HTC isn’t giving up on the Android smartphone market and will attempt to reinvigorate its struggling mobile business in 2019, though its plan to do so appears to be indicative of continued corporate stubbornness. According to HTC Taiwan President Darren Chen, the firm intends to place its near-term handset focus on mid-range and flagship models, dropping its efforts in the entry-level segment which is both extremely competitive and offers barely existent profit margins. The goal of the approach is to boost profitability by any means necessary, cutting losses in the segments that contribute little to the company’s bottom line and doubling down on the ones that deliver more significant results or at least have the potential to do so.
The definition of insanity
While that strategy is far from unprecedented and appears sound on paper, it’s also exactly what HTC has already been doing for the entirety of this year with virtually no success. As the manufacturer posts its financial results on a monthly basis, it’s no secret that its 2018 performance has been dire by every definition of that word. The company is hence consistently reaching new all-time lows and has never been further away from returning to relevancy in the Android smartphone space. Back in 2011 when the Taiwanese technology juggernaut was arguably at its strongest in the mobile world, it generated some $15 billion in revenue. This year, the company may not even reach $800 million in turnover and its misfortunes don’t appear to have an end in sight, so a continuation of its mobile strategy surprised many an industry watcher.
HTC essentially eliminated its entry-level products this year, though the Desire 12s launched earlier this week does fit the bill of a low-end Android handset in most respects but its marketing. The device sports a basic Snapdragon 435 chip from Qualcomm and is scheduled to be released in mid-January, priced at the equivalent of just under $200. HTC has yet to show any indication of a Western launch and has only said the Desire 12s will be coming to its home country and China. The focus on the latter is particularly surprising given how every foreign phone maker bar Apple is presently on the verge of irrelevancy in the Far Eastern country and a former tech darling that’s even struggling to maintain its core business is unlikely to fare better than a powerhouse like Samsung when it comes to taking on Chinese manufacturers who are capable of undercutting virtually every rival on the planet, especially on their home turf.
Due to that state of affairs, HTC might have fallen in the old proverbial trap of doing the same thing over and over again and expecting different results, which is how Albert Einstein, Mark Twain, and many other great minds of the past used to define insanity. Not only is the company now continuing with what’s essentially the same product focus that already brought it to the brink of obscurity but is doing so in a manner that doesn’t imply major device-specific changes either; Mr. Chen hence confirmed the U12+ Android flagship will be revised next year as the company looks to extend its lifecycle, which most likely means new colors are on the way. Seeing how its previous financial reports already indicated the U12+ isn’t selling well in most parts of the world, it’s unclear what’s prompting it to continue onward with this approach that’s seemingly doomed to fail.
Hope’s one the bleeding edge
Outside of conventional consumer electronics, HTC appears to be putting its hopes in bleeding-edge technologies as it looks toward surviving in the increasingly competitive world. Up until recently, those ambitions mostly revolved around virtual reality, i.e. its Vive line of headsets and associated solutions. Today, the firm is also looking to establish itself in the emerging blockchain sector. While digital ledgers aren’t exactly the latest major innovation to grace the industry, it wasn’t until recently that a wide variety of companies started embracing them on a significant scale and HTC is hoping it can do the same in the smartphone space. Its first attempt at doing so launched several weeks back in the form of the Exodus 1, what’s essentially a revised version of the U12+ that places a large focus on blockchain technologies, cryptocurrencies in particular. Mr. Chen recently revealed HTC sold out its initial batch of the Exodus 1 and was quick to brand the development a major success, though the company failed to clarify how sizable that original production run actually was.
As far as VR is concerned, HTC wants to drive software development in order to continue building both its own VR ecosystem and the industry as a whole but given its dwindling financials, it’s unclear how long it can continue doing so as loss-leader strategies are generally only successful when backed by companies with much bigger financial pull, at least on the scale that HTC is now targeting. VR as a whole remains in its infancy and is far from mainstream popularity, with an overall lack of quality content being just one of the factors limiting its current reach; high cost of hardware and motion-sickness issues are still concerns the industry is in the process of addressing.
HTC likely to regret its deal with Google
Another important cause for concern at HTC that the company has yet to publicly address is its early 2018 deal with Google that provided it with a much-needed cash injection but saw a significant portion of its hardware engineering talent move to Alphabet’s subsidiary, turning Taipei into Google’s largest tech hub in Asia. The Mountain View, Calif0rnia-based company clearly labeled the transaction as an attempt to bolster its consumer electronics efforts and HTC gave no indication of plans to directly replace the talent it lost in the development. None of that improves its chances to continue innovating in the tech industry, making its existing strategy focused on bleeding-edge solutions even more confusing. The company previously also confirmed it’s experimenting with 5G use cases but has yet to provide an update on its wireless ambitions and already appears to be stretched out thin as it is.
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