Chastened HTC turns to cheaper smartphones in search for profit

Sun Feb 9, 2014 4:15pm EST
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By Michael Gold and Sinead Carew

TAIPEI/NEW YORK (Reuters) - Smarting from growing losses, Taiwanese phone maker HTC Corp 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 Inc as well as giants like Samsung Electronics Co and Apple Inc, 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 which can sell for over $600. HTC won't get into the "very, very low-end market", Chang said, but 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, that 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.   Continued...

Visitors walk past a HTC sign at the GSMA Mobile World Congress in Barcelona, February 14, 2011. REUTERS/Albert Gea