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July 18, 2013

HTC in crisis: Could Huawei save it from the brink?

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It’s no secret, HTC is in crisis. The company had placed their hopes on the HTC One, that it  would help it turn the corner and put it back on the map, so-to-speak, but so far it hasn’t been as successful as they or we had hoped. And at this moment, if a new flagship device can’t sustain the company, it may come down to a merger. Even the ONE Mini details released today may not be enough to help.

JPMorgan has already done an analysis on this scenario and has proposed some suitable candidate companies.None more so than Huawei.

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HTC smartphones are as good as anything currently in the market. They have some great specs and features behind them, but have never really gotten the success that they deserve. Whether this be due to internal issues at the company or an almost lack of marketing budget, we’re not sure, although the marketing was better than previous released phones it was still below par for such a beautiful phone.

The HTC One was one of the most significant jumps from a previous design on the market. Sense 5 was a radical change,the concept and visuality are stunning. Combined with the fact that HTC decided to rely on its 4 “ultrapixel” camera, when most flagship devices were boasting 8-13 megapixels was a huge gamble for the company that looks not have paid off as much as they had hoped. Consumers it seems, couldn’t get there head around HTC’s concept. Plus many staff in UK stores were not selling/pushing the camera “ultrapixel” as they didn’t seem to understand it either.

Despite innovation, it’s not enough:

Nevertheless, the market share of the Taiwanese company, according to market analysts Gartner Inc., is under two percent. And so, in the second quarter of 2013, HTC was only ranked as the 13th largest smartphone manufacturer in the world. After JPMorgan has now lowered the rating of HTC’s share prices and the sales of the HTC One has fallen below expectations, their time might be running out. Alvon Kwock, an analyst for JPMorgan Securities, has expressed his concerns in the Taipei Times:

JP Morgan analyst Alvin Kwock said in a report

“With a hero product [the new HTC One] unable to turn its prospects around, the other game changer could be a merger, a combination of the expertise of Huawei and HTC could create huge synergies, especially for Taoyuan-based HTC, because it would lift HTC’s ranking in the smartphone market from the 13th-largest smartphone maker as of the last quarter to the fourth-largest with Huawei”.

And Kwon is thinking more along the lines of Huawei. The Chinese smartphone company has recently achieved a global market share of almost 3 percent, according to Gartner Inc. They follow Samsung (23.6 percent), Nokia (14.8 percent), Apple (9 percent), LG (3.7 percent) and ZTE (3.4) percent. An HTC and Huawei merger could create a new number four in the global rankings of manufacturers.

Benefits for both companies:

A merger would give HTC CEO Pete Chou a little room to breathe and help bring their proposed idea of tripling their market share closer to a reality with a single move. Huawei would of course benefit, CEO Richard Yu has already announced that he wanted to see his company as the third strongest smartphone company by 2015, although not necessarily thinking of a merger. Bringing  both companies under one roof would bring third place within arms-reach should a merger go through with HTC.

Huawei is pushing full steam ahead in the Western market, which so far hasn’t really heard much about the company. The Ascend P6 appears to be a step in the right direction of opening up that door and with the more familiar HTC name attached, it could make the penetration into the market that much easier. Huawei even recently proposed some interested in Nokia, but so far nothing has come out of these speculations.

One thing is certain: something has to happen soon for HTC and whether that be a merger or something else, that’s still to be unforeseen.

Source: Taipei Times (using Google Translator)

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Dave Thornton

Senior Editor

Senior Editor
Been involved in technology for many years, more than I care to remember. Live in Dundee, Scotland. I like Android, Windows Phone OS, BlackBerry OS and iOS, and love writing about all things techie. Currently have a Honor 6+, Elephone P6000, Nexus 5, Chrombook C720, HTC One M7, Nokia Lumina 625, Microsoft Lumia 435, Blackberry Q10, HTC Hero and iPad mini