Thanks, HTC, it's enough now!
We go back to the 6th of January 2012, it’s a rainy day in Taoyuan, Taiwan - everything is really dim and muddy, and large raindrops pelt down on the roof of some company’s headquarter, before eventually falling to the ground and forming large puddles. An employee of said corporartion looks out of the window right now - he sees nothing but huge, omnious clouds rolling by, with the sun being covered in its entirety. It is rumored that he started giving the clouds names: "Oh look, that’s the Cumulunimbus 4G LTE! And there, to the left, this one is called Nimbostratus XE."
It’s a bad day in many ways. But this is not only caused by the darkness of the enviroment and the fact that an outside temperature of 60.8 °F doesn’t invite anybody to go for a walk and get their heads free. No, this is not the reason, such days come but also go again - the problem is a different one: While in the skies of Taoyuan, thunders and bolts form ThunderBolts, the exact same company has bad news for its investors, announcing its Q4 earnings for 2011. The company I’m talking about could not be any other than HTC, one of the biggest players in the mobile market and one of the top Android phone vendors. But what’s the big deal? The mobile market is the most potential one on earth, and being involved in it is the best thing that can happen to an OEM. Well, theoretically yes, but not in the case of HTC. With a net income of $366 m in Q4 2011 - a giant decrease from the $492m raised in the same quarter of the year before - the 4th biggest mobile phone manufacturer in the world disappointed a lot of stockholders while also surprising the tech-savvy crowd.
But before we dive deeper into this affair, I’d like to start things off with a little chart that illustrates HTC’s downfall in Q4 2011:
As you can clearly see, the profit share of said Taiwanese phone manufacturer dropped significantly after September of last year, with mostly Apple and Samsung benefitting from this. And it’s not like HTC didn’t have its position in the market before: With a constant stake of around 5 percent in mobile market profits, the company did fairly well even before the Android boom, primarily being a member of Microsoft’s Windows Mobile alliance. However - and that’s particularly interesting - as opposed to Samsung, it didn’t really capitalize on the skyrocketting smartphone industry, at least in terms of gaining share. Quite the contrary, aforementioned percentage even changed for the worse.
To me, this first sign of ‘failure’ seemed very surprising, given the fact that in the same area HTC operates in, some of the other big players churn out monster-profits quarter for quarter, thanks to extremely high margins and sometimes radical marketing strategies. Just a few hundred miles away in South Korea, Samsung is well on its way to becoming world’s largest mobile technology company not only by sales, but also by profits, making up around a fifth of the South Korea’s global exports. With what’s esentially the future of personal computers right at their feet, one has to wonder why HTC seems to be not really benefitting from this.
After thinking about this for quite a long time, HTC itself gave me the - admittedly not very satisfying - answer:
There are many little reasons for this, on which I won’t excessively elaborate now; however, there is one big matter that caused HTC’s profits to go down constantly: the company’s smartphone portfolio. Ironically, HTC’s core area of activity was responsible for making the company unsuccessful. The company admitted that itself at the beginning of this year in form of a statement from Phil Roberson, executive director of HTC UK and Ireland, who said that they "ended the year with far more products than [they] started out with" and that they "tried to do to much." It’s important to note that this was not about the products itself - there was nothing wrong with the hardware or the software. This was about the amount of handsets Taoyuan spit out.
I’ve always wondered when the self-proclaimed "High Tech Computer Corporation" came out with yet another handset at yet another press conference, rushing indefatigably from announcement to announcement, without really presenting major novelties. Instead, they concentrated on making phones and tablets that are just supposed to cover a single usage scenario like posting to Facebook, boasting ‘monster’ audio, or support for LTE.
In 2011 alone, we saw a total of 14 phones (including several variants of the ‘Sensation’ and a ton of ‘Evoes’) being shown off by HTC - not even including carrier-branded devices like the ‘T-Mobile myTouch 4G Slide’.
Imagine, that’s two handsets per month!
And although they said they want to make it better, we've nonetheless seen another 9 Android phones alone in 2012 being released by the one corporation we're talking about right now.
Just for comparison: HTC has roughly 5,800 employees. Apple has many times that number of people working in the corporate offices, and still, the former only releases one phone per year, in which it put all its efforts and talent, while the latter is simply not standing still when it comes to desperately trying to appeal to customers.
This overload of attraction can’t possibly be desired by us as consumers due to one simple reason: The world we’re living in is changing fast, and we as humans are sometimes forced to adapt to that. So in a world that can be so superficial and features that amount of inconsistence, people are happy to have something that lasts, something that doesn’t need to be swapped for something newer, allegedly better, every two months. People don’t want to buy an HTC One X for their hard-earned money and then be tempted by marketing to pay another $700 for an HTC One X+. People don’t want to keep in mind that their flagship phone of today in a year won’t even get the latest operating system update anymore. Nobody wants that! Nobody, me neither!
This is why I think HTC has lost ground recently, not only financially but also perceived from a customers’ point of view, this is why I think HTC continues to lose ground, and this is why I say: "Thanks, HTC, it’s enough now," hoping that this undoubtedly creative company will go back to the drawing board and reinvent itself.
Chart via: asymco
Interview with Phil Roberson via: Mobile Magazine