HTC Profit Plunges, Sales of "One" Slow as Sector Stagnates
July 5, 2013 6:52 PM
comment(s) - last by
HTC may now be moving a million units of its flagship smartphone or less, slips to tenth place
top smartphone seller in the U.S.
, Taiwan's HTC Corp. (
) has today slipped to tenth place, according to Gartner, Inc. (
). The company this week announced its earnings for June, revealing that it will miss analyst earning expectations despite modest sales of its
. 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:
The general competiveness of the smarpthone market
HTC's failure to gain ground in emerging markets like China
U.S. slippage (
due to import bans
and being outmarketed by top U.S. sellers Apple, Inc. (
) and Samsung Electronics Comp., Ltd. (
to Apple and Microsoft Corp. (
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. (
) Global Markets Inc analyst Kevin Chang estimates there may only have been ~1.2m in May sales and ~600,000 in April sales. He
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
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)
-surveyed analysts predicted.
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.
aggressive changes on the marketing
Robert Downey Jr. (of
fame) to a $12M USD endorsement deal, making him the face of HTC's high-tech smartphones.
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
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
-- and Samsung's rumored to upgrade it around the time of the HTC One Mini launch.
The HTC Mini is arrive late to the party, so to speak. [Image Source: forte.delfi.ee]
Samsung is releasing specialist smartphones (like the
), while HTC's lineup remains small. And while Apple's big update -- the
Apple iPhone 5S
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 (
upcoming Ascend P6
and Nokia Oyj.'s (
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
. 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.
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RE: It's a shame
7/6/2013 2:21:23 PM
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.
“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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