HTC shifts focus back to cheaper phones, sets sights on China


A man poses with a replica of the HTC smartphone inside a mobile phone shop in Taipei in this April 6, 2012 file photograph. (STRINGER/TAIWAN/REUTERS)
February 4, 2013

HTC is turning its attentions back to making cheaper phones after saying its revenue for the next quarter could, in a best-case scenario, stay flat. In a worst-case scenario, the company said, revenue could drop as much as 17 percent.

The smartphone maker said in a conference call following its earnings release that it would shift its focus to making more inexpensive handsets, particularly for the market in China. Reuters reported that HTC Chief Financial Officer Chang Chia-Lin said he believes there is still “room to play” in the middle of the market.

HTC used to be the most prominent maker of Google’s Android-based phones, making it confident enough to move from making cheaper phones to higher-end devices with better tech and better profits, such as the HTC One X. But it’s revenue has taken a deep dive, leaving the spot open for Samsung to take over as the dominant smartphone maker for the world’s most popular operating system.

The Taiwanese firm finished 2012 as the fourth-place smartphone vendor for the year, behind Samsung, Apple and Nokia. It didn’t even crack the top five vendors for the fourth quarter of 2012, facing competition from Chinese smartphone makers ZTE and Huawei.

China is quickly becoming one of the most — if not the most — important smartphone markets in the world because of its growth potential. Users in large Chinese cities are already using premium smartphones such as Apple’s iPhone and Samsung’s Galaxy S III smartphones, but lower-cost smartphones are more popular among the larger population.

That means that any smartphone maker looking for short-term success in China has to offer phones to fit varying budgets. In its latest earnings report, Samsung said that it would be offering a wide range of smartphones in varying price points to capture as much of the Chinese market as possible.

Apple, which has been criticized for not having a strong Chinese strategy, takes care of this problem by offering older models of the iPhone for lower prices. To succeed in China, analysts say, Apple must appeal to the lower-end of the market by working with carriers to lower the price of its phones even further. The company is currently said to be in negotiations with China Mobile, the country’s largest carrier. Striking a deal would considerably boost its chances in the country.

Investors have been punishing Apple’s stock for — among other factors — not sharing a solid plan for emerging markets while it faces saturation in developed markets such as the United States

The firm did get some good news last week, however. A report from Strategy Analytics indicated that it took the lead position in U.S. market share from Samsung in the fourth quarter of 2012 — though it still placed second for the year.

Related stories:

HTC forecasts sixth consecutive decline in quarterly sales

Samsung no longer top mobile-phone maker in U.S.

Does Apple have an innovation problem?

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Hayley Tsukayama covers consumer technology for The Washington Post.
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