Can HTC survive without smartphone sales?

May 08, 2019 12:53
HTC's virtual reality business has yet to become a major revenue source that could offset the sharp decline in smartphone sales. Photo: AFP

HTC announced earlier this week that revenue for April dropped 71 percent to NT$590 million (US$19.08 million) from the same period last year as smartphone sales declined. 

The company, based in Xindian District, New Taipei City, is transforming itself from a smartphone maker to a virtual reality ecosystem operator. But it has yet to find a new revenue model to offset its absence in the smartphone battlefield.

For the four months to April, revenue fell 67.5 percent to NT$3.54 billion, from NT$10.8 billion a year earlier. Since HTC has no plans to unveil a new smartphone model until the second half of this year, sales are expected to remain lackluster.

The company has been scaling back its smartphone business since it launched Desire 12s in December, while competitors such as Samsung, Sony, Huawei and Xiaomi have rolled out new flagship models.

However, several technology media outlets found that HTC is testing two new smartphone models. One will will feature MediaTek chipset Helio P35 with 6GB of RAM and running on Android 9 Pie. The company is also developing another mid-range model powered by the Snapdragon 710 chipset. The handset will also come with 6GB of RAM, 128GB of internal storage and an 18:9 aspect ratio display.

However, in the absence of leaked supply chain photos, market watchers believe that the two models will not be launched anytime soon.

And even if they come out, HTC might find it hard to compete in the mid-range market unless the two new models have outstanding features and applications, as well as cheaper prices.

It will be recalled that when the company came out with the U12+, the model garnered praises in the industry for its unique camera system. But even so, it failed to convince many users to make a purchase.

What many HTC fans are waiting for is its 5G smartphone, which is supposed to be launched in the second half of this year.

Earlier this year, Cher Wang, the company's head honcho, spoke of a 5G-compatible model backed by artificial intelligence and virtual reality. Market watchers speculated about a hand-held version fo the Vive VR device.

HTC has been shifting its focus to VR development in recent years. But its effort has yet to be reflected on its financial results, at least on its impact on revenue.

This goes to show that the VR business is still in its early stage and has yet to become a major revenue source for HTC to offset the sharp decline in smartphone sales.

While the company is an early player in the VR market, competitors such as Facebook have shown much more aggressiveness.

HTC recently launched a new VR headset, the Vive Focus Plus, which is targeting business users in developed markets.

Unlike other Vive devices, this one does not need a personal computer set-up. The device will be customised for enterprise use such as for virtual conferencing, virtual training and even virtual tours. The device costs US$799 each.

By comparison, Facebook’s Oculus Quest, which provides similar specifications and applications, costs only US$399.

HTC has boasted that its Vive solutions have been adopted by the US military for training purposes as they offer shorter training time at a fraction of cost. The company also partners with a number of museums to bring the VR experience to museum visitors.

However, analysts believe market demand for such applications is still small. And while the VR market remains a niche market, HTC needs to find sustainable demand for the service to support its huge investments in the VR field.

Indeed, the company needs to create market demand for its hardware and technology, rather than just coming up with a series of products and services without considering the customers' needs.

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EJ Insight writer