HTC reported modest profit of $11 million for the quarter that just ended, with revenues also growing year-over-year, giving them a couple of quarters in a row of actual growth. Unfortunately, those positive signs aren’t going to hang around long, as the company’s Q2 target isn’t exactly strong. HTC expects revenues to drop by up to 29% year-over-year, which is surprising since they just announced their new flagship phone (HTC One M9) for the year that should have been a driving force for the next three months. Should we take that as HTC already expecting it to be a flop?
Of course, the blame these days for struggling sales figures is almost always directed at emerging market players like Xiaomi, who continue to ship boatloads of devices at rock bottom prices. Companies like HTC just can’t compete with the small margins of these other companies. OK, that’s not entirely true. They probably could if they really wanted to change their way of thinking and operating, but they seem to be set in their ways.
In fact, in an interview with the Wall Street Journal, Chang Chia-lin, the CFO of HTC, said that his company isn’t interested in competing with companies like Xiaomi, who tend to only focus on volume. Instead, HTC wants to focus on being “cool,” because…well…I actually don’t know why you would choose being “cool” over shipping millions upon millions of smartphones. Seriously, who says that? And yes, I quoted that because he used the word “cool.”
Chang did say that he thinks his company’s brand image is more important because their flagship product can create a halo effect that eventually draws people to mid-tier and entry-level phones, like the ones he just said he didn’t want to compete with, which would eventually bring in revenue.
I guess, I can accept that as one way of thinking. Except, that’s exactly how HTC has operated for the last few years, all of which have been massive disasters for a company who once shipped more Android phones than anyone in the world. HTC hasn’t even been in the top 10 in terms of smartphone shipments since 2013 and holds less than 2% of the world’s market share. And again, they managed that drop by creating supposedly “cool” high-end phones that were supposed to create a brand image that attracted the attention of mid-to-low end buyers for their other products. Is it working? It certainly doesn’t seem that it is.
On a semi-related note, Chia-lin did mention that his company will have another phone ready for the holiday season.
You tell me, is HTC “cool?”