HTC Reduces Focus on High-End Smartphones as it Forecasts its First-Ever Operating Loss
In perhaps another sign that the premium smartphone market may be maturing, the struggling handset maker, HTC, has predicted its first-ever operating loss. The company revealed its plans to concentrate more on mid-range phones as a result. HTC’s operating margin was just 1.5% in the third quarter but the company has forecast a range of zero to negative 8% operating margins in the third quarter.
The Taiwanese smartphone maker revealed it plans to launch a range of “innovative and competitive mid-tier products in the coming months.” HTC executives acknowledged that it has not been competitive in the mid-range smartphone market where the industry seems to be seeing the most growth as of right now.
This announcement comes as Apple is rumored to be planning to release its own new mid-range smartphone. For those of you who are unaware of what is being referred to, there are rumors afloat suggesting that Apple will release a new, less expensive iPhone model with a plastic back in the coming months. This of course would be alongside a new high-end model as well.
The changes with HTC mark a contrast from last year, when Chief Executive Peter Chou touting his company’s insistence on using high-quality materials to build premium smartphones. This strategy eroded HTC’s margins and has now prompted the company to attempt to lower its build costs and sell mid-range smartphones with higher margins.
HTC had once been one of the largest smartphone makers in the world but has seen its share of the market slide as the industry seems to have become a two-horse race between Apple and Samsung. Recent data from comScore found that HTC held the third-largest share of the U.S. smartphone subscribers with 8.7%, which is well behind Apple’s 39.2% and Samsung’s 23%. We’ll have to wait and see how these trends affect the wireless market going forward.