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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 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:]

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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RE: It's a shame
By stm1185 on 7/5/2013 11:12:32 PM , Rating: 0
Did people buy the S4 because it was the better phone, or because it is hip. Samsung is the new Apple.

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
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."

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