HTC Plans to Get Out of Entry Level Market in 2017, Intends to Produce At Most 7 Smartphones
HTC had a brief period where its devices in the mid and budget ranges started catching on in the Indian market. While they were not uber-popular, devices like the HTC Explorer (pico) had their own user base and could be seen frequently in urban areas.
But gone are the days of HTC’s presence in the budget segment. According to the President of HTC’s Smartphone and Connected Devices Business Mr. Chia-Lin Chang, this sector of the market is unlikely to see HTC’s return this year. In fact, HTC plans to shrink its device portfolio in 2017 to produce at most seven smartphones.
As quoted from the transcript released officially with the company’s quarterly earnings call:
There is some slight difference between 2017 and 2016. 2017, we are looking for profitable sales of products. So we are going to get out of the entry level part which I think is ultra competitive and [where] we are not necessarily going to benefit from a profitability
So to us, profitability on the smartphone is going to be quite important. What we are doing in 2017 is we are going to continue to reduce our portfolio so the number of key SKU is going to be dramatically reduced from last year. As I said, our intention [is] to do basically 6 to 7 maximum, obviously you still have a legacy product in sales throughout the coming month in there. But the new introduction, that’s what we aim for.
We are going to do it in the, probably I would say, very hard to pin down specifically on a price here, I won’t elaborate further on that, but I will say probably would be more mid-tier premium and the flagship type of these SKU products.
So that, you will see the difference. We’re not looking for the volume, we are looking for profitable revenue from the sales of the product perspective…..
….I do think this year in terms of new product introduction here, we’re very clear what we want to do in terms of number of SKU. Every quarter, we have something unique proposition in terms of hero product, not necessarily every hero product is a flagship level price tier here, so our proposition will be more clear.
HTC’s stance comes in light of another quarterly loss for the company. The decision does make sense, as devices in the budget category have become ultra competitive and the market in that price range has become saturated. Companies that do survive in the price bracket rely on sheer volume to make up for the razor thin profit margins. For a company that wants to cut down on its losses as every company naturally would, investing heavily in this segment does not make sense.
However, on the same note, HTC’s profit-oriented turn along with their recent pricing stance gives us indication of the year to come. The company wishes to focus on upper mid-tier and premium products. The HTC U Ultra and the HTC U Play follow that desire, coming in at $749 and £349 ($499, converted from UK Pricing) respectively. Both of these devices aim to offer a premium featureset, a fact that is made all the more apparent when you consider that the U Play comes with an extremely dated, 2015-mid-tier MediaTek Helio P10 SoC.
Mr. Chia-Lin Chang also commented on the recent Pixel collaboration with Google, and how it affects their profit and loss statement:
I understand the HTC names has been mentioned, and all I can comment is that HTC has historically a good relationship with Google. We see Google as a partner as you can see in the past history there. But I will not be able to comment on any business dealing with them and all I can say here is — obviously for any business HTC take[s] on for the interest of shareholder, we want to do it in a profitable way. So that’s what I would comment.
HTC’s aim this year is clear — to be back in the green. For this, they have planned to reduce expenditures, reduce product lines and focus only on profit-generating avenues. We hope HTC manages to accomplish all of these without alienating their older and loyal customer base, those who have an Incredible Desire to see them succeed. Amaze us One more time!
What are your thoughts on HTC’s recent stance on profitability? Should they be trying to constrict their product lines? Let us know in the comments below!