Smartphone Maker HTC Reports Record Losses: Too Quietly Brilliant

I first started paying attention to smartphones when I came back from the Peace Corps in 2010; I was amazed at all of the variety out there. I soon came to understand the market in a simple view. To me, it looked like it was mainly a fight between Apple and HTC. Whether that was true or whether I had just made some totally stupid assumptions, I’ll never know. Regardless, HTC is a pretty big player in the smartphone market, and a lot of people use Android-based smartphones in the US that are made by HTC. Unfortunately for HTC, though, there is some unsettling news today for the company.

HTC’s Quarterly Profits Hammered

According to an article written by Zack Whittaker for ZDNet, HTC’s “third quarter profit fell by 79 percent year-on-year.” That’s a huge record drop for the company and a troublesome signal.

Many companies in the tech world have been taking hits lately – Facebook and Zynga immediately come to mind – and it looks like HTC is the next to feel the heat. In fact, HTC’s stock has dropped almost 50 percent in the last year. Hopefully HTC can turn things around at the company before it is too late. One can only sustain drops like this for a certain amount of time. Competition is always better for consumers and when one big player drops out, competition suffers.

What’s to blame?

According to Tim Culpan at Bloomberg, HTC’s CEO has acknowledged some internal problems that HTC faces. Tim quotes an email the CEO, Peter Chou, wrote to employees in which he stated HTC “lacked a sense of urgency while bureaucracy crept in.” On top of that, there is also some serious competition from unbranded and cheap knock-off phones in Asian markets, especially in China.

What about the competition?

It would be irresponsible to not bring up the role Apple and Samsung have played in this record HTC loss. From a consumer standpoint, I honestly have no idea the message HTC wants to send me. What does their brand stand for? What experience am I getting if I buy an HTC phone? With Apple and Samsung, I know exactly what sort of image and experience they are selling to consumers. Why? Because both companies are extremely active with traditional advertising, as well as in utilizing fans, the web, and social media to build their brands. In my opinion, HTC falls short in this area.

Apple and Samsung have been increasingly creating high-quality smartphones as well. Backed by advertising and social media campaigns that improve their branding, both companies are doing very well. HTC could and should take some pointers from both of these companies, especially if they want to survive in the US market. It’s almost as if they make a phone and hope it sells itself.

Meanwhile, according to Tim Culpan, Samsung “reported record third-quarter operating profit.” Samsung is really doing well facing Apple’s product line. Apple is continuing to push out products that sell like hot-cakes and, according to news released today, they are anticipating selling around 10 million iPad Minis. HTC has some serious competition if it wants to get back to the record success it had in 2010 and 2011.

Branding and Advertising Mistakes Hurt

Ultimately, it looks to me like HTC has let some internal issues really stall its decision making and progress. On top of that – or maybe because of that – they have really been lackluster in their brand development and advertising. In terms of creating and pushing their brand, they haven’t done a very good job.

Like I said above, I have no idea what sort of experience or product they are trying to create for me. As a consumer, am I going to go with what I know or what I have no idea about? Yeah, I’d go with what I know. HTC needs to get things straightened out internally and then start pushing advertising and social media to improve their brand. They may even want to think about re-branding their entire product line. They sure can’t keep doing the same thing, or they won’t be in business for too long.

How important is branding, advertising, and an online presence to your business? Do you think HTC has a branding problem too?

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Patrick currently lives in Somerville, Massachusetts, where he is studying for a Master's Degree in Intercultural Relations. Upon graduation from Penn State in 2008, he spent two years overseas in Kyrgyzstan with the U.S. Peace Corps. While writing is currently his chosen way to put food on the table, he loves fitness and exercise, which he believes makes up for his avid computer gaming habit.

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