Early demand makes the U11 the most sought-after HTC phone since the M8.

After years of decline in the smartphone market, HTC needed the U11 to be a success, and it looks like the new flagship phone is off to a promising start. According to Focus Taiwan, HTC smartphone division head Chia-lin Chang told shareholders and local journalists that in its first month of availability, the U11 was outselling the previous two flagships, the HTC 10 and One M9.

An additional uptick in demand for the U11 is expected in early July, Chang reportedly told the shareholder meeting. The comparison with the HTC 10 and M9 is significant in light of the U11's narrower carrier availability in some key markets like the U.S.

HTC will reportedly cut its phone lineup to just three or four models per year.

Chang said HTC faced additional challenges in the run up to the rollout of 5G connectivity, adding that in the current smartphone market increased sales don't necessarily translate into increased profits. HTC will continue to trim down operating costs, while cutting the number of individual phone models launched each year down to just three or four. (That number likely doesn't include any Pixel phones that HTC would manufacture for Google as an ODM, or original device manufacturer.)

The slimmed-down lineup of HTC phones would likely see HTC doubling down on key price points, like the premium segment -- with the U series -- and the mid-range space, where the repurposed HTC One brand has been deployed. A focus on fewer, better phones would also allow HTC to be more nimble with its design, marketing and engineering resources, which would help its (currently precarious) balance sheet.

Looking further ahead, Chang said HTC would focus its R&D efforts on 5G in anticipation of faster mobile services launching in 2020.

In the short term though, HTC will be hoping the U11's early momentum doesn't fizzle later in the year, as the phone faces further competition from OnePlus, Huawei, Samsung and Apple.