HTC in a Long, Dark Tunnel With a Small Flashlight
For HTC’s leadership, the excuses for the company’s current predicament are many and varied. At various times over the past year, they’ve volunteered that HTC “lacks … strategic direction or sense of urgency“; conceded that it “hasn’t done enough on the marketing front“; complained that “competitors .. leverage their scale, brand awareness and big marketing budget to do things which HTC could not do”; and, even more tellingly, admitted that at times it has “simply dropped the ball on products.”
Those are not unreasonable excuses. But the frequency with which they’re being issued is, and that makes it tough to trust claims that HTC is emerging from a tailspin that’s well over a year long now. Certainly no one takes it as writ when CEO Peter Chou says, “The worst for HTC has probably passed; 2013 will not be too bad.”
Particularly after Monday, when HTC reported a net profit that declined for the fifth consecutive quarter, dropping to its lowest level since 2006. Add to that a new IDC study that says that HTC’s global smartphone market share slipped to 4 percent in the third quarter of 2012 from 10.3 percent the year prior, and Chou’s reassurances begin to sound pretty empty. HTC is in a tough spot these days. Quarter by quarter, it’s slipping deeper into the mud, and its days of being the largest Android handset provider in the U.S. — or anywhere, for that matter — seem unlikely to return anytime soon.
HTC is beset on all sides. It’s being pummeled at the market’s high end by Apple and Samsung, while manufacturers like ZTE kick it in the knees at the low end. And its big bets to put forth a flagship device for two different mobile operating systems — Android and Windows Phone — haven’t quite panned out. Samsung has Android locked up, and while there’s still room to throw a few elbows in the Windows Phone market, Nokia has its flag firmly planted there.
HTC’s task, then, is to differentiate itself enough from those rivals to gain traction in the high-end market, while scrapping with second-tier players like ZTE, Huawei and Lenovo that are challenging it in Asia and other emerging markets. And to do that, it cannot “drop the ball” anymore. It must introduce innovative devices, competitive with those of its rivals and market the hell out of them, marketing-budget constraints be damned.