Infrastructure // PC & Servers
Commentary
8/8/2012
11:37 AM
Chris Spera
Chris Spera
Commentary
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HTC Doomed? Strategies It Should Try

Once the darling of the converged device world, HTC has been having a rough go of things lately. It has two choices to stay afloat: License RIM's BlackBerry 10 OS, or work with Google to fill in the holes in Android. Either is just crazy enough to work.

The Wall Street Journal has a really interesting article on HTC's current state of affairs. It ain't good, kids. In fact, prospects for the once-dominant smartphone manufacturer look kind of bleak.

I remember back in the day--circa 2003-2004--when HTC was the unknown genius OEM behind i-mate, a converged PDA-phone device out of Dubai. The Pocket PC powered devices were taking the technology industry by storm, and helped Microsoft--with European carrier partners O2, Orange, and T-Mobile--snag much of the mobile device market. i-mate was it, man, and it was all because of the device designs coming from then-unknown HTC. It was the premium brand of its day and, unfortunately for i-mate, it still hasn't recovered and regained the global dominance it once seemed to have after losing HTC as an OEM.

Today, HTC is--or I should say, was--one of the leading manufacturers of Android-powered smartphones. Over the past two years, HTC has struggled, having trouble distinguishing itself from both Apple and Samsung. It's been so bad for HTC that it's lost over $1 billion in market capital, and its second quarter saw a 27% drop in revenue. Its most recent period is off nearly 50%. It has seen its market share drop from a high of 10.7% in Q2 2011 to 2.2% as of this writing.

HTC is stuck. It needs to make a change and it needs to do it now. Its HTC One premium line of smartphones launched in April, but hasn't seen nearly the success the company had hoped for. While it still hasn't had the support of the major U.S. wireless carriers such as AT&T, Verizon, Sprint and T-Mobile USA, HTC devices are having trouble providing any kind of serious competition for the likes of Apple's iPhone and Samsung's Galaxy S line. It appears to be just one more additional premium handset in a sea of similar looking, similar featured devices.

HTC needs to distinguish itself in the market and reestablish its dominance. Aside from throwing millions at a serious, sustained marketing campaign, in my opinion, it has a couple of options:

  1. License BB10 from RIM and become the first licensee of RIM's latest QNX-based OS, or
  2. really get in bed with Google and plug the holes in the Android ecosystem.

Let's quickly pick these apart.

BB10 and RIM

If RIM is going to license its new OS to other OEMs, this might be a good move for HTC. RIM needs a serious partner willing to go (nearly) all-in with it if it is going to make it. HTC makes some stunning and compelling hardware. The world knows it, too.

HTC is probably the one and only handset maker out in the market that I would trust to produce the type of home-run-hitting hardware that BB10 needs to be successful in RIM's last hurrah. Although this might be a risky move for HTC--partnering with a drowning company that appears to be surfacing for the third and final time--it might be just crazy enough to work, provided BB10 doesn't suck, and wireless carriers in both the U.S. and in Europe such as AT&T, Verizon, O2, Vodafone, Orange and the like get behind the device and don't pollute it with bloatware.

This is the one very real big risk for HTC, however. If app developers don't flock to the platform, it might not survive. Regardless of who builds the initial BB10-compatible hardware, RIM or someone else, if RIM can't find some way of attracting and retaining third-party developers, it's going to be a really short party for it. Third-party apps are a key component in sustaining a platform and drawing in consumers.

Plugging the holes in the Android ecosystem

Let's face it: like it or hate it, Apple is doing something right. A gazillion iPhone users can't be wrong. Despite the fact that it appears to "just work" and has an elegant design, the phone is successful for one reason and one reason alone, consuming content on the iPhone is something everyone can do easily. I don't care if it's the Web, audio, video, or apps. I don't care if you hate iTunes and think it's the biggest pile of crap you've ever seen. Apple has established an ecosystem that allows users purchase and manage content using a process that is elegant and inviting.

Google has created part of an ecosystem. Devices, tablets, and smartphones allow you to consume the content. Google Play lets you easily purchase the same kinds of content as Apple users--but that's where it all stops with Google. It has done little to provide a way for users to manage, organize, store, and back up the content they've purchased.

Yes, Google Play has a Web interface that lets you see what you have in the cloud, but there's one big, huge problem with that, especially here in the U.S.: the cloud isn't ubiquitous. That is to say, it's not universally available, and certainly not at reliable speeds required for streaming not only audio, but video, too. LTE networks are still a long way from being available to everyone, everywhere, and despite what carrier coverage maps might tell you, their coverage is not always what they claim it to be.

This is why tools like iTunes work and work well. It provides iDevice users with a way to download content to the desktop and then manage and organize it. Mobile devices don't have tons of flash storage, so you get to choose what you carry with you and what you stream when the cloud isn't available. With my iPhone, if I know I'm going to be on the subway, or in a high rise with crummy cell service, I can still listen to or watch my music or videos. This isn't easy with Android tablets or smartphones. I have to rely on a file manager and a card reader (or my device) to move content back and forth to either the device or its microSD card.

To put it bluntly, if HTC can purchase DoubleTwist outright and then cut a deal to license it to Google or to each Android handset maker as the offline content media management system for Android devices, it might be able to save its bacon. DoubleTwist works much like iTunes, even looks like iTunes, and it does for Android devices what iTunes does for iDevices.

If neither of these options give HTC a leg up, then not much else will. Like RIM and Nokia, I see HTC approaching a relevance crossroads. If it can't get some skin back in the game, it might be done, and that would be a huge shame.

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