Mobile Phones

HTC to start producing cheaper smartphones amidst falling profits

HTC Logo Not BrilliantHTC has announced that they will be producing a cheaper, lower end brand of smartphones following a continued decline in profits on their high performance models.

Smartphone sales in general have been up in 2013 to levels never before seen. But HTC has not been on the receiving end of those profits. In fact, they have been quite disappointed recently with their sales, which have continued to steadily decline over the last 24 months.

The Taiwanese phone manufacturer has always focused on higher end devices that utilize the most recent features available. But they have been unable to really break into the US market, especially in the past year. Competitors like Apple and Samsung have managed to corner and dominate the smartphone game.

Now, they are taking a look at their business model and coming up with solutions. While in the past HTC has stubbornly refused to cater to the low-end smartphone market, for the first time it has been proven that it is profitable.

In addition to new phones that reach closer to the mid-tier market, they are going to be upping their marketing. In the past, their audience has been consumers in their early 20’s to early 30’s, who tend to gravitate more towards trendy technology. That is an image that has to change, if HTC is going to find widespread appeal like other brands have.

They have refused to move into the low-tier market, however. Their new product lines will focus more on smartphones that match up with mid-range products such as those offered by LG. This will be a major overhaul in their strategy, which in the past was to focus all of their energy on pushing a single flagship product (such as the HTC Evo 4G), and ignore any other devices that might have boosted sales in the meantime.

Just looking at the way the market has gone, this is a good move. The billion smartphone sales in 2013 were due largely to the introduction of more affordable devices, especially Android devices which can cost as little as $70 from some providers, if bought refurbished. Then you have mid-range lines like the iPhone 5s, which have completely changed the availability of smartphones to the general public.

HTC is getting on the bandwagon late, though. Their stock status has already moved to Sell, their profits are dropping at a steady pace, and even their customer base in China (their biggest audience) has diminished.

Fingers crossed that they pull themselves together.

Source: Reuters

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