Is HTC going to survive?

February 21, 2013
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Chances are, you used to own an HTC device. It was the first big name manufacturer for Android, even making the very first Nexus device. We’ve grown as HTC has, though many of us have grown apart from HTC. If the chances are good that you once had an HTC device, those chances are the same that you no longer do.

Factors like having been usurped by Samsung and having made questionable business moves have put HTC in a really difficult position. The HTC One has gained industry-wide praise, but is it enough? It seems HTC wants its spot atop the Android world back, but that road is long and treacherous. Can HTC do it?

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A brief history of HTC

HTC was founded in 1997, initially making notebook computers, quickly switching to handheld devices. The company made some of the very first touchscreen cell phones and tablets, making HTC a true pioneer of Android as we know it. Without its innovations, it’s possible we’d be stuck in the BlackBerry realm of physical keyboards. Yikes.

HTC initially made devices based on the Windows platform and were responsible for the Palm Treo 650 and HP iPaq. Switching from making devices for others to put their branding on to using the HTC name was a bold move, and one that paid off. It went on to release the HTC Evo 4G in 2010, the first 4G device available for purchase.

Being named “Device Manufacturer of the Year” at MWC 2011 was a proud achievement, along with being ranked the 31st most innovative company in the world the prior year by Fast Company. By Q3 2011, HTC was the largest smartphone manufacturer in the world, holding a 24% market share. Samsung trailed with 21%, and Apple was a close third at 20%. HTC, it seemed, was well on its way to dominance.

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Where did it go wrong?

Going into 2012, HTC had quite a bit going for itself, as well as against it. Samsung was becoming a very respectable competitor, with phones such as the Galaxy line and its back-to-back Nexus devices. HTC purchased a large interest in Beats Audio, a curious move meant to give it an edge with mobile audio… a sector it felt was important to consumers beyond what was already on offer. It rang hollow, and was a sign HTC may not have its wits about them.

Marketing

HTC simply failed to market itself properly. Without a strong marketing presence, consumers simply began to forget about HTC. All the marketing muscle behind Samsung devices made them popular, as people tend to respond to clever or brash marketing. In comparing devices across the board, HTC was not producing second rate product, it just had a second rate marketing initiative. With a pretty impressive profit margin of about 13% in 2011, there was no reason not to promote itself.

Sense

Sense had, until the new HTC One, grown very stale. Consumers want to see something fresh, but not unfamiliar. Without an update to its proprietary skin, HTC devices would appear weak. The combination of Sense stagnating and Samsung’s rise would be a large motivation for consumers to simply ignore HTC.

The unfortunate truth is that Android is nimble and evolving quickly. Skinned devices add another layer to the user experience, but when it comes down to Android updates, updates just don’t happen quickly. Even the new HTC One is a bit behind, sporting JellyBean 4.1.2 instead of 4.2.2. It’s clear HTC values Sense over Android, which may not make a lot of sense to many consumers.

Carriers

It has been business as usual for HTC and its relationship with carriers. HTC felt it was doing everything the right way, and it was… if the business model simply hadn’t changed. HTC was giving carriers what they wanted, while Samsung was remaining indifferent to carrier whim.

If we take the One series (before the recent offering), three of the four carriers had a version of the device. AT&T had the “X” variation, while T-Mobile had the “S”, though not quite the same. Sprint (and various other CDMA carriers) had the “V”, which again had different specs, but also the HTC EVO 4G LTE (its One X version).

Verizon wisely passed on the device altogether. While the One X, EVO 4G LTE , One S or One V weren’t bad devices, having different variations was confusing. Samsung, on the other hand, simply made the Galaxy devices available for each carrier… without major hardware alterations. It was a page taken from the Apple playbook: you want the device, here it is, take it or leave it. A strategy that was working, while HTC’s method was outdated and confusing for consumers.

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Is the HTC One enough?

One device does not a company make. HTC got where it is by having a myriad of very well built devices, not one great One. Say what you may about HTC, but its top devices were always amongst the upper echelon of what was on offer. Perhaps the One S wasn’t as good as the One X, but it definitely wasn’t a bad device.

We don’t know what the corporate thinking was inside HTC. Perhaps it felt it could simply afford to take 2012 to reload, or decided to rest on its laurels. Samsung wasn’t about to rest, and its hard work paid off. With a few tricks learned from HTC (many great devices), and one learned from Apple (not giving in to carriers’ desire for exclusive devices), Samsung took a commanding lead.

With the new One device, HTC has the taken the first of many important steps toward redeeming its image and status as a preeminent Android device maker. HTC has clearly learned a valuable lesson before this weeks release, as it finally have a true flagship device with some great accessories. The specs are not only respectable, they’re impressive. Like any device, it will have its detractors, but overall it’s a stellar device capable of helping to rebuild a company in desperate need of redemption.

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How can HTC avoid more costly mistakes?

HTC has suffered disappointing quarterly profit, made some suspect business moves, and spread itself very thin. If HTC is to rebuild a once mighty empire, it must make sound decisions from now on, and yes… that’s a Beats Audio pun. The involvement with Beats Audio yielded very little results, as consumers simply weren’t as concerned with premium sound in a mobile device as HTC had hoped. The technology is good, but the reception to it has been mixed. Spending $250 million for interest in the company was top dollar spending for a less than solid return, proven by the fact that Beats purchased much of HTC’s shares back from the company.

Showing a little conviction in the devices it produce swill do wonders for HTC. If you have an HTC One on AT&T, yet I have an HTC One “W” on T-Mobile, the perception is that those are two different devices, even if they’re not. A special device color is one thing, but altering specs is another. If HTC really believes in its products and the direction it’s headed, it will put a stop to engaging in this silly game it plays with carriers. Sales occur with supply and demand, and consumers demand excellent products. The HTC One is just that.

 

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Conclusion

Sometimes we wonder just who HTC is. Is it a premium device maker, or one who makes any and every device it’s asked to? What HTC has been until now is the latter, and we know exactly how that has served the company.

We exist in a time when premium devices win the day, and there is no shortage of them. If HTC intends to regain its post at the top of the chain, it needs to build on the good work it’s done with the HTC One. A great device, tons of accessories, and plenty of hype… this is how great devices are born, and HTC hit a homerun this week.

We’re all terribly impressed with the HTC One, but not HTC… yet. If HTC intends to build on its momentum, which is entirely possible and realistic, it would be best served by following this week up with another just like it a few months on. Not much will make your competitors and fans take notice more than back-to-back homeruns.

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