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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 spread on 7/5/2013 11:56:08 PM , Rating: 2
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:

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

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
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.

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
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.

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.

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