Mobile // Mobile Devices
News
7/8/2013
09:17 AM
Connect Directly
RSS
E-Mail
50%
50%

HTC, Samsung Smartphone Plans: Not Enough Wow?

HTC and Samsung both saw their shares tumble after failing to wow investors with sales of high-end smartphones.

Samsung Unleashes New Mobile Devices: Visual Tour
Samsung Unleashes New Mobile Devices: Visual Tour
(click image for larger view)
The market value of both HTC and Samsung sunk Monday over investor fears about smartphone sales. HTC's stock price reached its lowest point since 2005 and Samsung's dropped to a 10-month low. What's going on with these two smartphone makers, and is investor fear really warranted?

HTC has been in trouble for nearly two years now. This year the company pinned its turn-around efforts on the HTC One, a high-end smartphone that competes with the Apple iPhone 5 and other top-of-the-line hardware from the likes of Samsung and LG. Despite positive reviews of the device, sales have been somewhat slower than HTC expected.

Monday, it announced that it met its own guidance for the current quarter, but that fell short of investor expectations, which in turn triggered a sell-off of HTC stock. Its share price dropped the maximum daily amount of 6.9% in Taiwan, erasing $400 million in value from the company's books.

"The window of opportunity is over," wrote Morgan Stanley to investors Monday. "Failure to turn the 'best ever' HTC One into scale bodes ill for HTC's long-term outlook."

[ Is there any real hope for a BlackBerry turnaround? See BlackBerry Ships Just 2.7 Million BB10 Phones. ]

The problem, say analysts, is that HTC's supply chain costs are much higher than those of Samsung and Apple, which limit the resources available to other companies. Further, HTC is selling a single high-end smartphone right now. While other products are in the mix for later this year, it doesn't have an entry-level or midrange device to offer carriers and consumers. This is something at which Samsung excels.

Samsung has its own issues, though. It may be on track to sell 20 million Galaxy S4s in a two-month period, but Samsung has already slashed forecasts for Galaxy S4 sales for the rest of the year. Samsung's stock price has been dropping in recent weeks, and Monday sunk another 4% on the weaker outlook.

Samsung watchers believe the company's smartphone efforts may have peaked with the Galaxy S4. The phone is one of the most feature-packed on the market, spiking fears that there's little room for Samsung to innovate moving forward. It may not be able to offer the "Wow" factor in future hardware, but Samsung has the entry-level and midrange markets covered in spades. Samsung offers devices at nearly every size and every price point. That gives it a major advantage over HTC. Toss in its superior supply chain story, and it's clear HTC will have a hard time catching up to Samsung's market presence and power.

The real question is, how much longer can HTC hang on? The company has tried diligently to get itself back on track, but doesn't have much to show for its efforts. Long-time CEO Peter Chou has vowed to remain at the helm, despite his failure to enact a recovery.

If the company loses much more value and fails to convince consumers that the One is worth buying, it might not be long before HTC finds itself fending off acquisition offers.

Comment  | 
Print  | 
More Insights
Building A Mobile Business Mindset
Building A Mobile Business Mindset
Among 688 respondents, 46% have deployed mobile apps, with an additional 24% planning to in the next year. Soon all apps will look like mobile apps and it's past time for those with no plans to get cracking.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Must Reads Oct. 21, 2014
InformationWeek's new Must Reads is a compendium of our best recent coverage of digital strategy. Learn why you should learn to embrace DevOps, how to avoid roadblocks for digital projects, what the five steps to API management are, and more.
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
A roundup of the top stories and trends on InformationWeek.com
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.