HTC counts on cheaper devices to halt decline

By Rachel Hand topicIcon Internet News

Decline continues

Smartphone manufacturer HTC has posted its Q4 2013 financial results and forecasts for Q1 2014, revealing further decline for the company.

The report published yesterday revealed a quarterly revenue of NT$42.9nm (£862m), down from NT$60bn for the same period last year, despite a slim Q4 net profit of NT$300m (£6m). Reuters reported that this means HTC has suffered 27 consecutive months of falling year-on-year revenue, which has also been echoed by an 80 per cent drop in share price.

Meanwhile for Q1 2014, HTC is forecasting a further fall to NT$34bn-$36bn, after January sales slumped by 38 per cent year-on-year.

Mid-range portfolio

However, HTC remains optimistic about changing its fortunes. In a press release, CEO Peter Chou revealed the company is planning on "building a compelling mid-range portfolio."

Meanwhile chairwoman Cher Wang commented:

"The problem with us last year was we only concentrated on our flagship. We missed a huge chunk of the mid-tier market."

Speaking to Reuters, HTC's chief financial officer Chialin Chang explained this new focus on the mid-range market would include lower cost smartphones in the $150-$300 price bracket, alongside its usual high-end, flagship devices at the $500-$600 mark.

HTC's current global smartphone market share is around 2 per cent as it faces competition from high-end manufacturers such as Apple and Samsung, as well as budget handsets. In 2013, Apple also attempted to crack the mid-range market with the launch of the iPhone 5C.

The new M8

The announcement comes as HTC prepares to launch its new flagship device in the next few months, a sequel to the HTC One widely believed to be called the M8. Its predecessor enjoyed positive reviews and a $12m advertising campaign starring Robert Downey Junior, but saw disappointing sales; Wang told Reuters that marketing is a key area for improvement in 2014.

Kleon West, business development director at theEword, commented: "After such prolonged decline it's high time for HTC to change tactics - and the low to mid range market does hold lots of potential. However, they will have to be careful not to diminish their USP or alienate loyal high-end consumers in the process."