HTC in “Upheaval” and “Disarray”?
5/22/2013 by: Denis Jelec
HTC has been losing ground for some time now, and that fact doesn’t even go into news category any longer. However, the recent news was that, although slowly, company seemed to be on the right track with their flagship One. The Verge wrote a story about the gloom that is towering over the company as they learned that HTC’s Chief Product Officer, Kouji Kodera has left the company. Is it truly that bad as the report claims?
The story continues on to say that the company did lose more than a few of employees in recent times (namely, Jason Gordon – the company’s vice president of global communications, Rebecca Rowland –global retail marketing manager, John Starkweather – director of digital marketing and product strategy manager – Eric Lin). One source told The Verge that the company is “in utter freefall,” and that “they are like T-Mobile two years ago.” Most of the folks who left the company are now in the 'other hands', and some of them call for their 'friends' in HTC to quit:
Worth noting is that the HTC Corp. (TPE:2498) did say they are completely redefining their marketing strategy in order to become more competitive in the smartphone market. The restructuring that followed (or happened some time before the official decision and claims) isn’t chaotic at all. It is more than natural. The first attempts of the new strategy were unfortunately blocked by the severe supply issues for their Android flagship smartphone contender. As good (or bad) as the HTC One is, it simply wasn’t there – there were no things to market - for far too many weeks. Now that everything is in working order, and that the reviews have matched the device to the Samsung’s flagship – the One is plagued by some comments on the uncertainty of the future Android updates, even though the company said they will work on it. The extra layer of software on top of the stock Android makes it more difficult to develop upgrades, but HTC Corp. doesn’t want to get rid of their Sense trademark so easily. Another uncertainty factor, for investors at least, is the rumor on weak results of the HTC First, the first (possibly the last) 'Facebook Home' smartphone.
Indeed, the HTC First running Facebook Home we wrote about earlier does seem to be a failure. Many analysts have believed it would be a failure from the very start – but it seems that the case here could be even worse than it was with the HTC ChaCha and the HTC Salsa. Who knows how many precious resources were wasted in the First? Still, the company most certainly didn’t count on the “epic” sales of the unit. What is more likely to be the case is that the company produced it, somewhat experimentally, while having the good relationship with the Facebook. Not because of the expectations that the First will be immensely popular. Not a single reasonable person could claim it would be. Among these lines it could be clear why Facebook themselves never went on to create their own device (though that is merely one reason out of many).
HTC won’t stop producing other (new) units, even though they are now a mere shadow of what they used to be (leading Android manufacturer). Recent leaks suggested that the cheaper variant of the HTC One could hit the market very soon. It could just be the thing that pushes the more positive Q2 2013 expectations even further. Once again, the Taiwanese company expects to have NT$70bn ($2.37 billion) of revenue, and a gross margin of 22-24% in the second quarter of the 2013. Due to excellent sales, the company even had to push their production capacity even further.
Conclusion? Long story short – restructuring of this kind can hurt in the short term. Badly. Still, there have been players in the smartphone ground that have been living in much higher losses thus far – and there is always a chance – even if your company isn’t called Samsung. Therefore, take everything with a pinch of salt (and especially the info coming from those who are impolite to their previous employer) – at least until the next quarterly results appear. Finances reveal the true condition of every company – more than tweets. Well, almost. In any case, not many should be annoyed by the usage of the Betteridge’s law in the headline. It is (far) too early to write the obituaries.
Reference story - The Verge
htc, htc corp, smartphones, smartphone, htc one, htc q1, financial results, htc news, htc first
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