Only a miracle can save HTC now

HTC Smartphone Strategy Analysis

I’ve gone on the record multiple times saying that I think the word “doomed” is overused in tech journalism. Apple is not doomed, Microsoft is not doomed, Google and Samsung aren’t doomed. That said, there are times when you look at the position a company finds itself in and the word “doomed” seems to be the only appropriate adjective. And if there’s one company that is being plagued by the stench of doom right now, it’s HTC.

I say this not as a “hater” but as someone who is actually a fan of HTC. I’m a very happy HTC One owner and I think that, from a design perspective, HTC phones are head and shoulders above the 12 or so versions of the Galaxy S4 that Samsung has put out. In other words, I have no reason to want HTC to fail. Quite the opposite, I want them to succeed so I can pick up the HTC One 3 (or whatever it’s called) when it releases a year or so from now.

But facts are facts and they’re telling me that HTC is in a no-win situation.

HTC first rose to prominence in the smartphone world because it was smart enough to be a very early Android adopter, which meant that anyone looking for a Google-centric alternative to the iPhone would buy a Droid Incredible or Evo 4G to get their fix. However, these early hits came before Samsung and its $14 billion marketing Death Star decided to really go after the mobile market. Once that happened, Samsung shoved early Android adopters such as HTC and Motorola out of the high-end smartphone market and made its Galaxy devices synonymous with Android for many mobile users.

What has HTC done to adapt to this new reality? Up until very recently… almost nothing. The company is only now realizing that it will fail if it continues to compete exclusively in the high-end market with Apple and Samsung. That’s why is is now planning to roll out a new line of devices that will be more affordable and that will attack the growing market for low-end and middle-range devices.

This sounds like a fine strategy… if HTC had decided to do it two years ago. Right now, though, the market for low-end devices is brutally competitive and filled with no-name vendors that will sell devices with very solid specs for dirt-cheap prices. HTC will also face increased competition from Microsoft, which is using its financial clout to push low-cost and mid-level Windows Phone devices into emerging markets. Then when you factor in BlackBerry’s plan to aggressively push its Foxconn-produced keyboard-equipped devices in markets where it still has a strong market share, and you can see that HTC is very late to the game when it comes to adopting a low-and-mid-tier device strategy.

HTC is also apparently pinning its hopes on both making a smartwatch and on delivering better marketing. I have two words to describe this strategy: “Pft, please.”

While a lot of tech companies are scrambling to build their own brand of wearable computers, we still have no idea how big of a market there will be for smartwatches. The Galaxy Gear was a dud and so far we haven’t seen anything close to a “killer app” that will make smartwatches a must-have item on par with smartphones and tablets. In other words, HTC could make a gorgeous watch and no one could care about it.

As for better marketing… sigh. Remember the last time that HTC vowed to do a major marketing remake to create more brand awareness? The result was a series of ads starring Robert Downey, Jr. that were so bad that I really thought someone had doped me with LSD just before I watched them. The idea that HTC would shell out God-knows-how-much money to get Downey onto its payroll and then sign off on ads as nonsensical as those were is mind-blowing to contemplate. In short, HTC has shown it has no idea how to create a strong brand message for itself and it’s unlikely that lighting another pile of money on fire will make the difference this time.

So, what can save HTC? Pretty much the company needs a miracle. The company wins lots and lots of praise from the tech press for the high quality of its devices and yet consumers don’t seem to care. Maybe if Google were to throw HTC a bone and have it design the Nexus 7, that could give it a much-needed boost. As things stand right now, though, the chances of HTC making a big comeback are very slim at best.

blog comments powered by Disqus