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HTC One Delay Costly: Profit Drops 98%

HTC earned just $2.83 million in the first quarter, its smallest-ever profit.

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HTC reported its first quarter results and the news is alarming. The company saw its year-over-year profit drop by a staggering 98.1% as it managed to eke out a meager profit of just $2.83 million. That's the smallest profit earned by the company since it began selling devices under its own name in 2006. The company generated about $1.42 billion in revenue, a 39.6% drop. HTC missed its guidance of $1.66 billion to $2.0 billion by a wide margin.

One factor that contributed to the low profit is the delay of the HTC One launch. When the device was announced in February, HTC said its hero smartphone would reach store shelves the world over by mid-March. That didn't happen.

Component shortages forced HTC to push the One's launch back by a full month in the U.S., and possibly further in other markets. The company had trouble getting its hands on enough camera modules and the raw aluminum needed to mill the One's unibody frame. These supply chain problems slowed down production of the One.

[ Perhaps Facebook can help HTC improve its earnings. Read Facebook Home + HTC First: Not About Hardware. ]

Had the One been available on time, HTC could have racked up about two weeks' worth of sales before the end of the first quarter. That would have helped HTC out a little bit. Instead, the company saw high expenditures as it made the final preparations to supply, manufacture, and ship the device to its carrier partners -- and no resulting revenue from sales thereof.

(Of course, it does without saying that HTC has had years of declining sales, failed marketing, and other problems that contributed to its current state.)

Both AT&T and Sprint have announced plans to offer the HTC One beginning April 19. The device will cost $199.99 with a new contract. T-Mobile has yet to share all its HTC One launch plans. Verizon Wireless will not offer the One. According to HTC, interest in the device is high. Outside the U.S., the company saw pre-orders for the smartphone reach 100,000 units.

While it is good that the One is finally reaching U.S. store shelves, it is going to have company. Samsung's Galaxy S 4 also hits carrier stores this month, and will surely catch the eyeballs of smartphone shoppers with its 5-inch display, 13-megapixel camera, thin-and-light design, and highly advanced software. U.S. carriers are selling the Galaxy S 4 for the same $199 price point. Going head-to-head with the world's biggest maker of smartphones is not going to help HTC's prospects at all.

The One has an aluminum frame with injected plastics. HTC chose a 4.7-inch screen for the One, rather than a 5.0- or 5.5-inch screen. Sticking with a less phablet-y screen size allowed HTC to keep the overall footprint of the One comfortable to hold and use without sacrificing the experience of the screen, which has 1920 x 1080 pixels. The FHD display has a pixel-per-inch count well over 400.

The One is powered by a four-core Qualcomm Snapdragon processor, with each core rated at 1.7 GHz. The processor is paired with 2 GB of RAM, and the One will be available in 32-GB and 64-GB versions. Perhaps the standout feature is the 4-megapixel camera. Rather than go for a huge megapixel count, HTC reduced the megapixels, but made them much larger. According to HTC, the One's camera collects 300% more light than a competing 8-megapixel sensor.

These hardware features, combined with lots of customized software, make the HTC One a competitive smartphone. We'll learn whether or not it is competitive enough as sales of the One and Galaxy S 4 unfold over the coming weeks.

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User Rank: Apprentice
4/8/2013 | 2:32:52 PM
re: HTC One Delay Costly: Profit Drops 98%
Given the lousy job HTC has done keeping its existing hardware updated with software releases, they're not going to retain their current customers, and potential tech-savvy customers will avoid them like the plague. That just leaves the silly sheep with more money than brains, and Apple already has that market locked up.
User Rank: Apprentice
4/9/2013 | 3:28:57 AM
re: HTC One Delay Costly: Profit Drops 98%
The HTC One is really a beautiful package, but I have to agree with Jack about the support from HTC. If this were a Nexus device, I would buy it without reservation. As a carrier locked device (is the bootloader locked too?) with little hope of getting future updates, I will pass. Sorry HTC.
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