HTC Slashes Jobs As Smartphone Sales Flatten - InformationWeek

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8/6/2015
04:05 PM
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HTC Slashes Jobs As Smartphone Sales Flatten

There's more trouble for HTC as the phone marker is now looking to streamline operations, cut jobs, and reduce handsets in an effort to improve its fortunes.

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On Aug. 6, HTC announced weaker than expected demand for its high-end Android smartphones. This, coupled with weak sales in China, is forcing the phone maker to streamline its business and implement company-wide efficiency measures to reduce operating costs across the organization.

This will result in the Taiwanese cutting workers to reduce its costs.

HTC posted a second quarter loss of $252 million against revenues of just over $1 billion, with CFO and president of global sales, Chialin Chang, admitting on an analyst call Thursday that consumers were looking for more fashionable handsets than the ones HTC is marketing. Chang did not offer specifics.

"The cuts will be across the board," Chang said, according to a report from Reuters. "They will be significant."

Despite promises of cost cutting and streamlining of its product line, analysts were less than optimistic when it came to the company's performance in the near future.

"We believe HTC will keep losing share in the smartphone market and will keep losing money," Calvin Huang, an analyst with Taiwan's SinoPac Securities, wrote in a research note obtained by Reuters.

(Image: Eric Zeman)

(Image: Eric Zeman)

Other recent analyst figures peg the company's worldwide smartphone market share at an anemic 2% or less, down by more than two-thirds from its 2011 peak.

Smartphone models like its flagship One M9 have garnered good reviews and boast a competitive feature set including an all-metal unibody design and a Qualcomm Snapdragon 810 octa-core processor, but have failed to find favor with consumers.

[Read more about the HTC One M9.]

HTC is not alone in its struggle to hold attention in the ultra-competitive smartphone market. A May Gartner report found that while worldwide smartphone sales jumped nearly 20% in the first quarter of the year. However, even powerhouse performer Samsung also took a significant dip. 

Despite the company's claims to streamline its product line, just last month HTC announced a line of Desire smartphones comprising four different models, with an emphasis on affordability and color options.

HTC noted in its earnings report that the company it will continue to invest in new product areas such as virtual reality, where it is working with a wide group of developers on content creation across a spectrum of applications including gaming, entertainment, and education.

The beleaguered mobile phone manufacturer has been struggling in the face of stiff competition for some time now. In May, HTC was forced to issue a strong statement rejecting an overture from an Asus executive, who suggested the PC maker was interested in buying the company.

HTC quickly fired back with a note on its investor's page clarifying the company's stance in response to Asus's unofficial acquisition offer.

The company's troubles extend beyond its smartphones, as the company announced in July that it would delay the launch of its Grip fitness band, which sports a touch display, is waterproof, works with Android and iOS and has GPS, until later this year. The device had previously been scheduled to reach store shelves in the spring.

Nathan Eddy is a freelance writer for InformationWeek. He has written for Popular Mechanics, Sales & Marketing Management Magazine, FierceMarkets, and CRN, among others. In 2012 he made his first documentary film, The Absent Column. He currently lives in Berlin. View Full Bio

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danielcawrey
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danielcawrey,
User Rank: Ninja
8/9/2015 | 3:42:51 PM
Re: Race to the Bottom
Things are not looking so great for HTC in the smartphone market. I remember when the company was at the forefront of smartphones. They have ceded that to the likes of Motorola and Samsung now. 

I do still think HTC has a huge opportunity in virtual reality though. They've created significant buzz with the HTC Vive, a consumer-friendly VR headset that is supposed to come out soon. If they can make headway in the very nascent consumer VR headset market, they may be on to something. 
Li Tan
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Li Tan,
User Rank: Ninja
8/8/2015 | 10:08:00 PM
Re: What does HTC stand for?
Good spot - this is exactly the fact. Talking about HTC, there is no strong justification I can think about to buy it. In this fiercely competing market, you must be number one or two. There is no space for even number three.
nasimson
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nasimson,
User Rank: Ninja
8/7/2015 | 10:12:50 AM
What does HTC stand for?
I dont think Virtual Reality and water-proof Fitness bands are going to save HTC. HTC has no clear positioning. Not least costly, not most feature-rich, not most rugged, not modular, not best UI.

So what does HTC stand for? Why would anyone prefer HTC over other Android phones?

HTC has to answer this basic question before anything else!
nasimson
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nasimson,
User Rank: Ninja
8/7/2015 | 10:12:10 AM
Re: Race to the Bottom
Africa, South America or India were the possible destinations.

But despite having a competitive hardware industry Indians have decided to focus on software. 

Despite some promising African countries like Kenya & South Africa, Africa does not has the industrial base or expert manpower in huge numbers

South America (except for Brazil) I am not much aware of.

Therefore I think its going to be China for sometime.
Gary_EL
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Gary_EL,
User Rank: Ninja
8/7/2015 | 1:26:19 AM
Race to the Bottom
First US consumer electronics manufacturers got clobbered by Taiwan and Korea, who themselves are then low balled by China. The question is, who will be able to do it cheaper than China, or does it stop there?
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