It’s not just Apple: HTC, Samsung suffer from high expectations, slower sales

Smartphone makers HTC and Samsung shared lower-than-expected projections of their quarterly sales and revenue Friday, raising concerns that the smartphone firms aren’t able to deliver the kind of growth that has helped them prosper in recent years.

HTC reported a net income of nearly $42 million, below expectations of around $66 million — and down 83 percent from the same period last year, despite glowing reviews for its HTC One smartphone. Meanwhile, Samsung actually offered its strongest-ever second quarter guidance, with expected sales of about $50 billion and a projected operating revenue of $8.1 billion to $8.3 billion. But that fell below analyst expectations, which Reuters reported were for around $8.8 billion in revenue.

The two companies are in very different positions in the smartphone world, with Samsung on top of the market while HTC is struggling to stay in the game at all. But both are facing an issue that plagues the wider market — sales are slowing across the smartphone market and companies can’t keep up with sky-high expectations based on the growth of past years.

Thursday’s results were particularly gloomy for HTC — the first to make phones running Google’s Android operating system — which has been slipping fast in the smartphone market. According to IDC, it was the fourth-largest smartphone manufacturer in 2012, but fell behind ZTE and Huawei during the final three months of the year.

To woo customers back, HTC tried a couple of strategies to juice its smartphone sales, saying last year that it would concentrate on developing fewer, higher-quality phones, then saying after its first-quarter earnings report that it would concentrate on lower-priced phones in emerging smartphone markets such as China.

Samsung, meanwhile, has used its leading position in the smartphone market to offer a wide variety of phones to consumers at a range of prices. But it needs sales of premium devices such as the Samsung Galaxy S 4 to stay strong while it tries to court first-time smartphone buyers with cheaper phones.

The company will deliver a full earnings report at the end of July.

The strong, but not astronomical, sales figures implied by both companies’ earnings comes after worries that Apple and its iPhone aren’t selling as well as more advance smartphone markets such as the U.S. and Western Europe approach a saturation point for premium devices.

The sales slowdown has also raised speculation that Apple will also be jumping into the lower-end of the market with a cheaper version of the iPhone, though Apple chief executive Tim Cook has said that the company isn’t interested in making lower-quality products solely in the pursuit of revenue.

“We aren’t interested in revenue for revenue’s sake,” Cook said during the company’s January earnings call. “We could put the Apple brand on a lot of things and sell a lot more stuff.”

Related stories:

As smartphone market matures, makers race to wow consumers

Apple extends lead over Samsung, HTC in U.S. ahead of Galaxy S 4, HTC One launches

Review: HTC One sparkles, but can it compete?

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Hayley Tsukayama covers consumer technology for The Washington Post.
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