HTC Turns to Medium-end Mar ket for Survival

The long-term depression for HTC， the Taiwan-based mobile phone manufacturer， was diluted a little by some good news. On February 11， HTC announced its financial report of Q4， 2013， showing that the company’s revenue reached US$1.416 billion in that quarter， down 28.5% year on year. But it saw the net profits again， which amounted to US$10.23 million， after the US$101-milllion loss in the previous quarter.

However， the decline is not a controversial topic for HTC in spite of the temporary rebound. As its financial report forecasts， HTC is likely to see the loss again in the first quarter of 2014.

With the looming stress of removing the loss， HTC began to shift the product line. Cher Wang， board chairwoman of the company， said that HTC was going to focus on the low- and medium-end market in this year and introduce some smartphones with the price tags of US$150-300.

In addition， as Taiwanese media reported， HTC is going to replace Samsung as the OEM for Google Nexus 10， even though no insider from HTC has confirmed it yet.

Bow the head to medium-end market

For long， HTC has considered Apple and Samsung its competitors.Meanwhile it is also chased from behind by Huawei， Xiaomi and other Chinese local brands. There is a long and thorny road for HTC to regain the lost glory.

According to the data from market consulting company Gartner， HTC’s market share in the global smartphone market dropped to 2.2% in the third quarter of 2013.

Chia-Lin Chang， CFO of HTC， said in the introduction meeting of financial report that HTC was expected to loose around US$100 million in the first quarter of 2014. Notably， the figure is even higher than the loss of Motorola.

However， HTC seems to be quite optimistic about this. An insider from the company said that the company had made some changes to the management team. Peter Chou， CEO of HTC， has moved some of his jobs to Cher Wang， while he shifted his focus onto the development of products. In addition， the company will try to improve the consumers’ recognition of the HTC brand after changing the marketing strategies.

The most obvious change is that HTC began to shift its focus to the medium-end market. Cher Wang recently said that the to-be-launched smartphones priced at between US$150 and 300 are the weapons for HTC to be simultaneously focused on the lowand medium-end market. “Among the smartphones HTC sold in mainland China last year. Only two had the price lower than US$150. The other 21 kinds of smartphones were all pricier than US$500. The excessive focus on the flagship products placed HTC into the current difficult situation.”

Peter Chou said that HTC signed a strategic cooperative agreement with China Mobile in the fourth quarter of 2013. Together they launched the HTC One Max smartphone， which is its first 4g cellular phone based on TD-LTE in China. “We are going to build the best smartphone for our users and more cheap low- and medium-end devices，”Peter Chou said.

Meanwhile， HTC is going to take the low-price strategy to reverse the situation.

Changing the Operating Pattern as the Key

For the change of focus of HTC to the medium-end market， Wang Yanhui， secretary-general of China Mobile Phone Alliance， said that HTC still wavered in its brand positioning. It has to face the competition with more domestic products from high-end market to the medium-end one， which is not easy for any participators. “It must make its operating pattern and marketing strategies closer to consumers. Only in that way can HTC get the characteristics matching the age of Internet and embrace its recovery.”

Nevertheless， HTC seems to be greeted with an opportunity of turning the tide for its overseas development. On February 8， HTC reached a comprehensive reconciliation with Nokia， with which it has been fighting in a patent dispute for a long while. The two companies signed the cooperative contract of patent and technologies. As revealed by an insider， HTC has been expecting that the disputes would end as soon as possible， so HTC could end the distraction and put its whole energy into recovering the business.

The experts also believed that the new agreement will help HTC get rid of the two-year patent disputes and swipe away anything standing its way of product development in the future.

It is known that HTC has already launched a series of medium-end smartphones in Europe， Asia and Middle East， but the long-term layout cannot bring about good effect in a short while as HTC has to face the loss in the first quarter of 2014.

Against that background， the change of the operating has become a necessity. Apart from optimizing the product portfolio， to find new business is also a good choice. The unconfirmed rumor about HTC’s OEM for Google Nexus 10 is an example. It is said that the new tablet is going to be launched into the market in the third quarter of this year. And it will be a great benefit for HTC if the rumor proves to be true.

HTC’s return to the role as OEM might be a result of being pressed by the revenue. This is a shortcut to improve the performance， but cannot solve the problem forever. To have a new foothold in the smartphone market is the key to HTC’s survival and revival.