HTC warns of its first-ever operating loss, will reduce focus on high-end smartphones
In perhaps yet another sign that the premium smartphone market may be maturing, struggling handset maker HTC has predicted its first-ever operating loss, and revealed it plans to concentrate more on mid-range phones.
In announcing the results of its second fiscal quarter on Tuesday, HTC revealed it expects to post the company's first operating loss in its history in the third quarter. HTC's operating margin was just 1.5 percent in the third quarter, but the company has forecast a range of zero to negative 8 percent operating margins in the third quarter.
The Taiwanese smartphone maker revealed it plans to launch a range of "innovative and competitive mid-tier products in the coming months." HTC executives acknowledged that it has not been competitive in the mid-range smartphone market, where the industry is currently seeing the most growth.
HTC's announcements come as Apple is rumored to be planning to release its own new mid-range smartphone. It's expected that the company will release a new, less expensive iPhone model with a plastic back in the coming months, alongside a new high-end model.
HTC's changes mark a contrast from last year, when Chief Executive Peter Chou touted his company's insistence on using high-quality materials to build premium smartphones. That strategy eroded HTC's margins, and has now prompted the company to attempt to lower its build costs and sell mid-range smartphones with higher margins.
HTC was once one of the largest smartphone makers in the world, but has seen its share of the market slide as the industry has increasingly become a two-horse race between Apple and Samsung. Recent data from comScore found that HTC held the third-largest share of U.S. smartphone subscribers with 8.7 percent, well behind Apple's 39.2 percent and Samsung's 23 percent.
In announcing the results of its second fiscal quarter on Tuesday, HTC revealed it expects to post the company's first operating loss in its history in the third quarter. HTC's operating margin was just 1.5 percent in the third quarter, but the company has forecast a range of zero to negative 8 percent operating margins in the third quarter.
The Taiwanese smartphone maker revealed it plans to launch a range of "innovative and competitive mid-tier products in the coming months." HTC executives acknowledged that it has not been competitive in the mid-range smartphone market, where the industry is currently seeing the most growth.
HTC's announcements come as Apple is rumored to be planning to release its own new mid-range smartphone. It's expected that the company will release a new, less expensive iPhone model with a plastic back in the coming months, alongside a new high-end model.
HTC's changes mark a contrast from last year, when Chief Executive Peter Chou touted his company's insistence on using high-quality materials to build premium smartphones. That strategy eroded HTC's margins, and has now prompted the company to attempt to lower its build costs and sell mid-range smartphones with higher margins.
HTC was once one of the largest smartphone makers in the world, but has seen its share of the market slide as the industry has increasingly become a two-horse race between Apple and Samsung. Recent data from comScore found that HTC held the third-largest share of U.S. smartphone subscribers with 8.7 percent, well behind Apple's 39.2 percent and Samsung's 23 percent.
Comments
The only good thing about the HTC one are the front facing speakers on the phone (they are awesome by the way). The fact that the HTC one is impossible to repair and only have a 4 mega pixel camera is the reason why it cannot compete with Apple and Samsung.
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Originally Posted by BuddyRevell
I wonder why out of the Android makers, only Samsung seems to be doing well?
Some of it is due to advertising. Samsung invested heavily in it last year, and it paid off in spades.
I can easily recall the Samsung TV ads. If there were any HTC ads, I don't remember them.
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Some of it is because of relatively little missteps that add up over time.
For instance, I used to love HTC smartphones. Little by little, that love eroded, due to broken USB ports, strange power button locations, etc. It was gradual, but pushed me away.
I would've come back right away for the HTC One, but it got delayed coming to Verizon. Another goof.
Lying, cheating, stealing, paying off governments and telecoms, and generally following the Google way of thinking.
It would seem that if you're Samesong, the way to do it is copy the iPhone, sell them as fast as you can, deny that you're stealing, drag out court cases as long as possible.
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Originally Posted by Tallest Skil
Lying, cheating, stealing, paying off governments and telecoms, and generally following the Google way of thinking.
Seems about right.
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Originally Posted by Don108
It would seem that if you're Samesong, the way to do it is copy the iPhone, sell them as fast as you can, deny that you're stealing, drag out court cases as long as possible.
Actually, Samsung's high end sales didn't take off until they stopped copying the iPhone's looks, and instead advertised their products as alternatives with more advanced features, bigger screens, etc.
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Originally Posted by Negafox
A good start for HTC would be to dump Windows phones.
No, a good start would be for them to stop being YetAnotherAndroidOEM because there's just no money in it if you aren't Samsung. Everyone else is in a race to the bottom like the struggling Wintel OEMs. Besides Windows phones make up around only 1/6th their current smartphone line and it's doubtful it would make any meaningful impact on their issues.
Because their copy machines are more accurate?
Actually only Apple is the only one not complaining about the high end market being saturated although they need to sell more phones. Everyone else saw a slight to big downturn in that segment. Now to enter the mid tier market with a premium brand image. Watch out below.
I actually feel bad for them. HTC at least tried to come up with an original design, they didn't settle for cheap plastic, they didn't clone the iPhone. They should be doing better than Samsung
For all the jokes fandroids like to crack about the rounded corner issue, it was exactly stuff like that which Samsung exploited, especially with their S2, to get some of the positive emotions people had towards Apple products towards their products.
I wonder how much the Samsung black-ops PR campaign against HTC actually hurt them.
I also wonder the same about Samsung vs. Apple.
Now 'experienced'... there's a word...
"HTC has experienced its first-ever operating loss"... Works for me.
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Originally Posted by dnd0ps
I actually feel bad for them. HTC at least tried to come up with an original design, they didn't settle for cheap plastic, they didn't clone the iPhone. They should be doing better than Samsung
I second that. The HTC One is an awesome phone.
The general Android population tends to prefer the low priced, discardable kind of hardware. Just look at all the people clamoring for the Nexus hardware-- it's complete crap. They're just so eager about it because of the cost, but these things are already taking their last breaths. The failure rate of the components is super high and the build quality is abysmal. In the example of the Nexus 7 vs iPad mini, I'm not going to pay $100 less for a device that will fall apart in the next year and has low resale value.
I think HTC just bumped its head against what I suspect is the pervasive consumer mindset: If I'm going to spend a lot of money on a smartphone, I'm getting an iPhone. All the Android mfrs, including Samsung, are faced with this obstacle. It's just that Samsung has spent prodigious amounts of money on advertising and promotions to either a) sell their high end smartphones or b) give the impression that their high end smartphones are selling well.
I think part of is the HTC Sense overlay.
It's one of those things that you either love or hate.