Can HTC go for the jugular in Chinese smartphone market?
Everyone’s getting used to struggling financial results from the telecoms industry these days due to the bleak economic outlook.
Announcing quarterly figures is akin to a death sentence, especially if the big companies find the going difficult.
Huawei posted strong sales revenue figures of CNY 102.7bn (£10.4bn), overtaking Swedish giants Ericsson through the first two quarters of 2012.
But despite this, they posted a 22% downturn in operating profits, with chief financial officer Meng Wanzhou saying that Huawei was only “relatively optimistic” about their chances for the rest of the year.
With regard to Taiwanese smartphone manufacturer HTC, their figures weren’t much different in their second quarter results back in July.
In a somewhat brief press release, the figures were announced: total revenue of NT$91 billion (£1.93bn); operating income of NT$8.2bn (£174.2m) and net income after tax of NT$7.4bn (£157.2m).
Given that analysts had predicted a NT$94bn operating income and that earnings last year were NT$17.52bn, the figures didn’t look very good at all.
A leaked memo from CEO Peter Chou, reported to the Wall Street Journal, found that the chief exec thought HTC had grown too quickly in the preceding two years and that it was beginning to cost them, adding that executives were acting “without decision, strategic direction or a sense of urgency”.
From the developer side, HTC has also been in the news recently due to a petition posted on Change.org asking for an alteration to the company’s policy on releasing kernel source code.
The petition – which carries a picture of HTC captioned “quietly failing” in reference to their “quietly brilliant” slogan – states that while developers are grateful for the manufacturer releasing unlock codes, not releasing a source code for anything up to 120 days isn’t good enough.
So how is HTC planning on turning it around?
According to a report by the WSJ, HTC head of China operations Ray Yam is looking to get an extra 2-3% market share in China, enabling them to challenge alongside the likes of the aforementioned ZTE and Huawei, as well as Apple and Samsung. HTC currently sits in ninth position of Chinese smartphone market share.
This appears understandable, but of course HTC had mainly targeted Europe and the United States, where sales are sliding due to difficult economic conditions.
Of course, the market in China for phone manufacturers is massive, with China Mobile’s 60 million users. HTC is reportedly increasing its branded counters to 3500 from 2700 by the end of 2013; a definite increase although dwarfed by Samsung’s 6000, however.
HTC CEO Chou stated his disappointment that their sales are down whilst the smartphone market expands. So can HTC pull it back, even with the competition?