HTC’s Q3 2012 profits down 79%, looks like the market doesn’t like the One series

October 8, 2012
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HTC has just reported that profits for Q3 2012 are down 79% from the same quarter a year ago. That’s brutal, but it gets worse. They say that revenues for the quarter, meaning how much money they’ve taken in from selling hardware, are down a whopping 48%. Why is this happening? Let’s take a step back to early 2011 when HTC announced the Sensation and Samsung announced the Galaxy S II. Samsung’s device was clearly superior, so HTC, which made a name for themselves with the Desire back in 2010, saw their market share decline. The same thing happened in 2012. HTC announced the One X, Samsung announced the Galaxy S III, and consumers decided that the Galaxy was simply better.

Is the recently announced HTC One X+ going to fix things? Not really. It’s the same One X from February, but with a black case and 4G LTE support. There’s also a bigger battery, but forget about that for a second. Samsung’s Galaxy Note II is just now launching in Europe, and it’s going to land in the US in the next few weeks. How many people are going to pick that up instead of an HTC device?

Several months ago, an email written by HTC’s CEO, Peter Chou, leaked out. It said bureaucracy is taking over the company and slowing it down. That’s obviously what’s happening here. HTC just isn’t moving fast enough, but then again can they? Qualcomm, who owns a share of HTC, simply can’t move as quickly as Samsung, who not only designs their own chips, but also manufactures them using their own fabs. In other words, Samsung already has a supply chain setup, from chips to devices, whereas HTC has to depend on multiple external parties. Each additional party just adds delays.

Can HTC turn things around in 2013? We don’t think so, but we do hope we’re wrong.

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