Does HTC have a clear smartphone strategy?

December 20, 2018 12:41
HTC said it will release new mid-range products early next year while focusing on premium products at the same time. Photo: Bloomberg

Taiwanese smartphone maker HTC has strongly denied reports that it would not launch a new flagship series in the first half of next year, saying that the company will continue to introduce new devices into the market. 

In fact, the company said, it will release new mid-range products early next year. At the same time, it also said it will focus on premium products in the first half.

Such contradictory statements have given rise to views that the HTC management appears to be losing direction in the smartphone business. Industry watchers also noted that management has failed to set a clear strategy to compete with the more aggressive Chinese competitors.

Amid such doubts, the company launched HTC Desire 12s, an entry-level handset powered by Qualcomm's Snapdragon 435 mobile platform. It features a selfie camera with an LED flash and the main camera with a 13MP sensor. 

What's more interesting is that the device is NFC-compatible, something that is rare for entry-level handsets because of the cost issue. This feature gives Desire 12s a competitive advantage, especially with the growing popularity of Google Pay and other forms of digital payments for which the NFC function is required.  

The phone is priced at NT$5,990 (US$194.18 or HK$1,520).  

Despite its desirable features, HTC may still face an uphill battle in the entry-level smartphone market. While the phone will be attractive to students and elderly users who don't require fast processing, they might find the price a bit too steep for their budget. 

Xiaomi's Redmi series is focused on this market segment, but the dual-camera handset only costs around HK$1,000, although it doesn't have an NFC function.  

Still, HTC may be right in positioning itself against Xiaomi and other Chinese brands rather than competing with the high-end brands of Apple and Samsung Electronics. 

In fact, the entry-level handset is driving the growth of the entire smartphone sector as fans of premium brands appear reluctant to upgrade their units while first-time buyers in the inner cities of China and other emerging economies are eagerly snapping up the latest affordable models.  

According to HTC, sales of its 2018 flagship, the U12+, have been much higher than expected, and the company will continue to sell it in the first half of next year while launching additional accessories during the extended sales period for the model.  

At the same time, HTC is considering restarting marketing activities for its high-end models in the first half, although it did not provide details.  

It also launched its first blockchain-based smartphone, the Exodus 1, which have been sold out. Because of its phenomenal sales, HTC plans to continue promoting such models which have security features for storing and transacting in cryptocurrencies.  

With the different directions that the company is taking in its smartphone business, industry watchers are starting to doubt if its management has a clear and solid strategy at all. 

It seems HTC wants to regain market share from Apple, Samsung and the Chinese brands, but so far it has been unable to present a convincing strategy to be able to do that. 

Consumer awareness of the brand is still there, but the company needs to do more in terms of marketing and product development to be able to compete well in the market. 

It may be suffering from lack of scale, and this has led to its products being more expensive than those offered by peers. 

Perhaps the company may consider outsourcing all of its production to contract makers, which could lower the price of its products by as much as a quarter. 

Pricing will decide whether HTC could succeed in the smartphone market where most of the products on offer have the same operating system and similar hardware specifications. This is especially true in the low-end market where the Chinese brands are very aggressive in pricing.  

In the premium market, HTC cannot just rely on brand awareness but must rethink its design, instead of just using the same design language for years without any changes. 

The company may also consider forging partnerships with external parties to enhance user experience in its devices. For example, it can adopt the Android One system to simplify phone operation. It can also rebuild its camera features, something in which rivals have excelled.  

HTC will have to overhaul its strategy if it wants to survive and thrive in the smartphone business. 

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EJ Insight writer