HTC goes back to square One

HTC goes back to square One

Last Friday was meant to be the day HTC fought back. The One flagship would hit stores amid strong reviews and be snapped up by Android aficionados. Except retailers are still waiting. They were left furious by HTC’s 11th hour announcement to delay the launch. Pre-orders will begin to be sent out at the end of March, with supply following some time after.

The manufacturer, whose British team has been overhauled with the departures of UK chief Phil Roberson, head of sales Mike Coombes and head of marketing James Atkins, was slated by retailers for poor communication and not giving any assurances about future supply. ‘HTC sounds like a company in a mess,’ said one. Another said the company’s reaction was similar to the BlackBerry outage of 2011, when its executives went to ground and operators and retailers were left scrambling to cope with angry consumers. ‘Because all the decision making is made in Taiwan, it’s the following day when you get an answer to your question. No one seems to know anything.’

This development is symptomatic of how HTC has fallen in recent years from its former position as nimble market upstart. The trade has been here before. The One was meant to be a mission critical handset in response to a difficult past 12 months. For 2013’s HTC One read 2012’s the One series.

But the stakes are even higher for the Taiwanese manufacturer. Earlier this month, it revealed it had February sales of NT$11.4bn (£255.4m). This was down 44% on the same month in 2012, but to throw the figure into even starker context, it was around the same level HTC was trading at in early 2010, before it captivated the market with its range of pioneering Android handsets. The One’s delay will have hobbled its fight back before it even begins.

Retailers fortunate enough to get their hands on the device are unanimous about its quality – it is the latest in a long line of HTC handsets that are critical darlings – but also agree that a good device is not enough nowadays. CCS Insight analyst Geoff Blaber said: ‘That’s not important without significant market spend.’

When it finally hits the market, it will go head to head with first quarter big hitters such as the Samsung Galaxy S 4, BlackBerry Z10 and Sony Xperia Z. One retailer said: ‘The pressure is on – HTC needs to make a comeback this year and it needs to bring out its big guns. It’s a very crowded market and there’s also a crowded release schedule. This year is going to be a challenge for it.’

The Samsung effect

Today is a far cry from when the Desire and Hero were among the devices driving smartphone sales. But HTC then got cocky and started churning out a confusing range of devices. One retail source said: ‘HTC spread itself too thin and lost its way. It slowed down the product range but it didn’t give those devices the marketing budget that they needed. Compare this to Samsung, who will be spending massively during the next few months.’

HTC has accepted it got its marketing wrong, bringing in Benjamin Ho to lead its global strategy and with UK marketing chief James Atkins among the swathe of changes at senior level in the UK. The manufacturer’s deal to provide sponsorship for the Champions League is generally seen as a shrewd move, but doubts remain as to whether this will be enough to break through.

CCS’s Blaber said: ‘Benjamin Ho faces a challenge which is faced by a huge number of other companies. Samsung has a vastly disproportionate marketing budget, forcing others to up their game. HTC will only have a finite budget available, but it has to be used to maximise the effect of positioning the One through the year.’

Aside from marketing, the botched HTC One launch further underlines how it lacks the muscle to sweep up components or produce them in house like Samsung can. Issues around the components for the Ultrapixel camera are believed to have been behind the delay, with one Taiwanese analyst slashing his sales forecasts by as much as 80% because of supply chain issues. One operator said: ‘Samsung has the market sewn up when it comes to components whereas HTC is always reliant on third parties because it doesn’t have the right scale.’ HTC experienced supply issues early this year when it failed to meet demand for its Windows Phone 8X and 8S handsets.

There is pessimism about whether HTC can do enough, with critics pointing out the difficulty in building its own content and services, as well as its lack of a multi-screen strategy. One retailer said: ‘Android competition has really levelled off from HTC’s heyday. The amount of Android devices out there is huge and the platform has become more varied. The pressure on manufacturers to innovate and produce something new is greater than ever before.’

For a company that prides itself on being ‘quietly brilliant’, the pressure is on not to go out with a whimper, let alone a bang. One thing is for sure – it needs the device to come to market, and fast.

Written by Mobile Today
Mobile Today

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