Mon, Sep 03, 2012 - Page 14 News List

Niche markets key to HTC’s revival

DIGITAL AWAKENING:A string of setbacks has seen HTC’s fortunes dwindle in the past, but analysts think an overhaul of the company could lead to a renaissance

Staff writer, with CNA

Taiwanese smartphone vendor HTC Corp (宏達電) still has a chance to regain its previously strong position in the increasingly competitive mobile phone market if it can tap into niche content and segments, according to industry analysts.

“HTC has some serious problems within the company,” said C.W. Chen, chief researcher of the Center of Knowledge-based Economy and Competitiveness at state-funded Industrial Technology Research Institute (ITRI, 工研院).

“Based on my knowledge, HTC’s internal innovation management lacks efficiency, and the company had failed to carry out some really good ideas or creative thoughts,” he said in a telephone interview recently.

HTC’s relatively weakened ability to innovate has also been evidenced by a closer tie between its partner Google Inc and its rival Samsung Electronics Co, as Samsung has replaced HTC as Google’s top partner in the Android camp to launch cutting-edge devices, Chen said.

Although the world’s first smartphone running on Google’s Android system was made by HTC in 2008, such strong partnerships appear to have faded during the past two years as Samsung have become more aggressive in supply chain integration and brand marketing, he said.

In the April-to-June period of this year, HTC’s shipments plunged 24.1 percent annually to 8.8 million units. The firm ranked fourth with a 5.7 percent share of the global market, said US.-based research firm International Data Corp (IDC).

The HTC figures were far below the 11.6 million units and the 10.7 percent market share it recorded in the second quarter of last year, IDC said.

Meanwhile, Samsung extended its position with record single-quarter shipments of 50.2 million units, or 32.6 percent of the market, while Apple shipped 26 million units to capture a 16.9 percent market share.

Given the intensified competition, Chen said he still believes HTC could make a turnaround because there is still a lot of room in the smartphone market for innovations, such as smart identification systems for voice, hand writing, face or finger prints.

Furthermore, he suggested HTC form partnerships with famous international companies to develop specially designed handsets for online learning and mobile shopping, in a bid to create a smooth user experience for its consumers.

“It’s not a time to reduce investments but to spend money more precisely and choose partners more wisely,” Chen added.

Jeff Pu (蒲得宇), an equity research analyst at Taipei-based Fubon Securities (富邦證券), said HTC has to stick to its merger and acquisition strategy to address its niche content and components amid fierce competition from Apple and Samsung.

Merging with other companies will be the fastest way for HTC to build its own sub-ecosystem in the mobile industry to combat Apple’s leadership in operating systems and Samsung’s edge in hardware manufacturing, he added.

However, several announcements in the past two years have cast doubts over HTC’s investment strategy and its ability to integrate new features into its hardware and software innovations.

In 2010 and last year, HTC made several investments to enhance its smartphone features and services, but it seems that these investments are struggling to bring any value to HTC or to survive as standalone companies.

In July this year, HTC decided to sell back half of a 51 percent stake it owned in US-based headphone maker Beats Electronics less than one year after the acquisition. The sale resulted in a loss of about US$4.88 million for HTC.

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