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Summary:

Once a rising star, HTC has struggled for several quarters due to strong competition from Apple and Samsung. The company’s One X smartphone line has boosted revenues a little, but HTC’s confidence is waning: It lowered next quarter’s expectations for the third time in a row.

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The smartphone market giveth and the smartphone market taketh away. That’s the hard lesson HTC continues to learn after rising on Android’s tide until Samsung jumped in with both feet: HTC announced lower revenues and margins for its second fiscal quarter of the year and lowered its forward guidance yet again.

When looking at the numbers compared to the prior quarter, everything looks fine. HTC revenues rose 34.3 percent while gross profit improved by 44.9 percent. But HTC’s performance had been sinking for several quarters prior; the company warned that such was happening and lowered its guidance for three quarters prior. So why the bump up in the most recent quarter?

Early this year, HTC changed its strategy to one of consolidation. Instead of creating multiple phones — the Samsung approach — HTC designed its One line, which is more akin to the Apple approach. It took time for the One S and One X to reach sales channels to help the company’s finances. And after using both devices, I can see why sales figures got  a boost; the One X in particular is a super smartphone.

A single hit won’t turn into a long-term success; at least not for HTC. That’s why I suspect the company has lowered guidance for the third quarter, suggesting that revenues will be lower than this quarter and about half of the year ago period. HTC is betting on China as a growth area, saying it has a “growing brand awareness, strong operator partnerships and increasing retail presence.”

Such optimism is valid as China is a country of opportunity for smartphones and tablet. The only problem for HTC? Its peers are betting on the same region for growth, so it needs to follow the One series with another smart, solid smartphone.

  1. Perhaps if they released a smartphone that instead of being paper-thin, lasted for 3 days with heavy usage…

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  2. They should try vanilla android instead of forcing Sense down there customers throat.

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    1. I like that idea – or offer a stock ROM for their phones if folks want stock.

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    2. It should come with Sense but have the ability to OTA ‘side’grade to stock directly from HTC.

      Most of my non techy friends with HTCs (the ones that aren’t interested enough to get involved with online chat about smartphones) prefer Sense because it streamlines use across apps and gives core apps a common look and feel. However, I fully accept that more technical minded folks (the ones always on blogs) might prefer to roll their own and/or keep on the cutting edge and as they’re more technically minded could easily cope with the associated issues with such a switch.

      HTC’s software department is one of it’s strengths. It would not be a good idea to waste that talent on stock only versions.

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      1. My main reason for not wanting Sense on the phone is to eliminate delays in OS updates caused by having to upgrade Sense for the new OS version. If they release it with Sense initially, OS updates will be just as delayed as they ever were.

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  3. I have used HTC phones for several generations and have always been impressed with the quality and deep functionality of the products, but have kind of been disappointed with their me too approach with recent phones.

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    1. You read my mind. Thanks to my HTC One X being dumped by accident into a Dallas roadside garbage can (my real estate partner didn’t realize it was in his sandwich bag) I now have a Samsung Galaxy S III. I can hardly tell the difference except in subtle ways. Both were on AT&T’s 4G LTE, so speed isn’t the issue. It’s mroe the “feel.”

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      1. That is so true. It’s the feel and also it’s the data plan, like your 4G LTE with AT&T. I have the same service here in Atlanta. I’m a hair stylist and swap photos a lot and the data carrying is important for folks like me.

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  4. Lindsworth Horatio Deer Friday, August 3, 2012

    Phillip Paulwell allocates 700Mhz and Fiber Optic License for LTE – Broadcasters effectively on notice for Digital Switch Over – http://bit.ly/M8UJwI

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  5. Earlier Samsung and now HTC are going to adopt Apple’s strategy of fewer models, would Apple sue them for copying their strategy too:)

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  6. It’s simple, give us expandable storage and no Sense, and we’ll buy more phones.

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  7. I love my One X. Best phone I’ve owned and my others were an Apple and Samsung. They just don’t have the deep advertizing pockets Apple and Samsung have -companies that were household names before the smartphone was even invented.

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