HTC is getting desperate. Plans deep price cuts for both old and upcoming new Android and WP8 models

Staska  By on 22 Aug 12

According to industry supply chain sources, after HTC’s One series failed to impress the market, Taiwanese smartphone maker now decided on a significant price reductions across the whole model range. These include the models already on the market, as well as the upcoming new Android and Windows Phone 8 smartphones.

To reduce costs, HTC will also stop using  Beats Audio technology in most of their handsets, after they already stopped including Beats earbuds with new models.

HTC has long presented itself as premium smartphone brand. And for a few years, as Android market rapidly grew and matured, they were able to stay at the forefront of Android hardware innovation. Positioning itself as a leader and commanding premium prices for its handsets. For several years HTC was also shielded from iPhone competition in its main U.S. market by Apple/AT&T exclusivity.

However HTC’s easy ride on Android growth was checked by a strong on-two punch from Apple and Samsung last year. With the end of iPhone exclusivity in Q4 2011, Verizon and Sprint customers who earlier turned to HTC, opted for iPhone. Costing HTC a huge chunk of U.S. sales. And with Galaxy S2, Samsung leapfrogged them in hardware innovation and design department. Mistakes in designing and marketing several little different versions of HTC’s 2011 Sensation flagship didn’t help either.

HTC’s strategy for 2012 was to concentrate all efforts and marketing resources on its One smartphone line, with very well designed and specc’ed One X as a flagship. During April – May HTC also had a golden opportunity to really push the One line, before 2012 flagships from Samsung and Apple hit the market. To that they even allocated unusually high marketing budget, at the expense of profit margins in Q2.

Unfortunately, even with 2 months without Samsung Galaxy S3 on the market, old iPhone 4S sales fizzling out, and huge (for HTC) marketing push, One X strategy failed to reignite sales growth. That was Q2 – the easiest quarter, and the only window of opportunity HTC had this year.

Now Galaxy S3 sales are in full swing around the world, even in U.S., backed by huge Samsung Olympics promotional budget. And HTC is already feeling the pressure . In May and June, when SGS3 was just rolling out and was still facing some supply and production issues, HTC sold $NT 30 billion worth of smartphones a month, even with a 2 week U.S. imports interruption. In July – as Galaxy S3 sales started reaching their full potential, HTC’s sales dropped 16.6% to 25B $NT. And it gets worse from now on. Samsung and Galaxy just got a huge brand and marketing boost from its Olympics sponsorship, virtually erasing HTC from public consciousness. Expect the August sales to fall even further.

And then, in about a month, we have the next generation iPhone launch. Which will totally screw things up for HTC.

Short term, HTC has the only option to slow the sales decline. Price reductions. And that’s what it is turning to now. Will it help? Maybe. Somewhat. But there will be at least $100 price decline for iPhone 4S and iPhone 4, when iPhone 5 ships. And then there is Samsung. It is able and can afford to match any price reductions HTC does, if it wants to. The question is – does Sammy care enough about sinking HTC. If they do – things will become very bad very soon for Taiwanese company.

And long-term, HTC’s situation is not much better too. They really need to step up their hardware and branding game. Are they able to? The jury is still out. But there is a very real possibility that in 2014 there won’t be an independent company called HTC anymore.

My wish, if that happens? HTC becomes a smartphone division of Facebook.

Via MyDrivers

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  • TGMzero

    HTC has to simply streamline their product portfolio to a bare minimal of devices. Cutting huge cost out of R&D of dozens of different devices will surely help them a lot.

    Focusing on one major branded device will also help. They have to stop all the pandering and catering to carriers. Samsung did and the results are evident.

    They say that these are their plans already, yet they haven’t truly implemented them yet. When they do, they’ll right their boat and become more profitable. If they don’t, it’s gonna be a long, slow sink to the bottom.

  • casualsuede

    THIS AUTHOR MUST NOT KNOW MUCH ABOUT THE INDUSTRY OR BUSINESS IN GENERAL. AFTER THE ONE SERIES BEING IN THE MARKET FOR A QUARTER AND TO HIT BACK TO SCHOOL, IT IS NOT UNUSUAL FOR PHONEMAKERS (ELECTRONIC COMPANIES IN GENERAL) TO DISCOUNT DURING THIS PERIOD. AS FOR BEATS, THE AUTHOR IS WRONG, BEATS WILL BE MORE INTEGRATED IN FUTURE PRODUCT LINES LIKE WP8 IN TERMS OF HARDWARE.

    THIS ARTICLE IS POOR SPECULATION AT BEST.

  • http://techwhack.com operamaniac

    HTC could seriously steal a lot of customers away from Samsung by simply switching to stock Android and offering unlocked bootloaders.

  • jakymiwm

    Well said.

  • http://getyourgadgetsgoing.com Tristan Thomas

    Wow, dude get a hold of yourself. Your the wrong one. It’s okay to be a fan just don’t be blind.

  • Fri13

    You nailed it! If HTC just would bring vanilla Android, update Android as quickly as possible, they could double their sales at best case.
    Then give a user a change to install HTC own launcher and apps if they want, with easy way with HTC own application and tie them to HTC own hardware.

    Samsung is top brand now because it at least updates its phones with Android. Same thing is happening even with low-end manufacturers (Huawei and ZTE) with some of their models.

    HTC makes very nice hardware and design is top notch.The new “One” line up is great, hopefully they would have continued it. Now without beat etc, I only see HTC is saving totally wrong place.

  • http://twitter.com/shobon Kyle

    You’re assuming that everyone wants vanilla Android. I’m sure that the majority of smartphone owners don’t care about flashing roms and AOSP. Sense provides a pretty, easy to use interface that appeals to people looking for a new phone.

  • casualsuede

    ill informed comment at best. If Vanilla android was so great, then Nexus would be killing it. In the lawsuit vs Apple, Samsung admitted that Nexus says represented a tiny percentage of their mix. They sell 50 to 1 Galaxy S G3 vs Nexus. And locked Bootloaders? haha…99% of the general public would have no idea of what you’re talking about.

  • casualsuede

    Try working in any industry. Discounting for back to school in most industries is not uncommon.

  • casualsuede

    There is one problem with that. One brand (not a One X or One S or One V) requires HTC to do all the heavy lifting on advertising and marketing. Carriers like product that are exclusive and often support it (Droid and EVO are prime examples).
    Does HTC have the $$$ to do a massive one brand campaign? Looking how uninspiring their last campaign was, I’d say no.

  • casualsuede

    Funny. Comedian… Don’t let something like the truth get in the way of a good joke.

  • http://www.staska.net Staska

    Yeah well, discounting for back to school is not uncommon. I agree.

    But, if the stuff the original source was reporting, and on which I based my story is correct, the discounts go way beyond back to school season and extends to the whole portfolio – including the smartphones that will be launched in October or November

    Btw, really loved your replies re: Sense, pure Android and launchers… :)

  • Louis B

    When you type with caps lock on your credibility vanishes.

  • Daniel Golightly

    Actually, They already unlock the bootloader for you at their website.

    http://htcdev.com/bootloader

  • Daniel Golightly

    psh… uninspiring. My Evo LTE beats out Samsung’s S3 in many tests and visa versa. It’s a marketing game, not a matter of design or functionality.

  • amehaye

    “HTC could seriously steal a lot of customers away from Samsung by simply switching to stock Android and offering unlocked bootloaders.”

    And a removable battery… and external sd-card.

  • http://twitter.com/realwalt Walt Nicholson

    Strong lead-in. Weak story. Discounting is as old as dirt.
    Strong lead-in. Weak story.
    The author almost seems to have slipped into spin city. More like this will surely sink his credibility ship. Or he does have agenda, you think???

  • http://www.toyboxinc.net Katoya Palmer

    With Samsung in trouble via the results of the Apple Lawsuit, there may be a shot in the dark for HTC – looking fw to the changes this fall as the holiday marketing tacktic sales and devices launch!

  • David

    HTC Flyer customers are gathering here:

    https://www.facebook.com/HtcIDeserveIcsjellyBeanUpdateByHtcFlyer

    They are protesting for an Upgrade for the Flyer.

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