What a difference a month makes

WHAT a difference a month makes. At the end of October, HTC said it expected fourth quarter revenues to jump by almost a third; yesterday, the Taiwanese firm shocked markets by saying sales in the last three months of the year would in fact be flat. In cash terms, HTC has chalked down its estimates by a staggering £635m in the space of just a few weeks.

It would be wrong to interpret this as a general cooling of the smartphone market. Rather it just goes to show how quickly things move in this fast-paced industry.

HTC pencilled in the bullish estimates after it boosted its market share of the US smartphone market to a staggering 24 per cent in the third quarter, higher than Apple (20 per cent) and Samsung (21 per cent). Management clearly assumed it would maintain – or even grow – its slice of the cake in the closing months of the year.

The reason for its amazing gains in US, and other mature smartphone markets, was its adoption of Google Android. Android has become the most popular smartphone operating system, dethroning Apple at the beginning of this year; as one of the earliest makers of Android-compatible handsets, HTC was a major beneficiary.

The problem is that HTC’s handsets just aren’t very good, or rather they’re not as good as those sold by fellow Android maker Samsung. Now there is a greater choice of better alternatives, HTC’s share of mature markets will start to slide.

We’ve always argued the Taiwanese company would be better focusing its efforts on the emerging markets, where the sale of cheaper smartphones will become the norm.

Maybe after yesterday’s shock announcement, management will think again.