Wed, Jul 18, 2012 - Page 14 News List

HTC must fix marketing issues: Goldman Sachs

CHINA CAMPAIGN:HTC’s sales are growing in China, where it is using pop stars and road shows to market its phones, something it does not do in the US or EU

Staff writer, with CNA

HTC Corp (宏達電) will regain its market share in the global smartphone market next year after it addresses important sales and marketing issues, Goldman Sachs said on Monday.

In a research note, Goldman Sachs said HTC’s market share in China in the segment for phones over 1,500 yuan (US$235) had increased to 13.3 percent in May, ranking third in the segment, up from 6.4 percent in April.

The strong momentum indicated that HTC’s China business is showing resilience in demand since the launch of its One series in the high-end market and the New Desire series in the mid-end segment, the note said.

“We believe it will nevertheless have implications for HTC’s other regional markets,” Goldman Sachs analyst Robert Yen (嚴柏宇) said, adding that its performance in China’s market will not be strong enough to offset HTC’s weak sales in the US and Europe.

Yen said that HTC has used unique marketing strategies with a local focus to get its product features and design philosophy across to Chinese customers, who are widely seen as being very price-sensitive.

These strategies, such as online movies, city road shows, collaboration with Sina Weibo (新浪微博) and using local pop stars as spokespeople for its products are rarely seen in HTC’s marketing in the US and Europe.

It shows that HTC’s current market problems in the US and Europe are not caused by its smartphones being too expensive or by its product designs not being competitive, but rather by sales and marketing problems, Goldman said.

“We expect HTC to continue revamping its sales and marketing team in the US and Europe,” Yen said.

“We believe adjustments in strategy will take time to bear fruit, but that this sets the foundation for a rebound in market share in 2013,” Yen said.

Goldman expects HTC’s shipments to drop by 68 percent from last year to 6.7 million units in North America and by 38 percent to 5.8 million units in Europe.

On the contrary, shipments in China will jump 105 percent from last year to 6.4 million units, while those in other Asian markets and the rest of the world are forecast to rise 18 percent to 13.1 million units, it said.

Given the estimated 28 percent drop in HTC’s total shipments this year, Goldman has cut its target price for HTC to NT$280 from NT$360 and kept a “neutral” rating on the stock.

HTC shares closed up 3.83 percent at NT$298 yesterday in Taipei trading.

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