HTC needs partner to survive

Wednesday 17 December 2014 | 12:27 CET | Background

The past year was relatively good for HTC. The Taiwan-based company manage to grow its revenues with the launch of the HTC One M8, as well as return to a small profit. The question is whether these signs of recovery can continue in the long term given the quickly changing market conditions. The company's chances appear small. 

This is due in part to the growing number of competitors on the smartphone market and in part to HTC's limited offering. There is simply not much room: HTC is running up against manufacturers from China and India, while the high end of the market has been dominated for years now by Apple and Samsung. Furthermore, HTC has only a limited range of phones. It offers the One series (Android/ Windows Phone) for the top end and serves the mid-market with its Desire range (Android).

More elbow room in 2015

HTC is reportedly planning an entry on the quickly growing market for wearables in 2015, as well as a return to the saturated tablet market. The company already contributed in 2014 to the new Nexus tablet from Google and pulled out the RE, a compact video camera in the form of a periscope. 

HTC wants more elbow room next year and plans to create this on its own strengths. The company has little debt, USD 1.5 billion in cash available and the capacity to raise more, the CFO stressed in October. Working with other manufacturers, either via an acquisition or joint venture, is not among its plans. In the past year companies such as ZTE, Lenovo and Huawei were named as possible buyers, but nothing concrete ever emerged.

The uncompromising position of HTC's management could limit its chances of survival. There is a reason a large number of executives, especially in marketing, have left the company in recent years, leaving HTC without a coherent sales and marketing strategy at times. The company is also reportedly losing staff working at the core of its products, such as engineers and designers, although the company has never confirmed this. 

In the footsteps of Nokia, BlackBerry

HTC's situation is starting to look similar to other manufacturers that, when at their peak, missed how quickly the mobile device market was changing and were often hindered by their top management's unwillingness to change tack.  

Nokia was ultimately forced to sell its hardware business to Microsoft after a more or less failed partnership, and BlackBerry had to completely rebuild its strategy in order to survive. HTC will not be able to escape a radical shift next year either, likely in the form of a cooperation, preferably with a strong, emerging player in the market.

In short, HTC will need to improve its position considerably if it wants a chance at succeeding in this crowded market. Even more than last year, 2015 will be the year of connected hardware, from wearables to the smart home. HTC can claim a place for itself if it shows itself innovative and disruptive and raises its profile with both the channel and buyers. 

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