HTC

Founded in 1997, HTC Corp originally made notebook computers, but entered the smartphone market, and at one point in 2011 it was the largest smartphone seller in the US, holding 24 per cent, compared to Samsung’s 21 per cent and Apple (20 per cent), but its market share has subsequently fallen sharply.

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TECHNOLOGY

Taiwan's HTC looks to new handset designs to exit slump

Firm's new phones are due out this year; analysts fear it could face supply-chain obstacles and issues retraining workers

PUBLISHED : Monday, 20 May, 2013, 12:00am
UPDATED : Monday, 20 May, 2013, 4:18am

HTC, the Taiwanese smartphone maker that blew markets away three years ago when its moderately priced, technically solid devices reached consumers worldwide, is looking at a risky new production scheme to regain market share after a long slump.

The designer of models such as the Butterfly and the One is developing new smartphones at mid-range prices to stand out in a thickening crowd of competitors, industry experts say.

But they fear the developer will face supply-chain obstacles for high-end parts, an arduous retraining of workers to make the new stuff and lost income from shelling out capital for fancy components if they do not reach the right markets at the right times.

Profits have slid since 2011 as Apple and Samsung have taken away customers. In 2010, HTC's revenues grew 93 per cent.

Now, some analysts say the firm may become obsolete without a quick turnaround. The company may roll out super-sized phones, up to 14cm high, to vie with tablets, in line with one of the latest consumer trends, analysts believe.

Some new devices will include cameras for low indoor light and come in metal casing rather than the usual plastic. Metal casing for a smartphone is thinner, easier to handle and able to expel heat, though it may cramp phone signals.

These plans require supplies that may not be as stable as Apple's, and it is hard to say how long retraining would take, said C.K. Cheng, an analyst with CLSA Asia-Pacific Markets in Taipei.

New phones are due out this year, but if too late, they may disillusion already sceptical investors, Cheng said. Yet if the plan works, HTC would stand out.

"They're going for the risky route, because they want to come up with something different," Cheng said.

"Frankly speaking, you have no choice, and right now it boils down to the execution."

HTC must lock in stable supplies of high-end components in case its new phones face heavy demand, said Wilson Mao, an analyst with Taipei-based market research firm TrendForce.

"The question is how to strengthen their supply chain in the second half of the year," Mao said.

Apple's parts supplies are stable, he said, while HTC's Butterfly models have been harder to find for lack of new parts.

HTC will hold its mid-range prices as new devices come out this year, but the formula hinges on moving large volumes of supplies, said Richard Ku, an analyst with Grand Fortune Securities in Taipei.

The Taiwanese developer will also find growing competition for sales of any 14cm smartphones - known colloquially as "phoneblets" because they are nearly the size of small tablets.

Some consumers may ultimately prefer smaller devices.

"What people want depends on the situations in which they use the phones," said Joey Yen, smartphone analyst with market research firm IDC in Taipei.

"Voice calling might be less developed, so if your reception is good, then your brand will have a clear strength."

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