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HTC To Emphasize Mid-Tier Smartphones After Declines

HTC To Emphasize Mid-Tier Smartphones After Declines
February 10, 2014 2:34PM

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"The problem with us last year was we only concentrated on our flagship. We missed a huge chunk of the mid-tier market," said HTC Chairwoman Cher Wang in a Reuters interview. That statement was in contrast to HTC's direction in 2012, when CEO Peter Chou said HTC did not plan any worthwhile devices on the cheaper end of the market.

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Moving to the high end of the smartphone market is never easy. Many manufacturers that have attempted to make a dent in the high end have found it impossible when faced with competition from Samsung and Apple. Surprisingly, the HTC One has remained one of the best premium phones for the past year and some reviews have placed it above equivalent devices from Samsung. While the phone may still be popular, profit margins from the device were not enough to sustain HTC and the company now plans to return to mid-range devices.

HTC is getting ready to release its next flagship device, the M8, which will take over the One's flagship position. Moving forward, however, HTC has announced it will be focusing on mid-range devices in order to recoup the losses that it suffered during its move on the high end of the market.

A Bad Record

During the past 27 months, HTC has repeatedly come back with falling revenues and decreases in market share around the world. Even though the One has been an immensely successful Android smartphone, HTC has concluded it focused too heavily on its one high-end device, which was not enough to sustain the company.

HTC's $10.2 million net profit in the fourth quarter was barely enough to avoid another quarterly loss. Shortly after HTC released the One, it reported the first quarterly loss in the company's history. While Samsung was able to pull out $9.4 billion in profits during Q3 2013, HTC was stuck with a $101 million loss.

Marketing Issues

HTC Chairwoman Cher Wang has recognized that many of the issues that the company encountered during 2013 were the result of marketing mistakes. With the success of the HTC One, the company decided to focus too much on marketing its flagship while moving away from other sectors that were more important to the long-term success of HTC.

"The problem with us last year was we only concentrated on our flagship. We missed a huge chunk of the mid-tier market," said Wang in an interview with Reuters. Wang's admission near the end of 2013 was in stark contrast to HTC's public direction in 2012, when CEO Peter Chou went so far as to say that HTC would not have any worthwhile devices in the cheaper areas of the smartphone market.

Chou told The Wall Street Journal that HTC "won't have good products" at less than 1,000 Chinese yuan, or about $165)....We insist on using better materials to make better products that offer premium experience. Many consumers like that."

Now that Chou and HTC's other executives have gone through one of the company's worst years to-date, it makes sense that a shift in focus toward the mid-tier is necessary for HTC to regain its market share around the world and recoup losses from 2013.

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