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."


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

    Comment number 284.

    I recommend everyone gets a smart phone. It worked for me.
    I am now the worlds brainiest person.

  • rate this

    Comment number 283.

    Agree with mrs gruffalo batteries on htc handsets particularly high end are crap i had a htc desire when they came out in the end had to get rid because of the cycling on off overheating problem untill htc sort the quality control they will allways lose sales

  • rate this

    Comment number 282.

    I've had an HTC desire HD for a couple of years now.
    I've been fairly happy with it except for HTCs refusal to upgrade it Ice Cream Sandwich. I know I can do this using third party instructions and I probably will. But why the *!*!! should I need to. I don't want to go to IOS or Windows so I assume I'll go to Samsung and I won't trust HTC again.

  • rate this

    Comment number 281.

    When will manufacturers produce personal electronic equipment that the purchaser can configure to their own requirements ie. voice control and to text, anyware on screen hanwriting recognition, foldout flexable screens, gesture control, full office software etc instead of just gimmiky applications?

  • rate this

    Comment number 280.

    I don't want to see HTC go down because I value competition in the market. But they shot themselves in the foot by not having removable batteries or microSD option in their latest range. Just like a few other commenters I opted for a Samsung to replace my HTC Desire. A pity in a way because I liked the HTC sense interface. I hated the miserly internal RAM in Desire though.

  • rate this

    Comment number 279.

    257.Killer Boots Man

    What % of smartphone owners actually use its functionality beyond calls, texting and camera?
    I would imagine a lot do. I hardly ever use the camera but internet access on the move is essential for me. As is the inbuilt GPS. Why carry another box around when the smartphone can have a SatNav program installed. The rest is just so so. Biggest drawback is battery life

  • rate this

    Comment number 278.

    @277 Nice little warning.... However, perhaps getting your facts on cost straight might help your argument!

    I'm no lover of the fruity-based phones, but a little investigation turns up a cost of $207 for each unit. Still a massive mark-up, but not as much as you suggest!

    By the way, my Samsung Galaxy S will be traded in for an S3 at the end of my contract!

  • Comment number 277.

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

  • rate this

    Comment number 276.

    HTC lost a customer and a fan when they announced that the Desire HD (which I previously had) would not get the ICS update. Considering that it was the flagship phone at its launch that has now been abandoned in terms of updates, I feel it begs the question of what could be done with the One X in a couple of years, which puts me off with its non-removable battery and non-expandable storage.

  • rate this

    Comment number 275.

    I concur with potatochip. The One X was too 'closed' for my liking (but otherwise great). I don't expect a truly open device; I'd only make a mess of it, but things like an easily removable battery and a microSD slot are certainly welcome.

  • rate this

    Comment number 274.

    It is quite obvious why HTC had success right up to the moment the CEO made poor decisions on Beets audio and reduced spec on the htc1 in order to rush it out before Samsung went to market.However the CEO was not sacked then and languishes in a failed 58% drop in profits.Lets face it the board and CEO are out classed and must go...this sounds like the Nokia and Windows story does it not ?

  • rate this

    Comment number 273.

    For my next smartphone (to replace my HTC Desire HD) I am intending to switch to Sony Experia S. There are faults in my opinion with all the HTC One range - notably non expandable memory, micro SIM, and poor camera. In addition HTC lost me as a fan when they decided not to upgrade Android software for Desire HD owners. Poor show.

  • rate this

    Comment number 272.

    I feel like one of those people who write in when the topic is modern music and say "Who's Anthony Blunt? I've never heard of him!" except in this case who are HTC? And who cares?

    I watch a shedload of commercial TV and can't recall a single advertisement for them. Perhaps their marketing strategy is a tad forgettable. . .

  • rate this

    Comment number 271.

    Look at an Apple advert. There about life, family, friends etc. They give you that warm fuzzy feeling inside. HTC do some bloke chucking himself out of a plane, what's that about.
    You may not like Apple but they know how to sell stuff.

  • rate this

    Comment number 270.

    257.Killer Boots Man

    What % of smartphone owners actually use its functionality beyond calls, texting and camera?

  • rate this

    Comment number 269.

    The main reason why I'll be leaving them is purely because of their customer services.It's taken them a month to get back to me the fault of my phone.I sent it I'm with a faulty ear speaker and volume button. Cheers then up every day for a month before spamming their Facebook page.Only then food I get any help.I want going to pay a £130 Bill for no reason. Rubbish customer services in my opinion.

  • rate this

    Comment number 268.

    HTC phones just feel cheaply made, even their flagship models. I had the One X until I noticed the camera lens was slightly off center, did not cause any problems with photography, but enough to trigger OCD.

  • rate this

    Comment number 267.

    @257 The number of non-smartphones on the market has dwindled since the intrusion of this type of device, with feature creep and bloated multifunction devices whose higher margins on the data contract push basic phones off the shelf. It is the same market, so advocates of the basic phone should be no more silenced than advocate or haters of HTC

    I don't think I saw anyone say "get a life" though.

  • rate this

    Comment number 266.

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

    It seems the BBC editorial policy for science and techhnology operates on the basis that if it isn't a pet topic of Cellan-Jones or Brian Cox then it isn't worth bothering about.

  • rate this

    Comment number 265.

    I think one issue is the number of phones HTC released in the past couple of yrs, where they only really required one good offering. The difference between HTC and Apple/Samsung, is that the latter clearly have a flagship smartphone line, which people trust and buy.
    With phones now providing very similar experiences, there is little differentiation. Battery Life and SuperUsability -> Samsung.


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