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Unwilling to change its phones, HTC changes CEO instead

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On the brink of its biggest product launch of the year, HTC has delivered the unexpected news that it's appointing a new Chief Executive Officer. Peter Chou, who had filled the role since 2005 and led HTC's rise from an anonymous contract manufacturer to a global smartphone brand, is being replaced by company co-founder Cher Wang.

Wang immediately becomes the focal point of all decision making at HTC, taking responsibility for broad corporate strategy as well as final product decisions. This marks the formalization of a handover of power that began in 2013 when Chou was said to be temporarily offloading operational duties to Wang in order to focus his attention on product development. Now that he's being demoted, he can make heading up the new Future Development Lab his full-time occupation.

It's too late to change the One M9, but never too late to correct course

The timing of this change is stark, coming mere days before the global release of the HTC One M9. Even if HTC's CEO transition was an orderly one that had been planned well in advance, announcing it at such a critical point in the company's development suggests that it was accelerated by recent events. The M9 has drawn the ire of many of HTC's most loyal fans for sticking too closely to the look and design of its predecessors, and though HTC had been betting big on the new phone's camera being a standout feature, early results have been underwhelming. This negative response seems to have caught HTC off guard, and the company is now taking the most drastic of actions to correct its course.

It's too late to change the One M9, but it's not too early to start rectifying the mistakes that have led to its ambivalent reception. In spite of spending tens of millions of dollars on having Robert Downey Jr. as its brand ambassador, HTC's biggest failure continues to be effective marketing. The company has been cycling through Chief Marketing Officers in search of a better way to communicate with consumers, but it still can't achieve the sort of cachet that allows Apple to reissue the same iPhone design for two years running without suffering a loss of sales. The unchanged One M9 design is not actually a problem, but it's perceived as such and that is an issue in and of itself.

HTC's marketing woes wouldn't be so severe if the company could keep its secrets secret

Leaks haven't helped the One M9's fortunes, either. Like almost every previous flagship Android phone from HTC, the 2015 One leaked out in pictures and video days ahead of its unveiling, and most of its new features were known about weeks in advance. Compare that to all the misdirection surrounding Samsung's Galaxy S6, which made a bigger and better impression when it was announced on the same day as the M9.

Verge Video: Hands-on with the HTC M9

Beyond its flagship smartphone, HTC also has to deal with a mobile market that's growing increasingly hostile to manufacturers of its type and size. The Taiwanese company does not have control over its supply chain, and has to shop for parts like everyone not named Samsung, Apple, or (to a lesser extent) LG. HTC also lacks any real sway over carriers, and is often forced to bundle bloatware on its phones to make them appealing to network operators. In the uphill struggle to secure the best possible components and the widest possible distribution, HTC is fighting only with the advantage of a great design pedigree. That matters, but not as much as Apple and Samsung's scale or the lower costs of Chinese competitors like the rapidly growing Xiaomi.

HTC's future depends on new devices like the Vive VR as much as any One smartphone

To survive, HTC is trying to diversify with a new Re range of connected products. The Re Camera kicked things off at the end of 2014, and this month's Mobile World Congress saw the debut of an HTC Grip fitness-tracking band and the pleasant surprise that was the HTC Vive VR headset. HTC is ready to evolve from a smartphone manufacturer to the purveyor of connected devices and experiences.

"The overwhelming response that our virtual reality product, HTC Vive, received earlier this month underlines the importance of these new connected technologies for our future," says Cher Wang in a statement accompanying today's news announcement. She is bullish on expanding HTC's portfolio and her predecessor, Peter Chou, is said to be actively involved in the development and refinement of the Vive and more products like it. On the surface, at least, this power realignment at HTC appears to make sense. Operational and marketing deficiencies have plagued HTC (and continue with the silly injection of Re into the Grip and Vive branding, forcing most people to read them as ReGrip and ReVive), and neither can be said to be among Peter Chou's strengths.

"I think I am the best candidate. I suggested it."

Enthusiasm for change must be tempered by the fact that Wang has been sharing operational decision making with Chou for the past 18 months, and thus has to accept a share of the blame for HTC's failures. With full control now established over the company, she'll bear the full responsibility for steering HTC into the right direction. "I know the company, I know the people, and I have the vision," Wang tells Bloomberg News in an interview. "I think I am the best candidate. I suggested it."

HTC describes its change of leader as a transition, though it feels like one that is being completed rather than only just beginning. Former CEO Peter Chou had once promised to resign if the original One was not a success, which underlines how closely and personally involved he was with the company's smartphone business. Now that HTC is working to define itself as the manufacturer of a much broader range of devices, it makes sense to redefine its leadership as well.

Verge Video: Hands-on with the Vive VR headset