HTC turns to cheaper smartphones

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HTC turns to cheaper smartphones

Smarting from growing losses, Taiwanese phone maker HTC says it will expand its range of cheaper products as it fixes off-target marketing for its premium smartphones.

The company that has long prided itself as a purveyor of upscale, feature-loaded products says it needs to sell more mid-tier and affordable smartphones after losing out in 2013.

Muscled off-track by fast-growing Chinese rivals like Xiaomi as well as giants like Samsung Electronics and Apple, HTC is seeking to reverse a two-year sales slump matched by an 80 percent drop in its share price.

“The problem with us last year was we only concentrated on our flagship. We missed a huge chunk of the mid-tier market,” said co-founder and Chairwoman Cher Wang, speaking to Reuters in New York last week alongside Chialin Chang, HTC’s Chief Financial Officer.

Speaking ahead of an HTC earnings guidance presentation expected later on Monday, Chang said HTC will sell products in the $150 to $300 retail price range for both emerging and developed markets, along with high-end phones that can sell for over $600.

HTC won’t get into the “very, very low-end market,” Chang said, but it will soon unveil a new flagship phone.

“The two cylinders are going to be fired together,” Chang said.

The new strategy marks a need to address problems at a company, 3.8 percent-owned by Wang herself, which just over two years ago supplied one in every 10 smartphones sold around the world. In 2013 its global market share had fallen to just 2 percent, according to Strategy Analytics analyst Neil Mawston, and HTC last month reported its second straight quarter of operating losses.

HTC will need to move quickly in order to convince skeptical shareholders. “Only time will tell, but I’m not optimistic,” said Laura Chen, a Taipei-based analyst at BNP Paribas.

Chen believes the company’s fundamental problem is unattractive, underwhelming products and that this will continue to hold it back in 2014. “They don’t offer anything really new to the market,” said Chen, who has a sell rating on HTC shares.

Wang aims to boost smartphone sales this year by improving its marketing, something she said her company “didn’t do well” in 2013. While the flagship HTC One phone it launched last year got rave reviews, these didn’t translate to sales: HTC needs a “very aggressive campaign” to broaden its market beyond tech-savvy 20- to 30-year-olds, the executives said.

Last year HTC hired Hollywood actor Robert Downey Jr. for a series of TV ads to promote its brand in a campaign labeled “Here’s to Change.”

The executives said that higher volumes of cheaper phones should make up for the difference in price with its higher-end phones.

“Overall profitability is going to grow,” said Wang.

Along with an improvement in the mid-tier, HTC is also hoping for incremental growth in the high-end phone market this year.

The executives said invitations will be sent out in about two weeks for an event where it will announce the successor to the HTC One flagship phone.

More affordable phones should fill a gap in HTC’s range. Of the 53 phones for sale on HTC’s China website, only two models cost less than $150 - the highest-growth price bracket in China, according to research firm IDC.

Twenty-one are more than $500.

Reuters

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