HTC

The question remains, though: How (and can?) HTC regroup financially to compete in this industry? 

Earlier this week HTC Corp. published its unaudited results for the third quarter of 2013. Despite the number of headlines making a big deal out of the company’s first quarterly loss (yes, it lost money this quarter), the news was easily anticipated.

Like many public companies, HTC shares its business outlook in every quarterly press release. Last quarter it said to expect $50 billion to $60 billion (local currency) in revenue, and it expected an operating margin as low as -8 percent.  In actuality, HTC posted slightly less revenue ($47.1 billion), and the operating margin was slightly better than the worst-case scenario in its outlook at -7 percent. 

How did the market respond? The stock is actually up 1.5 percent today. That’s a tiny move for a tech stock, so it pretty much tells us Wall Street yawned at these numbers. 

It’s unfortunate that products like the HTC One and the HTC First “Facebook phone,” released earlier this year, didn’t turn around the company’s fortunes.  I honestly don’t know what these guys should be doing to fix things. There is no question HTC makes good products. People have long respected HTC’s design skill and product quality. But it clearly isn’t enough to sustain the business. The mobile business is now heavily concentrated around Android and iOS, and in the Android market it’s practically impossible to compete against Samsung. Not only does Samsung make by far the largest number of (very good quality) phones, but it has strong control over much of the supply chain by making its own screens, memory, and more.

HTC One

As we've said time and time again — the products aren't the problem.

Still, HTC isn’t in imminent financial danger quite yet. Last time we saw HTC's balance sheet, it had about 14 times as much cash on hand as compared to this Q3 operating loss. Unless revenues plunge from here, HTC probably can get back to profitability with some careful cost cutting — which, yes, unfortunately often involves cutting people, which happened recently as HTC America confirmed it's laying off 20 percent of its employees. But contrast this with BlackBerry, which just announced plans to cut 40 percent of its staff, reduce operating expenses by 50 percent — and it still faces a heavily declining service business, which threatens to re-ignite the company’s cash burn rate even if management puts out the current fire.

What’s your take, folks? What strategic options should HTC implement? Should HTC look to sell itself? Shut down the business? Find another way to compete in the market somehow?

What options do these guys have to remain relevant?

 
There are 65 comments

jeddo45 says:

Although I'll be getting a Nexus, I hope HTC pulls through! I would love to see an official Nexus from HTC!

Posted by the man who makes things happen...

ajp8806 says:

Just hope they bounce back. I'd hate to see Samsung the only player in the Android market. Sent from my beautifully crafted HTC One.

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rampage1979 says:

I'm with you.

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Nreeldeep says:

You do know that there are other players in the Android space beyond Samsung and HTC, right??

Amir47 says:

In the states it's really just Samsung and HTC. LG and Motorola occasionally make an appearance. Sony is non existent in the states.

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Etios says:

HTC cannot survive against the behemoth Samsung, they can just hope to get bought by some bigger company at good price while it is still possible or else take money from Microsoft and release same handsets with two OS like HTC One with Android and HTC One with Windows phone, so they can spend more on marketing and make a splash against Samsung.

mstrblueskys says:

They absolutely can survive without being bought out - what they have to do is find their advantage, and I think the HTC One is a start, but it's a long way to go. They have to keep being the best phone. Release the best phone, people will pay attention.

They have a challenge they are facing, but they are not at all dead.

flagg902 says:

They've found it. They're already king of build quality, and they've made the best device this year. People just aren't buying it and their margins obviously aren't robust enough to carry them through. It is hard to compete on price and cost a conglomerate that builds it's own components.

I fear they need to fall to RIM depths for a buyout to save them. But who? Google? They can't buy every struggling oem.

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robsawalker says:

HTC are certainly not the king of build quality - I think that's still Apple. The HTC one is a lovely phone but isn't as polished as an Apple product.
There is no reason why they can't hang on though; they need to sort out their marketing department, because at the moment it's awful, and build an HTC one with a big battery and screen. Work on the camera, which is already really good but there's room for improvement, if you can shoe horn an SD card slot great. Sense is pretty great, but let's have an rss reader in Blinkfeed please.
Do that and for me it would be perfect.

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JobiWan144 says:

Before the iPhone 5, Apple's build quality felt nice until you dropped your phone. Glass on the back is just asking to be shattered. I don't know how much the aluminium back of the iPhone 5/5s helps, but it's got to be better than freaking glass.

Kudos to them for learning from their mistake, even if it did take them 2 generations.

If you ask me, a case could be made for HTC, Apple, or Motorola being the king of build quality.

Posted from my 1st gen Nexus 7 via Android Central App

Etios says:

HTC One was the best Android phone and every reviewer on the planet absolutely worshipped the One including Anandtech but look what happened.

HTC continues to blow it through the wrong marketing. Just as they finally had the HTC One available across all the major carriers, they came out with the Facebook phone and once again muddied their marketing message. And then there's the big push they did on their Windows phone offering. If anything contributed to their losing money, it was investing so heavily in a phone with next to no market potential.

The HTC One - and it's look-alike midrange models - have the makings of a successful line. They basically follow Samsung's recipe for success. All the other oddball stuff HTC makes just gets in the way.

Motorola has the same problems. Weird, diluted 'droid' branding on Verizon, and little visibility anywhere else. Moto X seems to be a nice attempt to break out of that pattern, and I can only hope it works.

DenverRalphy says:

Something I haven't seen, but would like to... Is where the losses came from. Did their Android offerings sustain their costs? Since HTC decided to drop Windows Phone could that be an indication that it was their WP products that produced the loss? Obviously Microsoft isn't happy with the decision to drop WP production, hence the Dual Boot in lieu of licensing fees offer.

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Etios says:

They are hardly producing any Windows phone handsets, since last year only 2 HTC windows phones have been produced: 8X and 8S. They never dropped WP production as anyways they produce 1-2 per year. So, It is the competition from Samsung in the Android world which is killing them and there is nothing they can do about it, Samsung is a behemoth and its nearly impossible to compete against them.

dorelse says:

3 actually...they also produced the 8XT for Sprint. I have both the HTC One & HTC 8XT at home on Sprint.

They update WP8 quicker than the other manufacturers b/c they're more vanilla than Nokia, and Samsung flat out doesn't seem to care (much).

HTC at least shows some interest in WP8...albeit, not much...

The 8XT is a good phone, I enjoy it quite a bit, but its no halo device...like a HTC One WP8 edition could be.

oddom says:

They have a huge marketing issue that needs solving because people know galaxy as soon as they see it but htc is still a non existent name to casual users. When I had the htc one everyone was asking what it was because they really had no clue, but now I have a galaxy s 4 and everyone says "oh is that a galaxy phone" (albeit a google play edition). The htc commercials have faded and I am still waiting to see a new ad. But if htc isn't careful I think Motorola is the next hot phone company.

JobiWan144 says:

Yeah, they really need to market themselves more. It's difficult to keep up with the giants of Microsoft, Apple, Samsung, and now Googlerola (who buys ads with revenue from ads...like a boss).

Posted from my 1st gen Nexus 7 via Android Central App

npco543 says:

3... 2... 1... Queue the idiot who ends every post with:

"DO YOU HEAR ME CHOU???????????????"

NoNexus says:

Gekko has missed the last few HTC posts

Posted via your wifes, girlfriends phone

NoNexus says:

The rumor of their death is greatly exaggerated.

Like I said yesterday. A company doesn't turn on a dime. The One and the recent update history are the kind of things that will pull them through the storm.

Too many past mistakes are the culprit for this loss.

If they keep it up they will be fine. A windows phine/deal won't hurt.

We aren't talking about blackberry after all

Posted via your wifes, girlfriends phone

jeddo45 says:

Haha yes blackberry! Wait who is that?

Posted by the man who makes things happen...

axllebeer says:

Would be kinda funny if HTC partnered up with BlackBerry and duel booted BB10 instead. Wonder if both companies would benefit or crash and burn even faster?

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jamie0 says:

if the pic's running around the net for the ONE MAX are true to form and its comes w/ sd card they will have my money. I believe one reason sammy is on top is they offer expandable memory and user replaceable batteries

Jay Holm says:

Even though I have the S4, I thought the HTC One is a fine smartphone!

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tr-1 says:

Well, clearly what they are doing not isn't working. This means they gotta make some changes.
1. Marketing. Is it lack of $$$ or they just don't know how to advertise? Heck, hire the same agency that does Samsung ads (didn't Samsung hire same agency that does Nike ads?)

2. Make people talk about your phones. Sure, HTC One already had plenty of chatter but IMO it could get even more chatter/respect from media if HTC did something different in terms on user experience. Make HTC One with pure Android (normal on-screen button layout) or ask CM team to make one like Oppo did. This will save them millions in SW development and is basically a low risk attempt to see if it sells better. I'd buy it..... Will not buy it as is.
People like to see familiarity and the current layout is not. If it runs pure/CM Android, geeks will embrace it and it'll be free marketing. Media will embrace it too because most don't like TW/Sense, whatever. Whatever media thinks makes a huge difference since people look up to them and then those same people go buy this phone and suggest others to buy it... It's like a snow ball effect.

3. Better camera. Sure, the pixels are different but the quality still lacks and people see number 4 and pass.

Not sure what else to suggest they try.

1. Robbie Downey Jr. http://www.youtube.com/watch?v=OVE1OcfB1E4

2. HTC One pure android https://play.google.com/store/devices/details?id=htc_one

3. Megapixels aren't everything but I do agree, more than four would be sufficient.

I hope they figure out something because they have a lot of history with Android. I hope if worse comes to worse Google can help them out.

tr-1 says:

Like I said in the beginning, it isn't working. You listed everything that isn't working.

GPe is not what I'm talking about. The buttons are still screwed up and it's only available at full price at Google Website (i.e. very little sales/exposure).

NovaWiz says:

4MP and 2.0 micron is a little extreme, same goes for 13MP and 1.1 micron. Something like Apple's 8MP and 1.5 micron should be suffice for most users.

Huntrowmar says:

CM or Pure android would be great. I agree with you.

tipperal says:

With you on this. CM HTC might be the way to get CM market share amongst non geeks and save HTC a bucket in R&D while still producing something slightly different. Better cameras on android in general are a must though.

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Deveal2014 says:

Sue Samsung for hiring ppl to write negative & untrue reviews about HTC. They may have been recently caught but I'm sure it's been going on for years . I believe little attack like that destroyed HTC good brand name.

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I'm pretty sure most companies do that for one thing, and I also don't believe that one thing alone would be enough to sink an entire company. If it was, then these Samsung employees are absolutely incredible review writers.

It's always easily to demonize Samsung whenever anything Android is discussed, but that's part of the problem. Samsung is on EVERYONE's mind. No press is bad press according to some, and maybe that's been the case for Samsung. Either way, they're dominating because whenever something comes up, someone has to mention them instead of looking at the situation for what it is.

DavidJ726 says:

If Sprint can pull off a comeback, then so can HTC. I'd love to have the HTC One right now, but my prior HTC EVO was replaced so many times I finally told (asked) Sprint to replace it with the Galaxy S3 earlier this year, soo now I'm in a wait and see mode in regards to the next Nexus coming out.

Cutting costs is always the first option anyone looks at when looking at the budget, and stronger risk sharing / profit sharing partnerships with the OEM's of their screens, memory, etc... would certainly be beneficial.

But HTC also needs to do more in the way of marketing. Anyone remember the creepy commercials Palm had with the Pre? Absolutely freaky, I bet those commercials sub-consciously turned people away from their product line.

They also need to find a way to differentiate themselves from Samsung, and in a big way. They almost pulled it off with the camera, but I think the megapixel mentality coupled with the "4" in the Ultra-Pixel definition was perceived as a step back.

I don't have the answer, but I would take an HTC over a Samsung any day of the week and twice on Sunday. I hope they can pull off a comeback!

David...

Tyson Fulton says:

I think you helped answer the problem. The HTC One may be an excellent phone ( I do not personally have one ), but they have produced terrible phones in the past. I have the Rezound on Verizon. Terrible, buggy, unstable, unreliable! It came out in early November 2011, and I bought it at Thanksgiving. Beyond the hardware, I only received one update from Gingerbread to ICS. Leaving phones stranded doesn't help brand loyalty. I think producing a few, quality phones and keeping their software updated will go a long way in turning their fortunes around, which seems to be their game plan with the One line. However, HTC will have to prove they can be consistent for a longer period than about 6 months before I ever consider another HTC.

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droidbeat says:

Just keep doing great products and the world will beat a path to their door. Don't sell itself! No way!

orlanka says:

People's biggest complaint, including my own, has been HTC's lack of advertising. While they have always had commercials popping up from time to time, there has never been any celebrity endorsement or creativity present in anything they've done. I am hoping the loss posted here is a sign that they have actually been spending money to make money, including the ridiculous RDJ commercials. I'll maintain hope for HTC and that Q4 sales and the release of the Max will kick off a solid 2014.

bigsmooth66 says:

The fix is rather simple.

1) Stop making so many different phones. The HTC One is fine. Maybe the HTC One Mini. Stop there.

2) Get really good at making one device. Make a no compromise phone.

3) Coincide your releases with new android updates. Just in time for Christmas.

4) Instead of integrating your launcher into the phone, make them separate apps. There is no reason Sense 5 can't be a download for those that want it. It would help the phones update with Android releases.

5) Release high quality accessories for your device.

6) Don't let Verizon bully you into making something different than what was intended.

7) Drop Windows phone 8.

tr-1 says:

I agree on all points except 5. HTC One has the most OEM accessories out of any other manufacturer. And they released them at the same time with the phone too.

Brick21 says:

To me this was HTC chance. With the Galaxy S5 probably being a aluminum or metal device. This will def get worse and Samsung will sell more. Hate to see them go but I don't see a a big improvement any time soon what so ever!

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ultravisitor says:

If not for the Sense garbage and that dumb button layout, I totally would have bought an HTC One on Verizon.

Oh well. Their loss.

tr-1 says:

I'm glad I'm not alone on this. I basically feel the exact same way. Too bad... because it's a great phone otherwise

sesar707 says:

The make great quality devices idk why htc is in this situation

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Rockee kun says:

With Samsung around.... you need more than 'just ok phones' to remain relevant in the android society... they should be more innovative... you have sony giving us water resistant phones, you have samsung giving us smart stay, smart pause etc with the air gestures features.... you need to be highly innovative to remain relevant as a top smartphone manufacturer....

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robsawalker says:

When the S4 came out,I was looking to buy an HTC one. Every mobile shop I went into was crammed with Samsung peeps, handing out fliers, there were giant Samsung stands everywhere and loads of S4 s everywhere for people to play with. All the sales staff tried to sell me the S4, showing little interest in the HTC one and seeming puzzled that I wanted it. Only one shop had a real one, and the battery died in thirty seconds.....

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selwinfrogit says:

Perhaps a HTC nexus phone would help them out of the hole. After all it has worked wonders for LG bringing them back into the lime light.

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Tyson Fulton says:

HTC already built a Nexus, the Nexus One.

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orlanka says:

That was how long ago? Getting a chance at another would definitely help.

Chanlion says:

Android should just be renamed to SamsungOS.

But seriously, I'm surprised, I see their devices around once in a while, they shouldn't still be losing money. I expected them to be around even.

robocopvn says:

customer service ! HTC always forget to update their FORMER mid-high phones and I think that's a important reason why buyers stay away from them.

HTC Desire, Desire HD, Sensation, One S .. blah blah blah.

If you only care your current customers, not your last customers, you will not have next customers

Tyson Fulton says:

I couldn't agree more! Add the lousy Rezound to that list.

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tipperal says:

HTC need to be more radical with their approach. Their big usp is build quality but a lot of their cost base is R&D for things like sense. This might be radical but slim sense right down to just a better camera experience than stock and launch a very lightly skinned phone (if at all) but nail that build quality. That will maintain their key selling point (in my opinion) and reduce the cost base of the business improving margins. They'll never compete with Samsung for end to end business but hopefully stay profitable and relevant. I miss my HTC phones but for me the nexus range and stock experience is just so much more pleasing than sense.

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jontalk says:

I also pray HTC survives..but in my opinion the commercial spots with Downey are lame and do little to inspire buyers to purchase the product..Not sure the market they were targeting with those spots but they just seem poorly done and a waste of the big bucks they likely had to pay Downey.. Too bad Iron Man couldn't endorse using the HTC One though :)

calvin35 says:

How many people that bought the HTC One S will ever buy another HTC phone? I'm betting nor many. It's decisions such as abandoning the One S that have lead HTC to the trouble they are in now.

dav_tech says:

That wasnt their decision. It was Qualcomm who stopped support. If they had loads of money, HTC could have continued support, but financially it would have been foolish so they had no choice.

nyc_rock says:

Have to see their p&l to understand what the issue is. What % of sales is SG&A and R&D to sales? What gross margin are they generating? They seem to have nailed the product, there must be a reason they aren't making money.

CasterCm says:

I think they can survive they just need to know more inmarketing their product, for instance here in singapore, the only accesories you find commonly among shops and malls are samsung & iphone products which somehow discourage my wife and some friends in buying htc product those little things should improve i think.
But i do hope they survive.

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MidMoMonkey says:

So Samsung charges more for an easy to manufacture plastic phone, and they have massive volume. Seems like a good plan. I like my One, but I actually would have preferred a cheaper plastic back just to improve the repairability of the device.

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darrylz07 says:

Don't know if others have experienced this but I had a friend who had to return 3 htc one before getting a working one..I also saw same feedback from other forums but idk if it is very extreme..

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jordyiam says:

I have both the Samsung galaxy s4 and the note 3..sorry guys I have to tell you ..my HTC one is still the better phone ...its so smooth and lag free..my note 3 with all its 3 gig of ram is struggling to keep up with scrolling etc ..perhaps the software isn't optimised yet...I don't know..and that huge battery is struggling to get me through my 12hr day...I'm a little disappointed ..
The only thing that let's my HTC down is the battery...I now await wot the max is gonna bring to the party ..

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Shadow Death says:

This really doesn't surprise me at all. As a Thunderbolt user it's very difficult to want another HTC phone after waiting on an ICS update for years that should have came months after the phone's release. The lack of love for HTC's flag ship phone made most of us want to jump ship. I'm still holding on to mine until I see what this next nexus looks like, or if Verizon even tries to get it that is.

dav_tech says:

Google should step in and help HTC by asking them to make a nexus device. Why give all the love to lg? HTC arebperfectly capable of making a great nexus device

newnado says:

I am sure that HTC could survive. But maybe they should focus on Asia too, most people here in my country admit that HTC One is a great phone, but most of them didnt know about the brand itself -HTC- . They are hypnotized with Samsung, and thinking HTC as other cheap chinese phones.

Other than that, I think they also have trouble in distributing their products. And in Indonesia, there is almost no ads of HTC. I am getting tired of Samsung's products dominating all of the ads (tv, brochure, billboard).

Soon enough, if Samsung couldnt find any solutiion for their phone's boring design, people will start to change. And I hope HTC could do it, because they are - Here To Change - .

Sent from my beautiful HTC One

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newnado says:

I am sure that HTC could survive. But maybe they should focus on Asia too, most people here in my country admit that HTC One is a great phone, but most of them didnt know about the brand itself -HTC- . They are hypnotized with Samsung, and thinking HTC as other cheap chinese phones.

Other than that, I think they also have trouble in distributing their products. And in Indonesia, there is almost no ads of HTC. I am getting tired of Samsung's products dominating all of the ads (tv, brochure, billboard).

Soon enough, if Samsung couldnt find any solutiion for their phone's boring design, people will start to change. And I hope HTC could do it, because they are - Here To Change - .

Sent from my beautiful HTC One

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TheoStauffer says:

I've had an HTC One since June this year, and it's by far the best phone I've ever had. Build quality, screen, speed, decent battery. Even Sense 5 isn't that bad.

HTC's problems stem from, more than anything else, bad marketing. People buy Samsung Galaxies and Apple iPhones because their friends have them and people talk about them. Nearly all the reviews and nearly all the comments online about the HTC One praise the phone to high heaven, but that's it.

HTC needs to get people talking about their phones. This is by far their most important task. People will only talk about their phones if they know others who have them. HTC could start the process of getting the ball rolling by engaging with its customers, asking what they like, what they don't, what they could improve etc. They could do simple TV ads without movie stars that simply show how reviewers react to the phone. They could offer stock android as an option on every HTC Phone. They could improve the camera (which is already very good for low light) by adding a few more megapixel (8MP). They could include a slot for an SD card. They could improve the battery life. They could reduce the bezel size on the phones.

Come on, HTC, get to it!

stalemate1 says:

stock price goes up and down all the time, I just hope they release that dual boot HTC one soon.