HTC Launches New Super Phone, but Will It Sell?

You've got to give it to HTC CEO Peter Chou - he knows how to make a great smartphone. But it'll take more than top-end design to make it a sales sensation, as Reuters' Jon Gordon explains.

Published

3 months ago

Categories

Technology, Finance

Topics

Finance, Consumer Electronics

People

Jon Gordon, Peter Chou, Rob Yen

Companies

Samsung C&T, Apple Inc., Htc Corporation

Transcript

The world's next super-phone is here: an ultra-dense display, a nimble new CPU, plus a cutting edge camera. And nobody is going to buy it. At least, if history repeats itself. Rewind to last year, when HTC's ONE X came out with the specs to meet or beat Samsung's flagship SIII. Two weeks into 2013, Samsung says its shipped just over 40 million SIIIs. HTC couldn't get us a number in time for publication, but a rough estimate puts it at five million. So how is it that Samsung's managed to take on Apple while equally seductive phones from HTC and others haven't taken off? (SOUNDBITE) (English) REUTERS REPORTER, JON GORDON, SAYING: "One: size matters. Samsung's integrated business gives it cheaper, faster access to the latest and greatest components." That's helped it pump out more smartphones last quarter than the next four android makers combined. (SOUNDBITE) (English) REUTERS REPORTER, JON GORDON, SAYING: "Two: wheeling and dealing. The Samsung SIII came out across five carriers in the U.S. simultaneously with several hundred globally. That's distribution muscle that HTC hasn't been able to match." Number three: laying down the law. Apple and Samsung have gone blow-for-blow in the courts, with a win some/lose some record. (SOUNDBITE) (English) REUTERS REPORTER, JON GORDON, SAYING: "HTC, though, has mostly lost. After some painful product blocks in the U.S. it settled with Apple, paying out a slice of revenues on each handset instead." Number four: marketing: Now this is Samsung's dirty little secret. Both it and Apple have far healthier profit margins than HTC. But Samsung's would be even higher than this if it didn't splash out so much on marketing. It's got these really high SG&A costs - basically the money spent on selling. They clock in way above the rest, which is why you probably remember a lot more Samsung ads in the last year than anything from HTC or Apple. Among the 42 analysts that cover HTC tracked by Thomson Reuters StarMine just 2 of them rate the stock a buy Goldman Sachs analyst Rob Yen rates it neutral. But he says this next product cycle could have a more positive impact on HTC's fortunes. The Taiwanese firm is addressing some of its shortcomings. It's signed on with new carriers, it's planning more volume low-end handsets for China, and it's also reached that settlement with Apple. (SOUNDBITE) (English) REUTERS REPORTER, JON GORDON, SAYING: "But to reclaim lost ground, the trick will be finding and spending the cash to match Samsung's brute force marketing attack." ENDS