Mon, Jun 13, 2011 - Page 12 News List

HTC facing lower profit margin, researcher says

AMBITIOUS:The average selling price of HTC’s products has dropped by 8 percent year-on-year as the firm aims to seize a bigger share of the global smartphone market

Staff Writer, with CNA

Taiwanese smartphone manufacturer HTC Corp (宏達電) will likely have a lower profit margin this year in the wake of its market strategy to increase shipments of mid and entry-level products, according to a Taipei-based researcher.

“The average selling price [ASP] of HTC’s products is dropping this year, although its shipments continued to hit record numbers in recent quarters,” Kelly Hsieh (謝雨珊), associate manager of Topology Research Institute (TRI, 拓墣產業研究所), said recently on the sidelines of an industry forum.

Hsieh said HTC’s ASP has decreased to US$360 in the first half of this year, dropping nearly 8 percent year-on-year from US$390.

The declining ASP may hurt the Taoyuan-based company’s profit margin as it takes aim at a bigger share of the global smartphone market, she said.

“The price drop is due to HTC’s increasing shipments of mid and entry-level Android phones in a tight race with its strong rival, Samsung Electronics Co,” Hsieh said.

HTC sold 9.7 million smartphones in the first three months of this year, an increase of 192 percent year-on-year. The world’s No. 5 smartphone maker has forecast second-quarter shipments of 11 million to 11.5 million units, an increase of 110 percent to 113 percent from a year earlier.

TRI has predicted that HTC shipments will increase from 23 million units last year to 50 million units this year, which will give the company a 12.5 percent share of the global smartphone market.

Meanwhile, Samsung’s smartphone shipments are forecast to grow from 19.5 million units last year to 39.2 million units this year, TRI said.

The South Korean firm expects its worldwide smartphone shipments to double from last year on the back of high-tier Android models, such as its flagship smartphone Galaxy S II, which features a 4.3-inch touchscreen and Samsung’s own dual-core application processors.

TRI said that with the launch of more new Android-based smartphones using dual-core processors and high-definition displays, earlier versions will be sold at lower prices to clear inventories.

According to Gartner Inc, Android remained the biggest mobile operating system in the first quarter of this year, with a market share of 36 percent, up from 9.6 percent in the same period last year.

It was followed by Nokia’s Symbian (27.4 percent), Apple’s iOS (16.8 percent), Research In Motion’s BlackBerry OS (12.9 percent) and Microsoft’s Windows (3.6 percent).

Gartner said smartphones continue to outpace the rest of the mobile phone market and a competitive mid-tier smartphone market will spur mass adoption by consumers.

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