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HTC looking for strategy to cope with changing smartphone market
Central News Agency
2014-08-16 10:02 PM
Taipei, Aug. 16 (CNA) Taiwanese smartphone maker HTC Corp. has traditionally tried to compete in the high-end smartphone market, but its eroding market share and new consumer trends are forcing the brand to adjust its strategy and product portfolio. It may be hard to imagine now, but as recently as the second quarter of 2011, HTC was the largest smartphone vendor in the United States with a 24 percent share, outpacing Samsung and Apple. The company has since fallen on hard times, hurt by the growing strength of Apple and Samsung and a series of marketing, product development and acquisition missteps. And now, with smartphone consumers demanding "low-cost but high-performance" models, and China emerging as the main source of growth in the global smartphone market, HTC has had to rethink its strategy and roll out mid-tier models such as the Desire 816. But even as its sales volume slides, the company insists it will not participate in the low-end market segment, according to Jack Tong, head of China operations and president of HTC North Asia. The pool of models ranging below NT$10,000 (US$333) is "a competitive market," and that of models priced below NT$5,000 is "even more competitive," Tong said. The trend toward lower-priced models will only be reinforced when China Mobile Ltd., the world's biggest mobile carrier by subscribers, cuts its reimbursement on mobile device purchases by US$2 billion. That will likely lead Chinese consumers to go for second-tier brand products with lower price tags but similar specifications, when, without the China Mobile subsidies, high-end Apple and Samsung models become more expensive, analysts have said.

At least in Taiwan, HTC's new strategy seems to be working. The HTC Desire 816 has seen sizzling sales, ranking as the best seller in the local smartphone market in June. The ZenFone 5 by Asustek Computer Inc. was second followed by HTC's flagship model the HTC M8, Hon Hai Precision Industry Co.'s InFocus M210, China-based Xiaomi Corp.'s Hongmi and Apple Inc.'s iPhone 5S, according to statistics released by industry sources. Analysts said most of the 10 best-selling smartphones in Taiwan in June carried a price tag of less than NT$10,000. Overall, HTC took the top spot in sales volume in Taiwan's smartphone market in June with a 22 percent share, ahead of Samsung's 15 percent and Asustek's 13 percent, the statistics showed. HTC also ranked No. 1 in smartphone sales revenues in Taiwan in June with a 29 percent share, followed by Samsung at 21 percent and Sony at 15 percent, according to the statistics. In addition to Taiwan's market, the HTC Desire 816 has also done well in India, one of the company's major markets. That model has proved more popular than low-end devices, such as the less expensive Desire 210, according to analysts. Yet the strategy has had its limitations. HTC's July sales slumped to NT$10.6 billion, the lowest in five months and the third-lowest of this year. Analysts argue that smartphone makers need to sell about 60 million smartphones a year to reach the needed economies of scale to compete, but HTC may have trouble selling 20 million units in 2014, putting it at a major disadvantage against bigger volume players.

Reluctant to enter the low-price high-volume segment of the market and sacrifice profitability, yet facing a high-end segment that is no longer a source of growth and could be shrinking, HTC is still in search of a strategy to reverse the company's fortunes, analysts say. How HTC positions its brand in the future in its fight for survival, analysts say, will truly test the company's wisdom and imagination. (By Esme Jiang and James Lee)

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