HTC to focus on lower-cost handsets as revenue continues to fall

HTC’s fourth quarter earning results are in, and things still aren’t looking very good. Quarterly revenue was NT$42.9 billion ($1.42 billion US), down from NT$60 billion a year ago. And as revenue continues to fall, HTC Chairwoman Cher Wang believes the company must place a renewed focus on the mid-range market, according to Reuters.
“The problem with us last year was we only concentrated on our flagship,” Wang told Reuters last week. “We missed a huge chunk of the mid-tier market.”
It is true that HTC didn’t release many mid-range phones last year. After the high-profile launch of the HTC One, the company later introduced One Mini and One Max variants, all of which hover around the higher-end of things. There were still some low-cost Desire handsets kicking around out there, but compared to competitor Samsung, HTC didn’t have nearly as many devices on the market.
But while it’s true that the company shouldn’t hope to turn things around solely on the potential success of a follow-up to the HTC One, it also needs to realize that profit margins are likely to shrink along with the cost of these budget handsets. HTC will need to sell a lot of lower-priced phones to help reverse the course of its earnings trajectory, and there is more competition in the mid-range space than ever.
Of course, HTC isn’t planning to rely on lower-cost phones alone. The company last week told Bloomberg it also hopes that a new wearable device, better marketing, and a successor to the HTC One will help turn things around.
But it doesn’t look like the company is planning for that to happen too quickly. First quarter guidance says to expect revenue between NT$34 and NT$36 billion, down from the NT$42.8 billion earned last year.