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HTC's nosedive blamed on scant smartphone innovation, fierce competition

Matt Hamblen | Aug. 12, 2015
Upcoming VR headset and possible Windows 10 Mobile smartphone offer glimmer of hope.

Waiting on Windows 10 Mobile

"HTC has faced serious competition in the smartphone space, and its latest M9 smartphone didn't bring any particularly impressive improvements over the M8," said James Moar, an analyst for Juniper Research in an email. The M9, released in March, looked almost identical to the M8, other analysts noted.

Juniper expects HTC to continue to launch more smartphones in the third quarter, including at least one device (or a modified current device) to run Windows 10 Mobile. "Any decisions about the company as a whole should wait until Windows 10 Mobile comes out," which is expected this fall, Moar noted.

"If HTC can establish itself as the premier alternative to Lumia for Windows smartphones -- and it certainly as the design capability to do so -- we could see a reversal in fortunes, particularly as Windows OS can function as a differentiator in the market saturated with Android smartphones," Moar added.

Juniper estimated that HTC has just 1.2% share of the market for smartphones, placing them 10th in global vendor rankings. IDC had HTC ranked in the top 20 smartphone makers in the first quarter, with a 1.5% share.

HTC shouldn't fold up, has potential with VR Vive headset

Ramon Llamas, an analyst at IDC, argued that HTC "should not fold up and go away, even though a lot of people are predicting that," he said.

HTC's recovery will depend a lot on how nimble it can be in capitalizing on emerging markets, Llamas said.

Both Llamas and Moar said HTC's investments in virtual reality could be promising. "I'm eager to see what HTC does with its head-worn VR device," Llamas said.

"There has been quite a bit of excitement about the potential for the company's VR product, although no release date has been set for that yet," Moar added.

HTC, in its earnings release, noted that its HTC Vive VR product will launch at the end of 2015. More than 1,000 developers are working with HTC on content creation for gaming, entertainment and education apps for the Vive, HTC said.

The case for going private

Some market observers say HTC should put itself up for sale or go private to boost its chances for success.

HTC could be sold, but the main buyers in contention would be Asian-based smartphone companies, according to Jack Gold, an analyst at J. Gold Associates.

"What would the contenders gain by buying HTC, as opposed to pushing their own brand?" Gold asked.

"I think it would better for HTC to go private at his point," said Patrick Moorhead, an analyst at Moor Insights & Strategy. "Their investors obviously have no confidence in them in the future. They don't even trade above cash level, which is a bit ridiculous when you think about it."


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