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HTC’s Bizarro World: where the maker of the best smartphone gasps for air

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May 22, 2013

HTC's story of simultaneous triumph and tragedy is one of the most intriguing of the year

HTC's story of simultaneous triumph and tragedy is one of the most intriguing of the year

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If you polled a roomful of smartphone pundits about the best phone you can buy right now, there’s a good chance plenty of them would say the HTC One. Hell, we might even say that. So it’s a bit strange to hear stories of the company bleeding top staff and continuing to hit hard times ... while simultaneously selling one of the most important phones of the year. Welcome, HTC. You've officially entered Bizarro World.

The latest word of HTC’s struggles comes from The Verge, whose sources say the company lost several top staffers during the last few months. The most significant was Chief Product Officer Kouji Kodera, who reportedly set sail last week. But the company also lost its VP of global communications, its global retail marketing manager, its director of digital marketing, and its product strategy manager.

One of those same sources describes the company as being in “utter freefall.” They also point to the immediate failure of the “Facebook phone” (the HTC First), some questionable decisions from CEO Peter Chou, and the near impossibility of competing with Samsung.

Sounds like shaky ground, to say the least.

Walking contradiction

HTC's sales have been dominated by Samsung's

But another way to look at it would be ... huh?

It’s no secret that the HTC One is one of the most intriguing smartphones around. Many respected tech reviewers (including Gizmag) agree on this point. Phrases like “stunning,” “premium design,” and “the best Android phone you can buy” follow it damn near everywhere it goes.

Maybe the best way to explain this freak occurrence is to ignore, for the moment, HTC’s present. Look instead at its recent past. The pickle it’s in now is probably more a reflection of that.

The last couple of years saw HTC squander its impressive start during Android’s early days. It released too many phones that didn’t really differentiate themselves. It centered too much of its marketing around Beats Audio – a feature few seemed to care much about. Turkeys like the HTC Thunderbolt and EVO 3D were just the icing on that foul-smelling cake.

Oh, and then there’s that behemoth known as Samsung. The Verge’s report said that was the most common thread when chatting with HTC sources. Samsung makes its own chips, it makes its own displays, and – most importantly – it has an insane, off-the-charts marketing budget. HTC can’t hope to compete on any of those fronts.

One hope?

The One is one of the most stunning – and possibly one of the best – smartphones ever made

That doesn't necessarily mean there isn't hope. The One hasn’t yet had time to affect HTC’s bottom line. In fact, part of the reason those Q1 results were so disappointing is that the One was delayed. Spending was high (from prepping for the One, no doubt) and revenue was low (no One to sell). So the bottom fell out on profits.

But the next quarter will be where we get a better picture of the company’s future. The Verge’s sources say that the One's sales got off to a slow start, but that was partly due to supply issues. Now that those kinks are ironed out, sales are reportedly picking up. Considering the phone’s extremely positive reception, that isn't too surprising.

Too important to fail?

No matter HTC's finances, though, it’s hard to overstate the company's importance in the smartphone market. I don’t see how having Samsung alone utterly dominate the Android part of that field can possibly be good for consumers.

We love many of Samsung’s products. But you know what we love even more? Choice.

Do you prefer the Galaxy S4? Or are you going with the HTC One? Do you like TouchWiz’s gimmicky bag of goodies, or Sense’s elegant sophistication?

Who cares? The best part is that you can make that decision. Without a healthy HTC, Android takes even more of a backseat to Samsung than it already has. And since we wouldn’t hold our breath for a dramatic Nokia, LG, or BlackBerry comeback, we're looking at a huge market utterly dominated by just two companies: Apple and Samsung. Ask any US wireless subscriber how those virtual duopolies work out for customers.

It would take a miracle for HTC’s sales and profits to reach Samsung levels, or even to put much of a dent in that lead. We aren’t hallucinating here.

But smartphone customers – and fans of the Android platform in particular – would still be better off with a reasonably healthy, head-above-the-water HTC. The company has laid a few eggs, but it's also made some outstanding smartphones that push the product category forward. Companies like that are good to keep around, wouldn't you say?

Stay tuned

HTC’s situation might not be quite as backwards as it seems at first blush. But it is still one of the most intriguing smartphone storylines of the year ... and, in my opinion, it’s also the story of a company worth rooting for.

For the sake of innovation, product diversity, and the smartphone field as a whole – here's one person who is crossing his fingers that HTC has One hell of a comeback up its sleeve.

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About the Author
Will Shanklin Will Shanklin is Gizmag's Mobile Tech Editor, and has been part of the team since 2012. Will has a Master's degree from U.C. Irvine and a Bachelor's from West Virginia University. He currently lives in New Mexico with his wife, Jessica.
  All articles by Will Shanklin
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14 Comments

Kind of sad to read this, i knew they were struggling but didn't realize it had become this bad. I am on my second HTC phone, First was the Inspire 4G now i have the One X+ though i miss the Aluminium of the Inspire the One X is seeming to be a good phone does everything i need it to do seamlessly. Pick your head up HTC ill still hold out for ya.

Ps, feel free to shoot me out and HTC One. ;)

Kevin Forde
22nd May, 2013 @ 03:26 am PDT

Sure, nice design, nice screen, good specifications. But unless you buy a phone every year it's got an epoxied battery, and no sd slot. To make things worse it ships with android 4.1 and HTC has a poor record of upgrades.

No question it looks nicer than the S4. But the S4 can be had with an open bootloader, ships with android 4.2, and can have the battery replaced.

If you want your phone to track the newest versions of android and have a battery that's 100% as good at 2 years as it was on day one then get the S4.

Fronty
22nd May, 2013 @ 03:45 am PDT

Second Fronty's comments.

HTC has some great products but they make some really baffling decisions here in the US market. Example: The two biggest criticisms of the One are the lack of memory card expandability and the battery that can't be replaced. Then we read about variants of the One going to Japan equipped with SD card slots and to China with two SIM slots, an SD card slot and a replaceable battery. Considering that, the US market got the single-digit salute with our version of the One.

Then there is the HTC First. The 'Facebook' phone. For a company on the ropes that was a truly idiotic move and possibly a move they won't recover from - given all the other wounds HTC is currently bleeding from.

If HTC had designed the One with the same general looks but with a memory card slot and replaceable battery I would bet it would be the number One seller right now - even if it was slightly heavier and thicker as a result of the design change. I don't think HTC will ever learn...

BleedingEdge
22nd May, 2013 @ 06:06 am PDT

Have to agree with what has been said so far. HTC seemed to listen to hype instead of going it's own way. So they turning the US version of the one into a wannabe Iphone with its non-replaceable battery and lack of SD card slot. Those two factors are huge.

Adding to that Verizon only has the lesser DNA, again without an SD card slot, which removed nearly 50% of the US market.

HTC can make a great phone. The Thunderbolt is a prime example. They decided to follow instead of lead.

VoiceofReason
22nd May, 2013 @ 08:31 am PDT

Bleeding or bloodletting?

DonGateley
22nd May, 2013 @ 10:43 am PDT

Something strange happened to me while using mny pre-production HTC One X: the battery became physically disconnected inside, killing the phone. I picked up a production model, which would routinely overheat and the device would randomly reboot as many as ten times per minute, before finally discharging the battery completely after little or no use over the course of a day.

Prior to owning an HTC phone, I was an iPhone, and the Samsung Galaxy S2 user, all of which were "okay" to "pretty cool". But I never, ever had battery issues. Sure, I had the Mophie Juice battery packs for my iPhones, but I'd never thought about or cared about needing the ability to replace a faulty battery.

I loved my HTC One X. I was annoyed by its complete lack of forward thinking regarding expandable memory, but that was really it. Form and function were fantastic. Just that damned battery...

So, when the HTC One was announced, I was thrilled that the camera was superior to anything else on the market, and that they had finally upped the memory to 64GB. But I was still plagued by fears of a non-replaceable battery. So, I opted for the Samsung Galaxy S4. The camera is pretty awful at any light level below bright sunlight, but the display is better, and the expandable memory is somewhat better at 16GB internal (if you remove most of the bloatware), plus up to 64GB external. Oh, and I can replace the battery.

Rolf Hawkins
22nd May, 2013 @ 10:50 am PDT

'Bizzaro world' is right.

It's amusing to read about this or that also-ran phone being declared 'best' when regular normal users keep rating the iPhone 5 top.

It just got the highest ranking in JD Power's ratings for the NINTH time in a row.

Neil
22nd May, 2013 @ 04:30 pm PDT

They made some poor decisions so far (Beats audio, facebook phone etc.) but HTC One still isn't quite a home run. It doesn't have a removable battery or SD card, it runs Android 4.1 instead of 4.2 like the S4, and it isn't available on the Verizon network.

Not being on Verizon is a big deal for both sales potential and marketing reasons as many people base purchases on advice from friends, websites, and sales reps anyway. Big marketing budgets are nice but not essential.

Their struggles aren't over yet but I am sure if all their flagship phones from here forward are at least as good as the One things should stay interesting.

As for Verizon not carrying the phone they realize HTC's position probably means they get to make the terms for this round but at the same time I think AT&T is now the slightly larger carrier. AT&T had huge growth by offering the iPhone when Verizon wouldn't. Verizon still has the S4 but by shunning HTC One they might be securing their new 2nd place tier of the podium for a while in the process.

Daishi
22nd May, 2013 @ 11:26 pm PDT

Battery

SD

But most importantly ... NOT LISTENING!

There have been plenty of people telling them this for at least the past 18 months, but they went ahead anyway.

Here's a nice, simple easy idea HTC

Galaxy announced the pure Android version of the S4

How about HTC One-A (or the next Nexus version)

- Pure Android

- SD

- Battery

THEN you've got a killer

Nickov8
23rd May, 2013 @ 02:37 am PDT

Excellent insightful article. I disagree with one of your final conclusions though, about HTC being a company worth rooting for. I presume a "root for the underdog" sentiment, and I do agree competition is good for the consumer.

But HTC it seems has put itself into the underdog category, as you cite, by several errors in market judgment. I don't want to root for a company that hasn't shown it's capable of doing enough right things to hang in there for the time when buyers of its products need its support...and it's gone under.

Underdog to me, as in baseball for example, describes a good team that nobody expects to go the distance, but has a sleeper roster of talent, good management, and most of all, a deep desire to win.

Seems to me if the top brass is deserting the ship, it's time to either put the captain in a rowboat, or go with a company that has fought it's way to the top against daunting odds -- a true underdog in other words -- and that company is Samsung. I know they'll be around for a long time because they really refine their products and create good new ones, along with controlling a great deal of their manufacturing process. That's the key to megapower, and they've come a long way toward being top dog in a lot of product areas.

I've got several Samsung products in my house now, including several 830 SSD which have made my computer run like a top without a single blue screen or slow down or crash in 18 months...my first such experience in 30 years of computing...and an early BluRay player that is still working in top condition. Also digital tape recorders, camcorders etc.

Samsung was a real underdog vs. Apple. It's the company I rooted for a couple years ago to challenge the iPhone. And they've done it.

Thanks for an excellent article though, very interesting.

Jim Lawrence
23rd May, 2013 @ 09:53 am PDT

So now they are worried about one company (Samsung) dominating the market and how that means we won't have any choices?

Are they kidding?

They never said that when Apple was the dominant company and it seemed no one wanted anything but an I phone.

Where was their concern about choice, then?

Fusiontek
23rd May, 2013 @ 06:22 pm PDT

Hope Management Can Get Their Act Together; To Many Companies Have Lost Their Competitive Edge Due To Leadership Issues.

xzendor7
23rd May, 2013 @ 06:55 pm PDT

Every company goes through some shake-ups. HTC will be fine. They make an exceptional product, as this article states. I’m a user of their Amaze; 1.5 years of personal testing complete. It has been a great phone! My only complaint is battery life. Other than that, it has been solid. If I had extra cash in my wallet, I’d go grab the HTC One today…and no, this is not a paid advertisement. ;)

reddrum
24th May, 2013 @ 09:47 am PDT

I just switched to Android in January, after years of using iPhones. And the vehicle for my escape was the HTC One X+ (I did play around with a Samsung Galaxy S3 for a little while before getting the HTC as well, and to be fair, the S3 is also a great phone. I must say that I like the HTC One X+ more, though). I LOVE my HTC One X+. SO much more than I EVER loved my iPhone. It's amazing. I don't miss my iPhone one bit! I understand that HTC is a troubled company, and has, perhaps, made some poor decisions in the past (honestly, I wouldn't really know, as I had very little knowledge of them prior to my current phone), but how is the Beats Audio association a detriment? I mean, have you guys ever plugged your headphones into, or plugged an HTC phone with Beats Audio into a speaker system? The sound is EXCELLENT! SO much better than my iPhone! It works when outputting to Bluetooth speakers as well! What is bad about this? I'll take the music player on my HTC over the one on my iPhone ANY day of the week! I'm just wondering what people DON'T like about a feature that brings useful functionality to the phone. Could someone please explain this to me?

Oh, and regarding the non-removable battery & lack of expandable storage, the iPhone has been doing just fine for YEARS, and it doesn't have either of these things. They're selling plenty of units. Google/LG didn't include these with the Nexus 4, either. Most people I know who have iPhones have had the same phone for years, and they don't even question the lack of removable battery. While I can understand while someone might PREFER a removable battery, I don't think it's a dealbreaker for most people. I think the average user probably never interacts with their battery AT ALL. HTC (AND Google/LG) probably thinks that if it works for Apple, it should work for them. Regarding expandable storage: My One X+ has 64Gb of storage BUILT IN. I DON'T NEED any more storage (Shit, I've barely even tapped HALF of that!). If the phone ships with 32 or 64Gb of storage, do you really NEED expandable storage (particularly when the cap, EVEN WITH the expansion is often 64Gb)? At the very least, isn't the larger amount of internal storage a good compromise? I guess I'm just trying to understand what people are asking for, and why: Are we just nitpicking on some of these things, or are they creating genuine hardship for us? I'd imagine the battery woes constitute genuine hardship, but is it really so hard to carry a charger with you in your bag? So far, this has not been a problem for me. A replaceable battery would be NICE, but I don't necessarily REQUIRE it.

As for their top brass leaving the company, well, that is a very bad sign, indeed. I hope they can pull it together, 'cause I'm a fan of their products. It'd definitely be nice if there are more players in the field than just a few dominant ones.

Eric Hope
3rd June, 2013 @ 02:27 pm PDT
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