Last year at this time, there was no doubt that HTC was the king of Android manufacturers. They were just coming off of a strong year of very solid devices that played a major part in the popularization of Android: EVO 4G, Nexus One, DROID Incredible, etc. These were the phones that, among other devices, changed Android forever. Whether HTC was winning in numbers or not at the time is hard to say, but they were killing it in hardware, specifications, branding, customer loyalty and popularity. They were on top of their game and turning huge profits. Nothing could go wrong.
But it did.
Earlier this morning, a report revealed that, for the first time in two years, HTC's profits are down. Tim Cuplan of Bloomberg explains that HTC's fourth-quarter net income dropped 26 percent to $364 million from roughly $490 million in the same quarter last year. Analysts also predict sales and shipments to fall further in the coming months as "the company cut its outlook for revenue in the last three months of 2011," says Cuplan.
According to Peter Liao, analyst at Nomura Holdings, "Severe competition at the high end from Apple and Samsung forced their sales lower during the quarter." On the flip side, Samsung has turned record quarterly profits and managed to ship a mind-numbing 35 million smartphones in Q4 alone. And profits are up to $4.47 billion, up 73 percent year-over-year.
Sure, the competition is stiff. But I wouldn't say it's any more so now than it was last year at this time. So what's really going on? Why is HTC slipping?
When you look at everything on paper, HTC's phones are mostly on par with everything else. Their most recent high-end devices sport dual-core processors, qHD or 720p displays, ample memory, nice design and everything else you would expect out of a high-end phone from late 2011. They have hit all the important price points, and they even have specific devices to appeal to different demographics.
But if you've been in this game for any amount of time, you're fully aware that what's on paper carries little weight. Don't get me wrong, HTC's devices are great … usually. I carried the Amaze 4G for a while and enjoyed it, for the most part. The build quality was wonderful, the display was great (for the time it was released) and I had next to no problems with the software – which should say a lot, coming from an Android purist who doesn't have much love left for Sense UI. But in the end, I found myself in the customer service line returning it.
HTC is churning out phones like they're going out of style, but they're milking every little bit that they can and incrementalizing everything. What the Amaze and the rest of HTC's latest devices are missing is a wow factor and differentiation. Even their best device on the market, the HTC Rezound, is mostly middle of the road. It's not bad by any means, but there is nothing particulalrly amazing about it.
I hate to keep referencing Samsung, but take a look at what some of their devices tout, for example. Most new Galaxy devices sport dual-core Exynos processors, HD Super AMOLED or Super AMOLED Plus displays and the Galaxy Nexus flaunts a completely buttonless face. Samsung's in-house chipset and display technologies are easily crowd favorites. HTC's S-LCD displays are fine, especially the 720p display found on the HTC Rezound. But the blacks are blacker, contrast is higher and colors literally pop on Samsung's AMOLED panels. And Qualcomm's dual-core Snapdragon chipsets suffice. But Exynos dual-core chips – in my experience at least – make a Snapdragon feel rather sluggish.
You may recall that HTC has plans to cut back and begin shifting more focus to quality over quantity this year. What that means, though, is that HTC is going to have to knock it out of the park with their next devices, maybe even break their loyalty to Qualcomm and S-LCD technology to get them out of this lull. If they cut back to one device per half of 2012, or one per quarter even, a device that flops could be devastating.
What they need at this point is another halo device, a game changer ... another EVO 4G. Well, a device like the EVO 4G – something that is substantial and casts a shadow on the competition. I'm not sure how they could do that at this point, but it already seems like 2012 may be chock-full of new technologies and major improvements over existing tech. Here's to hoping HTC can stitch another game changer together in 2012.
Does anyone else feel like HTC's devices are growing a bit stagnant? Have they lost their touch? Or will 2012 be another great year for HTC?
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