HTC aims to avoid One X mistakes with new mobiles

 
Models hold the HTC One X phones HTC's One series of phones was well reviewed but has been outsold by Samsung's rival flagship handset

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You know a company has problems when one of its executives calls to tell you it is facing "challenges" and needs to be "bolder".

It has not been a good year for Taiwanese smartphone maker HTC.

Profits have slumped on weak sales - the firm recently reported that revenues for July were 45% down on the year. At one point its share price was as much as 80% below April 2011's level, before it made a slight recovery.

A recent leaked memo from chief executive Peter Chou revealed the extent of his concerns.

"HTC used to be a company where we did things quick and reacted quick," he wrote.

"However, the fast growth from the last two years has slowed us down... we agreed to do something, but we either didn't do it or executed it loosely."

Second to Samsung

Such self-recrimination is usually only heard after a firm's products miss the mark.

What makes HTC's circumstances remarkable is that the firm's flagship handset - the One X - has been lauded since its release in April.

"It's one of the best mobile devices I've ever used," said influential tech news site The Verge in its review. Engadget went further, describing it as "a masterpiece".

UK gadget site, Pocket-lint was also fulsome with its praise, giving the device the same score as Samsung's top-selling Android device, the Galaxy S3.

"In real life they are very closely matched," Chris Hall, Pocket-lint's editor tells the BBC.

Peter Chou HTC's boss, Peter Chou, sent a memo telling staff to "kill bureaucracy" to make the firm more nimble

"The Galaxy S3 has better battery life... but the build quality and design of the HTC is better."

A popular top-end device is supposed to provide a "halo effect", boosting sales for an entire product range.

Yet data from IDC suggests that HTC shipped 9.1 million smartphones worldwide between April to June, a 24% drop on the year.

By contrast Samsung shipped 50.3 million handsets, a 173% rise.

So what went wrong?

"The market changed," says Jason Mackenzie, HTC's president of global sales and marketing.

"There's far fewer consumers who are going into the retail stores undecided about what they want to buy.

"Most of our research suggests about 70% of consumers are walking into the store already knowing what they want to buy... so we don't have the luxury in a significant percentage of times to be able to actually put the HTC One in the consumer's hands."

If this analysis is correct it all comes down to marketing - a problem for HTC which admits its budget is about a sixth the size of its South Korean rival.

"We cannot market like a Samsung - or Apple - where you've just got brute force tactics, carpet bombing the airwaves with TV commercials," says Mr Mackenzie.

"We've got to be more creative and act and speak like a challenger."

Skydivers

The problem, says one telecoms analyst, was that what budget HTC did have was spent on the wrong message.

"They had a rather spectacular but somewhat nebulous campaign of good-looking skydivers jumping out a plane in Arizona," says Ben Wood of CCS Insight.

HTC One X TV advert HTC's TV advert featured skydiving smartphone users, but little information about the handset itself

"Historically with HTC the product had always been up-front and they had been very successful with that, but with this campaign they lost that.

"The other thing is that previously operators had liked HTC products, liked the HTC people and therefore made promises in terms of supporting them.

"But in the case of the One X it almost felt like the operators had been invited to a better party - the Galaxy S3 with Samsung's eye-watering marketing budget - and they dropped HTC like a stone."

Manoeuvre to Microsoft

Samsung may have become the dominant Android smartphone player, but the upcoming launch of Windows Phone 8 presents HTC with a fresh opportunity.

Although it already sells two phones powered by the operating system's predecessor - Windows Phone 7 - they were never the focus of its efforts. That has helped the operating system become more closely associated with Nokia - something HTC intends to change.

"We will have two flagships," says Mr Mackenzie.

"For Windows Phone 7 we didn't provide enough differentiation to have that flagship status between what we were doing on Windows Phone 7 and what we were doing on Android. When we look at the market we think that was a mistake from us and from our competitors as well."

HTC's relationship with Microsoft goes back 12 years to the Compaq iPaq - one of the first colour touchscreen pocket computers.

Nokia Lumia 920 HTC plans to challenge the Nokia Lumia 920's claim to be the flagship Windows Phone 8 handset

Over the ensuing years it made several Windows Mobile devices sold under other brands' names and opened offices in Seattle nearby to the software firm.

But a decision to build the T-Mobile G1 in 2008 - the world's first Android phone - heralded a change in strategy.

Although HTC never broke ties with Microsoft, over recent years its links to Google have been stronger. A decision to recalibrate that position carries both risks and potential rewards.

"What HTC is hoping - as Nokia is hoping - is that there will be momentum around Windows Phone because of the huge amount of expenditure that Microsoft is making to market all the Windows 8 products," says Ben Wood.

"But I am concerned that consumers will find Windows 8 on PCs a rather daunting challenge because it's such a significant shift from Windows as they know it today, and therefore there's a danger of collateral damage to Windows Phone 8 if people decide to wait before jumping in."

HTC's decision to switch the focus of its marketing efforts to the internet, where it plans to educate users about what its devices do, may help - its strategy will become clearer after a press event in New York this Wednesday where it will launch new devices.

Certainly, one industry watcher says there is still time for a turnaround.

"HTC did a lot to bring Android into the mainstream and then Samsung catalysed on that to catapult into the top spot," says Pocket-lints's Chris Hall.

"But things go up and down in tech. We have seen the rise of Apple and the decline of Microsoft - going forward there's a chance that could switch, benefiting HTC in the process."

 

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  • rate this
    +3

    Comment number 24.

    @5
    UK doesn't really do consumer technology (too expensive to make stuff here), what we're good at is engineering, but often in areas nobody at consumer level would understand, thus it's not particularly news worthy.

    We're in danger of losing our engineering heritage to europe though, because the title "Engineer" has been dilluted down and pay for REAL engineers has suffered as a result.

  • rate this
    +1

    Comment number 23.

    The pretentious skydiving student advert didn’t exactly help HTC's cause either. I hear the latest HTC range has great build quality, but when equivalent high-end Android phones have a removable battery and expandable storage, I know which one I’d opt for.

  • rate this
    0

    Comment number 22.

    @20.Matt

    The iPhone is now a compeditor to the Galaxy S3. It's not been the best phone on the market since the 3GS and is currently woefully fragile compared to the rest of the market, despite having the best app support I have seen an iPhone 4S literally explode when dropped less than 4 feet onto a carpet.

  • rate this
    0

    Comment number 21.

    Its what happens with technology. . . . . Someone comes up with a great idea, they start selling, someone else comes along with a similar product, then it's a 'free for all'. .. . . . . .In this instance, Apple and Samsung captured the market, like VHS won over Betamax when video's first came out

  • rate this
    -6

    Comment number 20.

    I agree with Under-Used. There are sooooooo many smart phones that all seem to do the same thing. By sticking to the brand you know where you stand and how the device will work. Apple is very good at this by sucking-in consumers to buy other services via itunes etc etc. I still think the iphone competitors have a way to go.

  • Comment number 19.

    All this user's posts have been removed.Why?

  • rate this
    -7

    Comment number 18.

    @5.penguin337

    Rolls makes engines for American planes, so the Americaphiles at the BBC actually take the time to notice them

  • rate this
    -1

    Comment number 17.

    The problem is early Samsung smart phones where better than early HTC ones, I have used both and Samsung had the edge which is why I have a Galaxy S. Now my contract will soon be up for renewal and I've yet to see what HTC have done that would make me move to the One rather than the S3.

  • rate this
    +19

    Comment number 16.

    Why is it the BBC defintion of "technology" only includes mobile phones and social networking sites ?

  • rate this
    0

    Comment number 15.

    I quite like HTC devices - but from a technical POV HTC have made bad decision after bad decision with their last few phones - fixed storage and battery being the latest (compounded that they STILL have been unable to get decent battery life out of their devices, mainly due to screen tech).

    I read the spec of the One X and immediately discounted it due to these factors (now happily own a GS3)

  • rate this
    -1

    Comment number 14.

    For many years I have had a mobile phone, it also takes pictures. There is nothing as funny as seeing someone walking past T****, with a phone glued to the ear saying "I am walking past T****". I really don't understand why you might need to order shopping on line when you are standing outside the shop.

  • rate this
    +25

    Comment number 13.

    HTC shot themselves in the foot by releasing the Wildfire as a low end smart phone. The problem = so very little memory for apps that the user has to choose between the latest Facebook and the latest Google maps.
    If your not tech savy, the phone runs out of memory in no time and becomes less useful than a house brick.
    It's put A LOT of my friends off HTC phones!!! Very stupid HTC!!!

  • rate this
    +30

    Comment number 12.

    I think the problem is product saturation. Manufacturers are releasing new models in a very fast time scales but have only small incremental improvements to functionality. I believe the consumer is tired out and subsequently chooses one brand and unless something radical comes along stays safe with what they know. We all see how fickle the digital economy can be; why be top for a day?

  • rate this
    +5

    Comment number 11.

    The reason HTC is in the toilet..yes the market changed but probably not for the reason the HTC marketing bod above is thinking about. The market moved away from HTC because their customer service and support has been dire since mid 2010 - customers will only put up with so much before moving away to what they think are greener pastures.

  • rate this
    0

    Comment number 10.

    The problem with the Smartphone market is that the owners are not that smart. I think the manufacturers looked to the computer market as where the market would come from, and it did in the early days. Howerver, Apple have proved that the none techie market was a gold mine. Make a phone that even an idiot can understand, and you're quids in. HTC need a better camera, their long time failing.

  • rate this
    +15

    Comment number 9.

    It's got to that stage when all these smart phones can practically do the exact same as the other.

    It will turn into a matter of preference rather than innovation in the end

  • rate this
    -2

    Comment number 8.

    Rise of Apple and decline of Microsoft?

    In what universe is that happening?

  • rate this
    +21

    Comment number 7.

    I hope HTC stay competitive. It would be bad for consumers if Samsung gain a total monopoly in the Android smartphone market.


    I am very happy with my HTC one X, but have used many manufacturers over the years. Choice is good.

  • rate this
    +10

    Comment number 6.

    It's rubbish because it's not Apple. And only apple produce products worth talking about.

    Only Apple invent new things worth using, no other product can ever claim to be better than one made by Apple.

    *sarcasm about some commentators and the general market*

  • rate this
    -12

    Comment number 5.

    Funny how the BBC chats forever about companies like HTC etc but barely mentions British companies at all

    Cadbury- a world leader, the samsung of chocolate, now gone
    Sheffield Forgemasters
    Bombardier

    Hardly a cheep of support or a mention

    Rolls Royce aero engines occasionally gets a shout

 

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