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HTC's first net loss in a decade could spell its collapse in two years

Matt Hamblen | Oct. 7, 2013
HTC now on same track of decline as Nokia, BlackBerry

To add insult to injury, as HTC was reporting its third-quarter loss, Samsung said Thursday it expected record profits of $9.3 billion for the third quarter partly because of an increase in sales of its chips amid a contraction in smartphone sales.

Samsung is widely regarded as superior in marketing when compared to other smartphone makers, except perhaps Apple.

HTC's problems really started in 2012, when it shipped 31 million smartphones, according to IDC. That number was down 27% from 2011, making 2012 the first year-over-year decline for HTC.

In a year when HTC produced great Android smartphones including the One X and One S, HTC also launched two Windows Phone smartphones in September 2012, the Windows Phone 8X and 8S.

At the launch, Microsoft CEO Steve Ballmer called the 8X "truly a Windows Phone hero product," but neither appears to have sold well. The Windows Phone platform still makes up less than 4% of the smartphone market globally.

On Friday, a Bloomberg report citing unnamed sources indicated Microsoft is talking to HTC about adding the Windows Phone OS to HTC's Android smartphones at little or no cost. If true, perhaps both Microsoft and HTC will benefit, as the odds are already working against both in today's crowded market where successful product fixes can be elusive.

Putting a free Windows Phone OS atop an Android phone is also another reminder of Android's supremacy in the global market.

What started happening at HTC in 2012 with its high-quality Android phones, such as the One X and the One S, was that HTC faced Android competition from not only Samsung, but also Huawei, Lenovo, LG, Sony and ZTE.

The competition facing the HTC One hit a crucial point earlier this year when an HTC executive admitted in March that there was a shortage of camera components for the device, since the phone's camera was designed specifically for the One and production couldn't be ramped up quickly.

Delayed April sales for the HTC One then put it on a collision course with Samsung's Galaxy S4, announced in March and put on sale in April in the U.S. (It also didn't hurt Samsung that rumors of the Galaxy S4's release began eight months before it shipped.)

HTC needed more of a head start to market and sell its HTC One with its metal case that many reviewers said felt superior to the plastic case of the S4.

Having a head start of a month or two, or three over a competing product seems like it wouldn't matter in the smartphone race, but it clearly does. The point Dediu and other analysts make is that shipment delays are among a variety of crucial factors in the dynamic smartphone sales realm.

 

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