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HTC needs to step up its game

HTC enjoyed a meteoric rise with Android and manufactured some of the best smartphones of recent years. Its fall from grace has been spectacular. We examine what went wrong and take a look at how HTC might stage a comeback.
November 16, 2012

Samsung may be sprinting off into the sunset in the race to be the biggest Android smartphone manufacturer, but the struggle for second is far from clear cut. A new wave of devices and the patronage of Google, as the force behind the latest Nexus release, signal a major move from another South Korean electronics giant in the shape of LG. Now everyone’s favorite Taiwanese underdog is losing its rhythm and falling behind – it’s time for HTC to pull it together and get back in the race.

From out of nowhere

HTC was founded in 1997, but it wasn’t until the company adopted Android over a decade later that it really hit the big time. In 2008 it released the HTC Dream (T-Mobile G1) which was the world’s first Android smartphone. The Android platform surprised everyone to quickly emerge as real competition for Apple’s iPhone line and HTC struck while the iron was hot. The HTC Hero was followed by the hugely successful HTC Desire. The company even released the first 4G phone way ahead of the competition in the summer of 2010. The HTC Evo 4G was a big hit.

To smartphone success

By the third quarter of 2011 HTC was in a comfortable third place behind Samsung and Apple in the smartphone manufacturer charts. The brand was seen as a cool alternative to its competitors. HTC was synonymous with high build quality and there’s no doubt it enhanced the Android experience with the Sense user interface, which was far superior to TouchWiz or any of its other competitor’s efforts.

With the cash piling up and brand awareness at an all-time high everything was looking pretty rosy for HTC and then it went wrong.

The downward spiral

HTC’s fall from grace has been pretty spectacular. The company took a dive from that Q3 2011 peak and it’s still in free-fall. So where did things go wrong? HTC spent a lot of money on a range of investments and partnerships and saw very little return. More importantly it failed to carry on the word-of-mouth momentum it had built as a desirable brand and engaged in some embarrassingly bad marketing attempts. Most importantly the device line-up became confused and samey; the cutting edge was blunted.

As Android evolved and improved, even the Sense overlay began to look bloated and stale. HTC’s failures in the market sat against a backdrop of litigation from Apple which was only just settled. HTC agreed to pay Microsoft a royalty on each Android handset a long time ago. Licensing and legal troubles obviously didn’t help, but the real problem was misfires in the marketplace.

Muddy marketing, declining quality, and a lack of focus

What does the HTC brand actually stand for? Do consumers understand the difference between an HTC and any other Android smartphone? What’s going to entice them to buy an HTC? Where are all the great smartphones?

The company has repeatedly failed to answer these questions. The One series should have been what the Galaxy series was for Samsung, but while Samsung’s flagship was picked up by all of the major carriers, Verizon passed on the One series. The troubles started before that.

Carrying on the leading status established with the Evo 4G, HTC released the Thunderbolt on Verizon in early 2011, which was the first Android smartphone to support Verizon’s LTE 4G instead of WiMAX. The shine of those blazing fast speeds was considerably dulled by the limited battery life. It’s a risk to lead the market with new innovations and the 4G rollout turned out to be far slower than expected. Consumers have not rushed to buy 4G smartphones and since HTC had bet on it in a big way that was bad news for the company.

Where are you going with this?

HTC had enjoyed a great deal of success with a fairly modest range of devices. The bulk of them were high-end, top of the Android market smartphones, and there were occasional forays into the budget end with releases like the HTC Wildfire. In the summer of 2011 HTC lost the plot and deviated from its usual pattern. There was a series of questionable releases like the BlackBerry-looking HTC ChaCha, the disappointing HTC Salsa with its pointless Facebook button, and the girly HTC Rhyme which came off as patronizing and misogynistic (women don’t need good phones they just like purple accessories).

Even HTC’s attempts to continue to innovate seemed doomed to failure. The HTC Evo 3D tried to jump on the bandwagon of another long-touted trend that failed to take off. There simply wasn’t much interest in the idea of being able to take your own 3D photos and videos, and the Evo 3D came under fire for limited battery life as well.

The names were confusing. Tagging 4G, S and + onto the end of familiar model names did not offer any clarity for consumers. Switching to X, XE and XL was not an improvement. HTC was still producing some good smartphones at the top end, with consistently good reviews from critics, but consumers were no longer biting.

How to fall behind in advertising

Obviously few companies have deep pockets like Apple and Samsung, but it’s not a simple matter of how much you spend, it matters what you spend it on. HTC seemed to throw a lot of weight behind the Beats audio partnership, but did it sell a lot of phones? Too many of the ads, from HTC and the carriers, focused on one aspect of an HTC device, like the audio or the camera, and failed to show them off as the cutting edge Android smartphones they were.

Staging a comeback


We’ve seen HTC fall, but the company still has a tremendous amount of goodwill. To some extent it has been hurt by its own attempts to innovate because the first generation of something new always comes with teething problems. That reputation for making great hardware is deserved, but HTC needs to learn from its mistakes and sort its marketing strategy out. Given the right release many people will come back to the fold. The HTC Droid DNA on Verizon looks like a step in the right direction.

My last HTC was the Desire and at the time it was quite simply the best smartphone around. That’s the reason I now have a Galaxy S3 in my pocket. If HTC can hit those high notes again then I won’t be alone in returning. I have more affection for HTC as a brand than for Samsung or LG, but the company needs to step up its game, and fast.