No more new flagship smartphone for HTC?

November 20, 2018 14:01
It is said that HTC may not release its next flagship model by spring next year, as earlier expected, amid the sluggish demand and intense competition in the smartphone market. Photo: Bloomberg

A stubborn malaise is afflicting the global smartphone market as customers delay upgrading their handsets.

With the sluggish market demand, Taiwan's HTC appears to have decided to take a break from the intense competition and suspend the launch of any new flagship smartphone product to avoid further losses.

Online industry news media speculated that the company won't be releasing its next flagship device, called U13, by the spring of next year, as previously expected. Instead, it is likely to launch a mid-range device.

Some market sources said HTC could be cooking up “something else” for release later next year, and although it is not clear what that something else could actually be, they hope the time would give the company a chance to restructure itself and move forward in the smartphone space.

Industry watchers said the company may adopt a new business strategy or focus on its core network of loyal users. 

Indeed, the need for HTC to effect changes in its structure and operations has become more urgent after it sold its original design manufacturing (ODM) unit to Google last year.

A rebranding may be in order after its image has been tarnished in the brutal market competition over the past few years.

In fact, HTC has been shifting its business focus from smartphones to virtual reality devices. But that hasn't stanched the bleeding.

Last week, HTC reported a revenue of NT$4.04 billion (US$130.5 million) for October, with a gross margin of 4.7 percent for the quarter. Operating loss was NT$2.79 billion and net loss after taxes was NT$2.62 billion. Its global share in the smartphone market was 1 percent.

According to preliminary data from the International Data Corporation Worldwide Quarterly Mobile Phone Tracker, smartphone vendors shipped a total of 355.2 million units in the third quarter, down 6 percent from a year ago.

This was the fourth consecutive quarter of year-on-year declines for the global smartphone market. IDC maintains that the market will return to growth in 2019, but it is uncertain at this point what kind of growth it will be.

As far as HTC is concerned, it has become quite a struggle to compete with leading players such as Samsung and Apple, and the aggressive pack of Chinese challengers such as Huawei, Xiaomi, Vivo, OPPO and OnePlus.

HTC still has a loyal fan base for its unique phone design language and its customized HTC Sense user interface. But the company itself appears to be losing interest in its Sense software and is now using Google apps like Android-based devices from other brands.

Marketing woes

What has happened to HTC? It used to offer decent smartphones in the past, but the problem is that many customers were not even aware of the unique features of its products.

All this leads back to marketing, which the company has been struggling to fine-tune for years.

Rumors are circulating in the market that HTC may launch a new flagship model with 5G network compatibility next year, making it a first of its kind in the market.

But given its unimpressive track record over the past few years, it is unlikely that the company will be able to handle the challenges of developing a 5G device and introducing it to the market.

In fact, it is more likely that HTC will return to becoming a contract phone maker for rising Chinese brands, considering that it still has a huge smartphone production capacity.

Whatever it does in the future, the company could look back with pride at a time when it was a formidable player in the market. In the third quarter of 2011, for example, it was the biggest smartphone maker in the United States, cornering 25 percent of the mobile phone market.

During the period, it shipped around 5.7 million devices worldwide, or 800,000 more units than Samsung. Apple then came in third with 4.6 million units.

It's an uphill struggle for HTC co-founder and chair Cher Wang to turn her company around after several failed attempts over the past few years.

But the brand holds a lot of value. It could still survive and reach new heights with the right strategy and execution.

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EJ Insight writer