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4/7/2014
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HTC Posts Loss As Smartphone Sales Sag

HTC prepares to take on Samsung in battle of the smartphones. Will the newly redesigned One help HTC recover from its slump?

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HTC today reported another quarterly loss as sales of last year's flagship device sank ahead of the new One's debut. The company lost $62 million on sales of $1.1 billion, well below its revenue forecast. HTC has been struggling for a long time, and its latest earnings report shows just how serious a situation the company finds itself in.

HTC's market woes began several years ago. After holding an early lead in the smartphone market thanks to its quick adoption of Android, HTC's lead slipped away as competitors -- notably Samsung -- flooded the market with cheap and appealing hardware. That led HTC to go all out with the One smartphone, which it introduced about a year ago. The company fully expected the One to reverse its sales slide, but production problems delayed the One's release, and HTC wasn't able to get the phone to Verizon customers until six months after its initial debut. HTC claims the One (2013) is its best-selling device ever, but consumers have been savvy enough to avoid it during the last few months ahead of the 2014 One.

HTC released the new One on March 25. The device, which bears the same name as its 2013 predecessor, boasts many improvements, including a more refined design. Some might say the phone is an evolutionary update, but it is still a finely crafted piece of hardware. Though the One has so far been available only in Verizon Wireless stores, it can be ordered online from AT&T, Sprint, and T-Mobile. Most carriers are selling it for $199 with a contract or about $26 per month through installment plans. The new One will reach all stores by April 11.

[The redesigned HTC One is impressive, but there's room for improvement. Read HTC One: Pros & Cons.]

HTC pulled off a coup by selling the device the same day it was announced -- beating Samsung's Galaxy S5 to retail stores by two weeks or more. HTC solved last year's production problems and had plenty of inventory on hand for launch.

HTC has been mum on initial sales of the new One, however, and that's not an encouraging sign. Apple and Samsung often trumpet their first weekend or first week sales, especially if they move more than a million units. HTC has made no such announcement, leading some to question if the launch has met HTC's expectations. In a statement, HTC said, "The company expects to see positive trajectory of its revenue in April from March and forecasts quarter-on-quarter revenue growth in the second quarter."

One of HTC's problems is marketing; the company's pockets are not as deep as those of its competitors. Samsung has ramped up its marketing budget over the course of the last 15 to 18 months, and it is evident in the strong sales enjoyed by devices such as the Galaxy S III and GS4. Samsung's 2014 flagship hits retail shelves later this week, which will put it head-to-head with the One.

Fighting Samsung head-on is going to be tough for HTC, no matter how good the One is. The new One may be HTC's strongest device yet, but it must put a dent in demand for the GS5 if HTC is to stay in the race.

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Eric is a freelance writer for InformationWeek specializing in mobile technologies. View Full Bio

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anon8434051857
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anon8434051857,
User Rank: Apprentice
4/8/2014 | 12:51:42 AM
HTC cannot compete in today's world
HTC calls the new HTC One a flagship phone. Yet it still has a mediocore camera and no matter how it tries to fool customers, the pictures taken from the phone can not be compared with the 'real' smartphones in the market. In US people may still buy it but outside of US people are more demanding. They do compare all the other options. Even if we just talk of Android phones, S5 and new Experia are way ahead of the M8. Then there are truly 'cheaper' options too. On top of it increase in Windows phone sales is also affecting HTC more than Samsung or Apple. 

With this kind of specs, I don't think M8 will do any better than previous HTC One. HTC should be prepared to post further drop in revenue and market shares in the coming quarters.
Charlie Babcock
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Charlie Babcock,
User Rank: Author
4/7/2014 | 6:56:38 PM
A vote of confidence for the HTC One
I too like the HTC One as the right size, right amount of memory and capabilities and almost enough battery life. I have the spare battery pack that's supposed to contain two full charges as well -- althoguh so far it hasn't lived up to that billing. It may need a few more weeks of training charges -- recharging from an exhausted state. I'd hate to see HTC go out of the phone production business. They're one of those secondary manufacturers who can compete with the best.
Lorna Garey
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Lorna Garey,
User Rank: Author
4/7/2014 | 5:39:42 PM
Re: Cheap and Appealing Hardware?
I don't see how you can call the One "unappealing." I have one, and love it. Lined it up against the Samsung model at the time, and the One just felt more substantial. It's a good-looking phone. 
ekholbrook
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ekholbrook,
User Rank: Strategist
4/7/2014 | 12:32:52 PM
Cheap and Appealing Hardware?
Well I guess that's ultimately the goal all of us want: To find a cheap phone that has appealing hardware. 

But I think it's a bit misleading to write, "HTC's lead slipped away as competitors -- notably Samsung -- flooded the market with cheap and appealing hardware. "

When the S3 came out (arguably the samsung phone that caught the attention of the masses), it was NOT cheap. At least compared to the iPhone or other Android phones. 

So really the part you got right was the "appealing hardware" part. And yes, that probably why samsgung won over customers from HTC's "unappealing" hardware
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