HTC Reports Positive Growth First Time in 2016: A Lot Depends on Google Pixel

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The Taiwanese company HTC Corp (TPE:2498) has a struggling tale for a very long time. In spite of its beautifully designed, feature loaded smartphones, it has been failing to make its mark in the market. The company had made several attempts to revive its revenue but failed most of the times. However, the company reported a year-to-year growth for the first time in this year, in its earnings report as of September 2016. According to HTC’s press release, it marked 31.35% YoY and 41.84% MoM (Month-over-Month) growth in the month of September, which is the highest in this year.

htc revenue
(In NT$ million)

The smartphone market has been very dynamic for a couple of years with the entry of many Chinese OEMs like OnePlus, LeEco, Oppo, Vivo, offering flagship devices at affordable prices. HTC smartphones are often too expensive, with no outstanding and innovative features. The company fails to promote and advertise their devices effectively due to which consumers do not usually consider their devices, having to pay extra for features which are available in cheaper devices as well.

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Earlier when HTC was successful and growing, it was ahead on the product design curve but was too dependent on American and European carriers on marketing and sales support to drive the products, said Neil Shah, analyst at Counterpoint Research.

Talking about the year 2016, HTC launched its flagship device HTC 10 in April which was said to be a reviving device for the company’s smartphone fortune. April and May posted a positive month-over-month growth with 38.78% and 17.42% respectively, after declining percentages since January. However, the company is struggling to sell 1 million units of HTC 10 this year. HTC 10 has failed to attract consumers against a phone like Samsung Galaxy S7, which accounts for 11.8 million shipments in the first half of 2016, globally. Apart from the price, it is the design and innovation that attracts a customer. Unfortunately, HTC 10 had none of it.

In the second quarter of 2016, HTC reported a revenue of $601 million (NT$18.9 billion), a net loss of $133 million (NT$4.2 billion). According to the company, HTC 10 smartphone gave a boost to the company which lead to a 27% rise in revenues as compare to $470 million (NT$14.8 billion) in Q1 2016. The net loss was at $15.2 million (NT$4.8 billion) in the first quarter. HTC is constantly working towards reviving its fortune in the smartphone market.

The latest advancement came in with HTC manufacturing devices for Google, which launched as Google Pixel in October 2016. HTC had tied up with Google to manufacture its Pixel phones, but the phones are designed, advertised and distributed by Google. The phone was launched just four days back so it’s too early to say if the devices are going to be successful. However, with the features and the hype that the device incorporates, and with all the resources that Google has with its advertising expertise, the Pixel duo can be a hit in the market. It will also benefit HTC and could be a saving grace for the company.

There are also rumours that HTC is developing a button-less smartphone, HTC Ocean, with contextual UI that will help in performing a variety of tasks like adjusting the volume and clicking pictures simply by touching the side of the device. This could be a new and attractive feature in the smartphone market if the device is successful in seeing the light of the day.

The future for HTC looks bright. The Taiwanese company needs to make a mark in the market by hook or by crook. It cannot continue producing the same type of devices anymore if it wants a sustainable future. The competition in this segment is extremely intense and will be even harder for the company in future as the technology is advancing and the other devices are inheriting AI based features as well. The tie-up with Google seems to be a wise step in favour of the company. However, no one knows what’s in the box until it’s opened.

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