The madness of HTC

HTC Smartwatch Analysis

I’m still trying to wrap my mind around the trippy interview HTC’s chairman gave to Bloomberg this week. The comments made by Cher Wang can only be compared to Ed Zander’s legendary obliviousness in the fateful autumn of 2006 as he argued that betting everything on expanding the RAZR portfolio was the best route for Motorola. What HTC seems to believe is that it can rebound by a.) improving marketing, b.) launching smartwatches and c.) praying that the upcoming HTC M8 will click.

If this seems disjointed, that’s because it is. This list of three points makes no sense on any level. First of all, HTC already made a huge bet on marketing last autumn. You know — the $1 billion ad blitz that kicked off by featuring the most famous action movie star in the world. The entire effort was a nightmarish mess and also a disaster. HTC showed it does not understand how it should rebrand its phones and it has no grasp of what core message it wants to convey.

So how is a new marketing blitz going to change anything? The phones have excellent quality but are sold at a high price. This is a combination that does not work in a handset market where the growth in the luxury segment has evaporated. There is no marketing message that can solve that problem. You can add both Scarlett Johansson and Jennifer Lawrence to those Robert Downey, Jr. ads and it won’t do HTC one bit of good. I would not be surprised if they tried, though.

Mentioning smartwatches and wearables as a gamechanger is probably the most desperate Hail Mary pass I have heard in years. Obviously, the smartwatch market is going to have two key tiers: Dirt-cheap Chinese models offering deep value and the high-end segment where Apple and Samsung battle it out. Why would this end any better for HTC than the smartphone and tablet battles with precisely the same script? We have already seen this movie twice and the plotline is obvious: HTC cannot or will not price products low enough to be credible budget entries and it does not possess marketing budget, savvy, or exceptional design prowess to break into the luxury segment.

Why is it that the HTC executives cannot grasp the obvious? Of course, the upcoming HTC M8 looks precisely the sort of also-ran, almost-there, high-end item that the doomed HTC One was last summer. A 5 inch, 1080p display. Quad-core Snapdragon 800 chipset. Two 5-megapixel cameras. At a price that is too close to Samsung and Apple flagship phones. This is the formula that stopped working back in Christmas 2011. Yet HTC has not been able to change it, even as the $500-plus device segment grows ever more hostile to smaller brands as the unit growth rate tanks.

Hiring a new ad agency or putting out an HTC watch is not going to do any good. This goose is cooked.

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