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A Lack Of Vision: HTC’s Two-Year Growth Stops

Oh HTC, the company without which this site would not have existed. Since early 2010, HTC’s sales have continually risen, but that growth has now come to an end. The Taiwanese smartphone maker reported Q4 profits of $364 million, which is 26 percent lower than the same timeframe in 2010 and a massive 41 percent lower than Q3 2011.

Just to give you a graphical overview of what this means, here’s a chart by Reuters:

As you can see, HTC’s profits have dramatically risen from Q1 2010 till Q3 2011, but now fallen to the level of 2010′s third quarter. In fact, HTC predicted this drop back in October, as we noted in our year-end article, citing the launch of the iPhone 4S. But – the smartphone market is still growing (and will continue to grow for a while), and Samsung reported a record quarter.

So, what led to these results? I believe it to be a lack of vision.

While Samsung is focused on bringing out one flagship device each year (not counting the last two Nexus phones), centering around the Galaxy brand, HTC seems to toss out new high-end devices every few months, with apparently no strategy behind. Case in point: The HTC Sensation. It was released in the second quarter last year as HTC’s flagship device, but a few months later, after the acquisition of Beats Audio, HTC released the slightly improved Sensation XE with a faster processor. Fair enough – the difference was minor. But then came the Sensation XL in October, and, while it was newer and had a bigger screen, it actually had a slower processor, and lower resolution. And now you want to get the best HTC device. But which one is it?

Sure, you could argue that it’s all about choice. But what kind of choice is that: higher resolution and faster processor on the one hand, bigger screen on the other? What if I want both?

No, it certainly was not about choice. The Sensation XL was essentially an Android version of the HTC Titan, one of its second-gen Windows Phones, and HTC simply re-used its design – Microsoft’s operating doesn’t support dual-core processors and higher-than-WVGA resolution yet, which explains the curious specs – to quickly get out a new phone, without meaningfully differentiating it from its other offerings. That doesn’t work.

Maybe HTC became greedy, too fixated on short-term profits, which is why it feels the need to release a new flagship device every month or so. There are 720p screens now? Okay, launch a phone with that. Screw engineering, industrial design – oh, it’s 13mm thick, feels like a brick? Who cares, let’s get this out. But just on Verizon, and lock the bootloader, so we don’t have to deal with those kids – and what do we call it? Rezound sounds… ugh. But who cares, nobody will remember that name in two years anyway.

Some quick cash, yeah, but no viable long-term strategy. That was okay when HTC didn’t sell smartphones under its own brand, but not anymore. And HTC knows that – they knew that as early as 2008, when they launched the Touch Diamond and Touch Pro, and later the Touch HD. Three different products, but clearly distinct – one is small and stylish, one has a keyboard, and one has a big screen. Choose yours, it’s that easy.

The same continued with the Touch Diamond2, Pro2 and HD2. And eventually, there’d be a stylish Legend and powerful Desire. Or a low-end Wildfire S, mid-range Desire S and high-end Incredible S. Or was the Desire HD the high-end one? Its screen was bigger, but it was older. Oh wait – it already happened. Too many models, too many confusing names, but no direction.

While it’s no problem to re-use existing designs, they have to be good. The problem with HTC is that, while they do have a strong design language, it’s ruined by the execution. There are so many different devices, and all of them look similar but still have small, insignificant differences –  a different shade of brown here, a slightly modified earpiece there, and another pattern on the back. Again, those small differences add absolutely no value to the consumer – you can’t mix and match everything. Instead, you’re stuck with a plethora of different devices, pseudo-choices, none of which are as good as just that one Galaxy S. Or S II. Or heck, iPhone.

It’s really that simple. If you want to bring out a new device, try to make it perfect. If you can’t, then don’t, and wait a year till you can make another perfect device, instead of releasing something half-baked.

HTC knows how to do that. They just forgot.

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