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HTC pins hopes on China to avoid becoming the next Nokia

Michael Kan | Oct. 16, 2013
Its fortunes in the West having stumbled, HTC is looking to the massive China smartphone market to keep it in business.

Its fortunes in the West having stumbled, HTC is looking to the massive China smartphone market to keep it in business.

The shift was evident Tuesday when HTC picked Beijing to unveil the HTC One Max, in a departure from major launch events in the past, which were held in the U.S. and Europe.

"This market is so important," Jack Tong, HTC's China president, said on the sidelines of the event. China is "the biggest market in the world," he said. "We are making China our home market."

Based on the island of Taiwan, HTC is right next to the Chinese mainland. But long before China emerged as the world's biggest smartphone market, HTC had decided to focus its efforts on the U.S. The strategy paid off at first, and HTC's Android handsets led the U.S. market as recently as 2011, with about 20 percent of devices sold.

But HTC's business started to decline the next year, pushed out by more popular devices from Apple and Samsung, and HTC now has just 9 percent of the U.S. market. The poor sales have strained its finances, and earlier this month it reported its first net loss in a decade.

The outlook appears bleak for the Taiwanese firm: Nokia and Motorola ran into financial trouble and ended up being bought out, and BlackBerry too is seeking a buyer. There has been speculation and rumors that HTC could face the same fate.

But on Tuesday, HTC put on an optimistic face to unveil its new handset, a 5.9-inch phablet called the HTC One Max.

The device comes with a fingerprint scanner, like Apple's iPhone 5s. But another key selling point for HTC is the device's support for China's upcoming 4G LTE networks, which could be switched on as soon as the end of this year.

"This is the first LTE-enabled big-screen phone for the country," Tong said. "We hope to offer high-end phones that can complement the coming era of 4G."

In targeting China, HTC is aiming for a market that could see 240 million smartphones being sold this year, almost twice as many as in the U.S., according to research firm Canalys.

The growth has been so robust that since last year's second quarter, China became HTC's largest market for smartphones, but still not enough to turn its fortunes around.

HTC has said it's becoming recognized as a high-end brand in China, but its market share is still so small it doesn't make the top 10 rankings for vendors there, according to Nicole Peng, an analyst with the research firm Canalys.

Standing in its way is a small army of entrenched rivals, many of them local. Samsung and Apple are the only foreign vendors to have established a significant share of the market, with the rest dominated by Lenovo, Huawei and smaller domestic companies.


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