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Summary:

HTC reported a 79 drop in profit in the third quarter as it continued to struggle in the face of competition from Apple and Samsung. The once high-flying smartphone maker has been plotting a comeback but the prospects look dim.

HTC
photo: HTC

HTC, the once high-flying Taiwanese smartphone maker, is finding that reaching those lofty heights again is proving a lot more difficult than planned. Increasingly, its plans for a comeback are faltering in the face of bigger giants with little hope for a breakthrough.

The company announced third quarter results Monday and reported a 79 percent drop in profit with NT$3.9 billion ($133 million) in income, short of analysts’ expectations of NT$4.43 billion. Revenue for the third quarter came in at NT$70.2 billion ($2.4 billion), which was at the low end of its revised guidance for the third quarter. Analysts had expected that HTC would generate about $2.9 billion in revenue. A year ago in the same period, HTC pulled in NT$135.8 billion or $4.5 billion in revenue. The third quarter results continue a downward trend for HTC, which saw revenue decrease by 20 percent from the second quarter.

HTC has tried to simplify its smartphone lineup as competes against Apple and Samsung. While the One line has been well received by reviewers, it is now competing directly against Samsung’s Galaxy S III, which sold 20 million units in first 100 days and the Apple iPhone 5, which did 5 million units in the first weekend.

HTCHTC’s woes underscore just how hard it is to eke out a strong smartphone business in the shadow of Apple and Samsung. There is still room to grow but with global smartphone sales slowing, vendors need to increase market share to grow. 

HTC is hoping to get some traction with new Windows Phone 8 devices, the 8X and 8S, but it will be going toe-to-toe against Nokia, which can’t afford to lose out on its Microsoft bet and Samsung, which is showing more interest in putting out top notch hardware for the Windows Phone platform. And that again highlights the competitive differences between HTC and bigger rivals, which can control the supply chain and make their margins meaningful.

HTC is also hoping that China can be a growth opportunity but it faces some of the same challengers in that market as well as cheaper Chinese manufacturers such as ZTE and Huawei. HTC has some growing brand recognition in China, but it will be forced to spend a lot to keep its name up there alongside bigger rivals or local manufacturers. And with HTC set on not building cheap devices, it has to stand out among the big boys while fending off the advances of cheaper rivals.

HTC isn’t dead yet, but the current economics do not favor a significant turnaround. And with bad bets on Beats and OnLive, HTC has even less margin for error.

  1. If HTC want’s to generate sales all they have to do is release a phone and guarantee updates for the device. They simplified their line up but they still aren’t releasing updates. Jellybean was released 5 months ago and they still haven’t updated the One series of devices.

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  2. Good idea – nothing but Nexus-like models.

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  3. Where’s the fork? They are done like Motorola.

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  4. This is a shame. In my opinion, HTC makes the finest handset on the market. Their direction of poor marketing and the recent subborness to stick with a fixed battery, hurt them. I was going to purchase a new HTC and the lack of removeable battery set me back. I did write to them and they acknowledged other same complaints. Yet, here we are with more of the same.

    John B.

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  5. In addition, I am not sure there way of participating in couple of key markets like MEA and India. Though Mr Matthew Costello-COO -HTC says that India is a success story, i believe somewhere the point is getting missed there. In my opinion, apart from rejigging their entire marketing effort to put more emphasis on product and would agree with John that they make on of the best, they need to sincerely do a rejig on their operating regions for expand distribution. Its the time to ” Go micro” for them

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  6. The HTC is a great phone

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  7. I like the design and quality of HTC phones but they decided that they know what I want better then I did. Every time an Android update comes out, they force me to wait for it longer then necessary because they have to update Sense to work on the new OS. They decided I don’t want a removable battery or microSD slot so I can have the thinnest phone and use the “Cloud”. I would gladly have an extra mm or two of thickness added to my phone for the convenience of a removable battery and I don’t want to live in the cloud. Give me what I want and I’ll buy your product. If I want someone else to tell me what I want in a product, I’d buy apple.

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    1. My Sensation has a removable battery and a micro-SDHC card, currently at 32GB. I’ve had it a year and see no need to update. Are you referring to newer models having no removable battery or a micro-SDHC card slot?

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      1. Yes, I am referring to newer models. I also have an HTC Sensation. It had the features that I wanted when I bought it. The HTC One X and One S compromise features that I want with what some one else has decided I should want. That means I won’t buy it.

        I hate Samsungs slow software updates and the fact that they left my original Galaxy Tab stuck on Froyo. I swore I wouldn’t buy another Samsung device because of that. But it looks like I will have to eat my words because Samsung is the only one who makes devices that have the specs close to what I want.

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  8. My HTC Sensation is a very good phone. I have not felt the need to change after using it for the past year. My only hope is that its ICS will be updated. My complaint is that it has a problem using Bluetooth to transfer my photos to my computer. But connecting to the computer with a USB cable is not really a problem anymore. The first Android – maybe 2 – required the phone to restart before the phone was recognized by the computer.

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  9. HTC lost me when they stopped updating my EVO.

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  10. They need a game-changing set of features such as the very large screen and pen technology on the new Galaxy Note. I love my HTC Sensation (though it frequently crashes!), but the Note’s specs just blow anything else away.

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