean, pay $600 for a phone that can't? Why???
That would be mark of the weird loser.


RE: It's a shame
By djdjohnson on 7/6/2013 12:09:34 PM , Rating: 2
A lot of people buy the S4 because it is what is in stock. The One is still hard to find.


RE: It's a shame
By InsGadget on 7/6/2013 8:38:19 PM , Rating: 2
Exactly. Lack of availability on Verizon is huge.


RE: It's a shame
By hau101 on 7/6/2013 11:11:32 PM , Rating: 2
So Samsung is hip because it's become mainstream? I don't get it. I would've chosen the S4 over the one for the replaceable battery, SD card slot, and UI despite a lot of people liking Sense more.

Then again with Apple out of the spotlight now, the S4 is the new "face" of a "good" smartphone and I imagine people who don't have time to research several phones or just aren't techy enough will just default to the S4, just like they used to for the iphone before. But I won't consider that being "hip."


RE: It's a shame
By acer905 on 7/6/2013 8:21:14 AM , Rating: 3
Time for another pointless personal anecdote!!

I know 5 people, myself included, who own an HTC One, and 0 people who own a GS4. One person I know has a NoteII, and everyone else either has an iPhone or a smattering of older androids.

That must mean that HTC wins...


RE: It's a shame
By cyberguyz on 7/8/2013 5:41:21 AM , Rating: 2
For you, I suppose it does.

I have a GS4 and I don't know anyone at all that owns an HTC one. For me, don't look like HTC winning much at all.

If it makes you feel better there is a general slump going on right now. Everybody is losing money. Samsung and Apple too.


RE: It's a shame
By jimbojimbo on 7/8/2013 1:18:03 PM , Rating: 2
Acer was joking by the way.
For me I ride a train into work every day and most of the people have phones out. I have yet to see a One but I think I've only seen one S4... it's hard to tell since the S3 and S4 look pretty similar from further away. I still see a lot of Blackberrys though and saw two Windows phones of some sort.


RE: It's a shame
By BRB29 on 7/8/2013 2:32:34 PM , Rating: 2
Who cares lol, we know Samsung sold more GS4 so you should see more of them than HTC One.

Whether which one is better or not is subjective. Most people think the GS4 has a better screen but it doesn't. But both screens are excellent and probably indistinguishable by most people. The main difference being the body material and SD slot. I would prefer no SD slot for the better body while others would disagree.

I'm still waiting for a phone that has a good aluminum body and an SD slot.


RE: It's a shame
By jimbojimbo on 7/9/2013 11:27:22 AM , Rating: 2
Don't forget wireless charging. I got another charger for home and I love that thing.


RE: It's a shame
By Monkey's Uncle on 7/8/2013 5:27:11 PM , Rating: 2
quote:
Acer was joking by the way.


LOL OK, I'm slow :P


RE: It's a shame
By spread on 7/5/2013 11:56:08 PM , Rating: 2
quote:
It's a shame that they aren't doing well, despite having the best phone on the market. >:|


You tell me that in 6 months when HTC quickly drops support for the HTC One like every other device before. Maybe you'll get one update if you're lucky.

This is why people hate HTC: http://www.dailytech.com/HTC+Kills+Android+Updates...

First they say that of course the HTC One S will be getting an update to Android 4.2 with the One X. Then the update comes and weeks later they announce that no, no more updates. You want updates you buy new phone. That is the HTC way.


RE: It's a shame
By rocketbuddha on 7/6/2013 4:58:56 PM , Rating: 2
Exactly.

http://pocketnow.com/2013/04/01/heres-what-htc-did...

HTC shot itself on its foot. HTC One S is the latest obvious case and there will be more.

Most of the phone buyers in the US buy the phones as a part of contract with a carrier. Keep in mind One S was the premium HTC handset in 2012 on T-Mo network. If there is not even software support for 1 year.


RE: It's a shame
By retrospooty on 7/7/2013 2:09:12 PM , Rating: 1
"One S was the premium HTC handset in 2012 on T-Mo network"

The One S was never a premium phone. It was a mid range phone and it was released with 4.0. Jelly BEan came out several months after it was released and it DID get an update to JB 4.1. For you to expect 2 years of updates on your mid range phone is beyond optimistic. No phone maker does that, on ANY OS. Not Nokia, not any Android maker and not Apple either. No mid range phones get updates like that. YOu should be happy with the fact that your middle range phone on a budget carrier got a Jelly Bean update at all. IF you want updates, you have to buy high end. Or better yet, take it upon yourself to update it with a custom ROM.


RE: It's a shame
By TakinYourPoints on 7/7/2013 10:45:10 PM , Rating: 2
quote:
No phone maker does that, on ANY OS. Not Nokia, not any Android maker and not Apple either.


iOS 6 is available on iPhones going back to the 3GS from 2009.

http://arstechnica.com/apple/2012/09/tempting-fate...

It is ancient hardware at this point and it should be upgraded, but in Ars' words it does work: "iOS 6 doesn't make the iPhone 3GS any slower or more difficult to use than it was before, which should be good news to anyone who keeps theirs around as a secondary or backup phone"

I'm guessing that iOS 7 will bump the minimum spec up to the iPhone 4, but supporting a device that is over three years old is pretty good, better than the maybe one year OS upgrade you get from most other devices.


RE: It's a shame
By retrospooty on 7/8/2013 7:24:50 AM , Rating: 1
No less than 3x in the post you replied to I mentioned that it was for a mid range phone. The very theme of the whole post was that no manufacturer releases mid-range phones and updates them for over 2 years. What Apple does is supports their high end phone for 3 years.


RE: It's a shame
By cyberguyz on 7/8/2013 8:32:13 AM , Rating: 2
Does Apple actually have a mid-level phone?


RE: It's a shame
By retrospooty on 7/8/2013 9:40:26 AM , Rating: 2
No. They dont. They only release one per year and it's the high end... They then sell last years model as a mid-high and 2 years ago's model as a mid-range.

Regardless of the segment, obviously Apple having one phone per year is better at OS updates. If that is a concern, and guaranteed "official" updates are important to you and custom ROM's are not something you want to tackle, then the iPhone is your best bet.


RE: It's a shame
By TakinYourPoints on 7/8/2013 4:35:26 PM , Rating: 2
Fair enough. That said, getting reliable updates on many other high end phones is unfortunately also problematic. I really wish carriers would do a better job at this.


RE: It's a shame
By retrospooty on 7/8/2013 4:50:05 PM , Rating: 2
Yes, they surely should, for public perception if nothing else.


RE: It's a shame
By rocketbuddha on 7/8/2013 10:21:52 AM , Rating: 2
On T-Mobile, One S was not a midrange phone. While S3 came a couple of months later, One S was the most expensive Android phone save the Note in the line up.

While it had qHD AMOLED 4.3" vs. HD SLCD2 4.7" on the screen, smaller battery (due to smaller screen) and front cam was below specs, it had a better build quality (ceramic vs. polycarbonate).
And the SOC it used MSM8260A is CPU+GFX wise the same as its OneX cousin MSM8960. The difference is that the latter has support for LTE while the former ends with DC HSPA+. It was released at a time TMo still had not disclosed plans to move to LTE.

So hardware spec-wise while it was not the highest, it was closer to high-end than mid end when compared to contemporaries.

HTC One S was available (late Apr 2012) with 4.0.3 ICS(when 4.0.4 ICS has been available for more than 2 months). Within a couple of months JB(4.1) was released. So HTC always updates to 1 version of the OS from the release version esspecially when the release version is actually not the latest.

When HTC was "golden"(till 2011), it basically had a great attitude of support. It had removable batteries, expandable memory and good OS support and upgrade policy irrespective of the class of phones. This was at the time that Samsung literally had disastrous start with the Galaxy series of Android phones. When HTC went to chasing just new customers and said screw you to existing customers, they started going down.

I have had travails with the HTC Amaze 4G upgrade
http://pocketnow.com/2013/04/01/heres-what-htc-did...
Look at the TMo forums on the problems that happens whenever HTC upgrades the OS. Very poor QC and testing.


RE: It's a shame
By retrospooty on 7/8/2013 4:44:20 PM , Rating: 2
I hear what you are saying, but just because it was the highest Android phone except for the note on one budget carrier doesn't make it high end phone. It was a mid-range phone period. The same generations "high end" from HTC was the OneX. Whether T-mobile had that or not at any given time doesnt change the fact that the One S was their mid-range phone... And they did update it to JB.

If you do want the latest erison of the OS, here ya go. http://get.cm/?device=ville&type=

As a person that comes to Anandtech/Dailytech I assume you arent "normal" and are somewhat technically inclined, so it should be an easy path for you.


RE: It's a shame
By daar on 7/6/2013 12:09:10 AM , Rating: 2
There were a large number of consumers that had HTC One's with poor workmanship. Some examples being screen protrusion, bezel gaps, uneven/rough cuts, flawed cameras. The returns and unpleasant experiences certainly did not help them :/


RE: It's a shame
By bug77 on 7/6/2013 6:00:32 AM , Rating: 2
Remember when Bill Gates' intuition told him IBM's PC will go nowhere without an operating system?
It's the same with smartphones today. You may have the best hardware, bar none, without proper (and up to date) software, you'll still leave your buyers with a bitter taste.


RE: It's a shame
By rudolphna on 7/6/2013 9:29:40 AM , Rating: 2
Heres the thing- other than security, I see no reason for an update to the HTC one software. It's perfectly fine as-is. That wasn't the case for say, my SGS2. Plus, flashing that with ICS when it came out royally screwed it up.


RE: It's a shame
By bug77 on 7/6/2013 4:18:06 PM , Rating: 2
quote:
Heres the thing- other than security, I see no reason for an update to the HTC one software.


Well, their software is buggy to the level they forgot some logs on debug level, providing an intruder with tons of location data. And look at the benchmarks of Sense'd One and the pure Android variant (there are some on gsmarena). There's no reason Sense should affect CPU benchmarks, yet it does.

quote:
It's perfectly fine as-is.


Get back to me when the rest of the world enjoys their Android 5.0 while you'll be stuck with 4.3 (at best).


RE: It's a shame
By spread on 7/6/2013 4:55:50 PM , Rating: 2
quote:
I see no reason for an update to the HTC one software. It's perfectly fine as-is.


New software means new features. You can buy a new phone from HTC every 6 months if you like but the rest of us want software updates like every other phone out there. Even Sony has better support and care for customers. Sony.

HTC deserves to go bankrupt and be an example in business classes about what not to do.


RE: It's a shame
By Chaser on 7/7/2013 1:34:03 PM , Rating: 2
Right. That's how everyone shops and compares phones. At the mall kiosks, stores, and online: future unknown updates.

But I wonder how my phone will make and take calls after this:

http://www.zdnet.com/android-4-2-2-rolling-out-for...

HTC can burn in *ell.


RE: It's a shame
By retrospooty on 7/7/2013 2:05:11 PM , Rating: 2
People like to buy cheap phones then complain they dont get updates. The fact is there are no low to mid range phones from any maker that get updates 2 years after release. It just doesn't happen. I would be bummed if I got the One X from last year and it wasnt updated, but the One S is a mid range phone. and it DID get a JElly Bean update to 4.1. That is a good thing. Anyone that buys a mid range phone with the expectation they will get updates for 2 or more years is delusional and expecting way too much from their phone.


RE: It's a shame
By name99 on 7/6/2013 2:21:23 PM , Rating: 2
The more relevant aspect of the analogy is that getting your OS from a third party results in a commodification of the HW space, which leaves zero money to be made by anyone in the space.

Google has apparently tried to avoid this trap by encouraging skinning and OS modification by the large companies rather more than MS, but this obviously hasn't worked. It's still not clear to me if the primary problem was that Google was only half-heartedly behind this, or if they did not realize before they started how utterly incompetent their HW partners were, both at SW (NONE of them appears to have created compelling customizations; even the most aggressive, like Samsung, appear to be bug-ridden and slow) and at business (they've pretty much all pissed off their customer base by developing a reputation of never upgrading their software).

The results are obvious. Even the one company that was making money in the Android space, ie Samsung, looks rather less golden than it did six months ago.
More floundering around doing what's been suggested here is not going to change anything. More models, different sizes, targeting new demographics, none of that changes the STRUCTURAL issues. It's just like the PC world --- what these companies are delivering is commodities, which means they can't charge anything but low prices, which means they have no money to do the R&D to raise themselves above commodities.

Is there a solution? Not that I can see, not as long as you want to play this game of using someone else's OS to drive your phone.
You could try to get into the Win8 game --- but there's no reason to believe that MS is going to help you out any better, it's the same game there.

The only way out is to control a critical mass of the device --- most likely the OS, but alternatively perhaps a unique HW feature. This is, of course, where Apple is, but is there space for another Apple? The cost to reproduce everything they have would be prohibitive.


RE: It's a shame
By Solandri on 7/6/2013 2:52:35 PM , Rating: 2
quote:
Remember when Bill Gates' intuition told him IBM's PC will go nowhere without an operating system?

Off-topic, but Gates' intuition told him no such thing.

Gate's mother was friends with an IBM executive who happened to be tasked with making/buying an operating system for their soon-to-be-released IBM PC. He mentioned this to her while they were having lunch together, and she told him to contact her son Bill because he ran a software company.

She tipped off Bill to expect a call from IBM about an operating system, and when Gates spoke with IBM he told them sure he could provide an operating system, even though he had none and didn't have any experience making one. He called around, found that Seattle Computer Products had something they called QDOS (quick and dirty operating system), negotiated, and bought the rights to it for $50,000. When he later met with IBM, he presented them QDOS as Microsoft DOS.

It wasn't about innovation nor intuition. It was all about having business connections, being in the right place at the right time, and having a ruthless personality which shamelessly withheld information from people for his own personal benefit. You know, the personality type which makes a manager take credit for his subordinate's work. An honest person would've said, "I'm sorry I don't have an OS, but I'm sure I can find you someone who does. Oh here's one. Here's their contact info and a bill for my time finding them for you."


RE: It's a shame
By bug77 on 7/6/2013 4:13:39 PM , Rating: 1
Well, he didn't have an OS at that time, so his intuition was he should change that.


RE: It's a shame
By cyberguyz on 7/8/2013 5:51:30 AM , Rating: 2
I think something similar could have been said about Steve Jobs after his visit to PARC and seeing the Star GUI ;)

http://www.youtube.com/watch?v=NxEmJu8OSug


RE: It's a shame
By piroroadkill on 7/11/2013 4:31:53 AM , Rating: 2
Eh, I'd get an Xperia Z if I was in the market for a new high priced smartphone.


"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer














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