HTC sales drop 48% YoY, 12% in a month. Profits down by 78% . Can 8X and 8S Windows Phones save them?
HTC results continue to go down the crapper.
They have just issued the September and Q3 2012 numbers, and there’s absolutely nothing good about them.
September sales came in at $NT 21.1B ($721 million) compared to NT$24B in August. Full quarter revenues were NT$ 70.2B ($2.4B), after tax profits – $NT3.9B ($137M). This compares to revenue of 135.8B NT$ ($4.6B)/$NT18.7B ($639M) in profits a year ago, and $NT91B ($3.1B)/$NT7.4B ($252M) in June quarter.
HTC decline has accelerated again. Sales dropped 12% in just one month, 23% in 3 months and 48% in a year. Profits are now evaporating even faster – 47% decline in 3 months and down a whopping 79% in a year. One or two more quarters like this and HTC will join the crowd of money losing Android smartphone makers like Motorola, LG and Sony.
And it seems that a pattern is emerging to these HTC troubles. Their problems started a year ago, with the release and rapid ramp-up of iPhone 4S sales. First on 3 major U.S. carriers, then Europe and then, in Q1 2012, in China. It took HTC 5 months to steady the sales decline,but by March 2012 they did it.
Unfortunately that didn’t last long, and as soon as Samsung launched Galaxy S3, there was another sharp 16% drop in HTC’s monthly sales. And now, with iPhone 5 only available in 7 countries for most of September – another sharp 12% decline. I wonder what the new iPhone will do to HTC numbers, as its sales ramp up around the world.
HTC’s Android position remains untenable too. They couldn’t compete with Samsung Galaxies on the strength of HTC One line, and the small One X+ flagship update won’t help there much. They may have an 5” phablet on the way – but that category too is owned by Samsung.
The only thing HTC has left to slow sales decline in the short-term – are Windows Phones. They’ve announced a couple of interesting new models – 8X and 8S. There will be a huge marketing blitz from Microsoft to kick-start its Windows Phone 8 smartphone platform, in which HTC will be featured front and center. And the Taiwanese company said they have an impressive line-up of 150 carriers around the world, to push the new devices.
The only problem is – Windows Phone is not what you’d call a proven and successful platform. More like the opposite. And Microsoft has already tried to launch two iterations of it, throwing loads of marketing money at everyone, every time. Barely moved a needle so far. Why would this time be different?
Third time’s is the charm? Maybe. The conventional is wisdom says that it’s not until the third iteration of a major product, that Microsoft finally gets things right and starts catching up in the market. And Windows Phone 8 conveniently is the third iteration of the OS. So maybe people will finally start buying WP8 phones in droves. But I have to see to believe that.
And then, even if Windows Phone demand explodes – how much of that will be new sales to HTC? And how much will simply cannibalize their Android sales. Oh, and let’s not forget that while HTC is important partner to Microsoft, the Nokia partnership is still there.
Well, we’ll have to wait for HTC’s earnings conference call in a few weeks, to see what they expect from the Christmas holiday season. The iPhone will be widely shipping for more than a month by then. And most of the device contracts for Christmas should be in the bag. Which would make HTC’s Q4 earnings guidance a very interesting thing indeed.