Cheaper Price: The Only Revival Tool For HTC
After suffering losses in 2013, HTC is saying what every other smartphone maker is swearing by at present that is: it needs to sell more mid-tier and affordable smartphones. Analysts believe going for a Cheaper range of smartphones can be the only way to revive its fortune. The company which was one of the market leaders even till about two years ago, started losing out to giants such as Samsung and Apple in the past several months, and is looking to recoup its declining sales and market share. In the past one year, it has reported an 80% drop in its share price.
However, Chialin Chang, HTC’s CFO is determined. Speaking at a recent event, Chang said as HTC focused only on its flagship it had lost a chunk of the mid-tier market. However, it would not venture into the very low-end market. HTC will sell products in the $150-$300 retail price range for both emerging and developed markets, along with high-end phones which can sell for over $600.
Despite an optimistic picture of the company sketched out by the senior management, many are skeptical about its success in the market. Laura Chen, a Taipei-based analyst at BNP Paribas told TOI that unless HTC acts quickly and offer something new to the robust smartphone market it will not
The new strategy marks a need to address problems at a company, 3.8% 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%, according to Strategy Analytics analyst Neil Mawston, and HTC last month reported its second straight quarter of operating losses.
With the smartphone race heating up in emerging markets, price has become a key differentiating factor for brands. In emerging markets such as India, Indonesia and Brazil companies such as Apple and Samsung are slashing the price of their devices. Apple has brought back the iPhone 4 as a low cost option for customers exclusively in India, Brazil, and Indonesia and is offering discount to any customers trading in an older smartphone for Apple’s iPhone 4. Likewise, offering cash back for consumers buying a Galaxy Note II, Galaxy S III, Galaxy Grand, or Galaxy tablet.
Taking a cue from the handset giants and their marketing strategies in emerging countries, HTC executives said that higher volumes of cheaper phones should make up for the difference in price with its higher-end phones. “Overall profitability is going to grow,” says Chang in a report.
Not only that along with an improvement in more affordable phones, HTC is also hoping for incremental growth in the high-end phone market this year, say multiple reports.
Competing in the China market was also becoming a challenge for any handset maker including HTC as growth in China is shifting to cheaper models. Even Apple, despite a much-hyped deal with China Mobile, Huawei Technologies and low-cost phone brand Xiaomi are chalking out new strategies to reach out. HTC officials however have made it clear that the company wouldn’t return to its roots as a contract manufacturer supplying phones for a third party, but certainly sees a future in migrating into the mid-tier segment, which is a trend to watch out this year.
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