HTC Moves 24.6M Handsets, But Can it Keep Growing?

HTC Desire Z

Continuing to hitch its wagon to Google’s Android operating system, Taiwanese handset maker HTC reported record sales and profits in the final quarter of 2010 with 9.1 million phones sold in the three-month period. That result is good for a 163 percent year over year sales increase and brings the total handset shipments to 24.6 million in 2010. A jump in the average selling price of each handset, up to $364, helped push net profits to NT$14.8 billion ($508 million USD). The company has high hopes for 2011 as consumers continue to adopt high-margin smartphones around the world.

But will HTC become a truly global brand? Currently, the company is heavily reliant upon North America which accounted for 50.6 percent of all handset sales in 2010. Europe added another 32.3 percent, with Asia and other countries making up the rest.

With 83 percent of sales in regions where smartphone adoption is already high, will HTC be able to catch the fast growth that will appear in places such as India, which is home to less expensive smartphones and a huge chunk of the global population? What about African nations where mobile web browsing is up more than 4,900 percent? The company’s success at the higher end of the market could hamper sales in the future because it focuses on high-priced handsets, although HTC has been known to make less expensive, but quite capable, devices.

One way HTC can continue to grow sales is to leverage its smartphone background to enter new product markets. Earlier this week, rumors began surfacing of the HTC Flyer, an alleged Android tablet the company may launch as early as March. I wouldn’t be surprised if this happens for two reasons: it wouldn’t be the first time HTC attempted to launch a computer or tablet — the HTC Shift, a 7-inch Vista tablet is a perfect example — and HTC is a key Google partner, so the company likely has access to the upcoming Honeycomb version of Android for tablets.

Until a tablet or other innovative device arrives, HTC will rely on new 4G handsets for sales growth. The HTC ThunderBolt will hit Verizon’s LTE network within a few months and appears to be the first Verizon phone that will do simultaneous voice and data, at least in areas with 4G coverage. Sprint has the HTC EVO Shift 4G while AT&T is gaining the HTC Inspire 4G. And all of these devices have some form of HTC Sense, a custom user interface that could generate future revenues in the form of cloud services and smartphone data backups.

Don’t count out HTC’s use of Microsoft Windows Phone 7 either: HTC currently builds one five devices for Microsoft’s new mobile platform and if it takes off — a big “if” at this point, based on limited sales data and comments from LG’s mobile division — HTC is well positioned to become less reliant on Android. That could help bring customers who aren’t interested in Android, although it won’t likely help much in terms of market breadth: a Windows Phone 7 device isn’t likely to compete well on price as compared to low- or -mid-tiered smartphones.

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