Blog Post

HTC Highlights How Fickle The Mobile Market Can Be: That Spells Opportunity

Looking at HTC over the last week or two, it’s almost hard to believe that it is the top-ranking smartphone maker that the analysts claim it is. Shares have dropped some 40 percent in the last five weeks for the Taiwan-based handset maker, with the company’s stock price currently down to a level last seen in July 2010. The silver lining, if there is one, is that this demonstrates just how open the opportunity can be for those players like Microsoft (NSDQ: MSFT), Nokia (NYSE: NOK) and RIM (NSDQ: RIMM) to pick up momentum if they launch the right products at the right time and price.

For HTC, the problems, it seems, are three-fold at the moment:

The company in November issued a revised guidance for its Q4 sales, in which it said that it expects sales to be flat compared to last year — compared to its previous estimates of growth between 20 percent and 30 percent.

Yesterday that situation appeared to get compounded when the company announced that its sales for the month of November were T$30.94 billion ($1 billion), a fell 30 percent drop compared to the month before, and 20 percent compared to a year ago. That was HTC’s first drop in year-on-year sales in two years. Despite these numbers, it has not yet chosen to re-revise its revised Q4 forecasts.

While HTC has blamed the economic climate for the lower sales figures, others are looking at the state of the company itself — specifically the lack of handsets that HTC is launching for the crucial holiday season (new models will be revealed only early next year).

HTC makes devices based both on Android as well as Microsoft’s Windows Phone OS, and it focuses only on smartphones, but some question whether the company will have what it takes to drive “basic” smartphones to the masses, and do not believe that LTE devices alone, one area where HTC has been leading, will be enough to drive sales at the company:

“It can’t just rely on a few more new applications to build up its name. It needs to put in some effort on the overall design of its phones in terms of hardware specifications, software features and services,” CK Lu, an analyst with Garter, told Reuters today.

Combine this with a pending decision at the ITC that could see its devices get banned from sale in the key market of the U.S., and HTC looks like it could be in hot water indeed. That’s a big turnaround for a company that in Q3 ranked as the top smartphone company in the U.S., UK and other countries — and was a close second in other markets.

But just as HTC seems to have quickly found itself in a troubling place, it seems like it would be possible for another player to reverse its fortunes just as easily and regain some market share.

There are certainly a few that could use a boost.

Taking just one: Nokia’s decision to launch the Lumia, even if only to a restricted number of markets and even if only one model, seems in that sense to be a good idea, creating interest, buzz and demand for a product and brand at a time when those that are on top look to be teetering a bit.