Anyone concerned that Taiwanese smartphone maker HTC might soon evaporate in a puff of quietly brilliant smoke can rest easy; the company isn’t going anywhere anytime soon. Persistent comparisons to Nokia and RIM aside, the former king of Android smartphones has a ways to go before it truly earns the overused title “beleaguered.”
That said, the fight does not go well for HTC. The company recently announced a revenue drop of 45% and a 23% falloff in sales guidance for the third quarter, after posting similarly dire performance numbers the quarter before. The value of its stock has also fallen by more than half over the course of the year. This is especially concerning considering HTC’s current product offering, which is impressive but sparse.
Understanding the company’s woes isn’t as easy as understanding RIM’s, since there’s no outdated product portfolio or stubborn lack of flexibility to point to. Our own Jaime Rivera has touched on this in his editorials encouraging the OEM to quickly adopt Android Jelly Bean and to do more than just innovate, and I share his views.
From my perspective, HTC is suffering delayed-onset consequences from its year-long experiment with endless variations on boring design (see the company’s 2011 catalog). It’s also facing enormous pressure from South Korean rival and world’s largest handset vendor Samsung, currently dominating the Android smartphone space. I think HTC is in a better position than doomsayers in the press might indicate, however – and company CEO Peter Chou (predictably) agrees. “Do not be influenced by noises from the market and the industry,” he said in a recent companywide employee memo; “We are a strong player in the market and we are just having short-term challenges.”
Here’s three ways I think HTC can overcome those short-term challenges to regain some of the ground it’s lost.
HTC learned a big lesson from over-extending itself in 2011. After twelve months of churning out too many iterations on uninspired designs, the company entered 2012 with renewed focus on a single halo class of smartphones: the One series. The One lineup was aptly named, with a single handset each for the market’s high- mid- and low-end segments. The flagship One X won us over here at Pocketnow, both in its international and AT&T variants, and in those bright days of spring, HTC’s future looked particularly promising.
One down-side to this minimalist approach to the market, though, may be a lack of retail shelf space. Walking into a carrier store in America, customers are confronted with a huge array of smartphones to choose from. Part of the process of sifting through that enormous bulk of options inevitably includes weighing which manufacturers are well represented on those shelves. With only one HTC device seeing significant exposure on each carrier, there’s just not much to reinforce the company’s brand in a retail environment. The company may well have slimmed its offerings down too much.
The solution isn’t to fire up the assembly lines again and start the flood of mediocre products anew, though; that’s what got the company into trouble in the first place. The strategy behind the One line can work; look no further than Apple for confirmation on that. A small offering of top-quality products can lead to success. But it takes time, and it takes awareness. Speaking of which …
Nice To Meet You (Again)
When people are trying to fill lulls in conversation -or when someone’s looking for an excuse to chat you up- an easy avenue to small-talk is what smartphone you’re carrying. In my experience, that’s lately resulted in a remarkably consistent exchange that includes the phrase, “oh, you have a smartphone? What is it, an iPhone or a Droid?” More recently, “a Droid” has been replaced with increasing frequency by “a Galaxy,” but the message is the same: Apple, Verizon, and Samsung have all seen success in capturing mind share, so much so that their brands are embedded within the fabric of the smartphone landscape.
HTC hasn’t had that kind of success. Here in America, its partnership with Sprint has paid off in the Evo line, a popular string of devices that have been very well-received … but on the nation’s third-largest carrier, that’s not as big a smash-hit as it might seem. On the advertising side, the commercials HTC commissioned in its quest to become a household name have seen wide TV exposure. They feature a catchy beat, compelling aspirational message, and hip atmosphere, and they well serve the task of introducing the relatively-young brand to a new market.
When I first saw this line of commercials, the original Evo 4G had just launched to a wave of nearly universal acclaim, and HTC was riding high. I was pretty buoyant about the brand’s prospects. The problem is that the concentrated, combined push of print and broadcast advertising didn’t last long enough to imprint HTC’s brand into the mind of consumers, and the uninteresting lull of 2011 didn’t help its momentum. HTC’s brand never became synonymous with Android in the way “Galaxy” or “Droid” have, despite the fact that some Droids are actually built by HTC, and despite the fact that HTC was at one point the world’s leading Android manufacturer.
No matter how good your product (and I think we’ve established that the One X is damn good), no one will buy it if no one can remember it exists. HTC needs to be focusing on capturing more mind share if it expects to make up ground in the market share war.
Get Back Into Tablets
For some of you, this is where this article goes off the rails. On the surface, it seems completely absurd to suggest that a company which found greatness only when it focused on a smaller product offering should again broaden it into another category. I get that. Maybe it’s stupid. But hear me out.
The smartphone marketplace is an insanely competitive arena, because there are already a lot of established players. These players have been building on their success generation after generation, reinforcing their dominance through refinement. And while that’s true to a huge extent with one product in the tablet space (take a wild guess), it’s less so on the whole. The Android tablet frontier is tamer than it once was, but it’s still immature and unstable, ripe for disruption.
On the low end, some of that disruption is already taking place courtesy of Google’s Nexus 7 and Amazon’s Kindle Fire, among others. But the mid- to high-end tablet markets are still just sitting there, waiting for an Android-based OEM to do something earth-shattering with them. And based on what we’ve seen so far of the Galaxy Note 10.1, Samsung hasn’t figured it out yet. There’s still room for HTC to gather its wits and launch a product as compelling as the One X in tablet form, something with the potential to become irresistible when paired with an HTC smartphone that talks to the tablet. Ecosystems being as important as they are, this is a unique dual-opportunity for greatness. And it’s worth the risk of another loss of focus, a risk that diminishes the stronger the smartphone-integration angle is pressed.
However many of these steps HTC plans to take isn’t clear, but CEO Chou maintains an encouraging tone in his memo: “Stay firm with … innovations and make them even bigger and deliver them,” he urges his employees. “We are coming back.”
Here’s hoping that comeback happens soon, and that it generates momentum that won’t die out a few weeks after HTC’s next major product release. For the sake of the Android smartphone world, HTC needs to thrive.