THE demise of Nokia happened in slow motion. Apple released its first iPhone in 2007 but it took almost four years before Nokia admitted it was “standing on a burning platform”. Even now, some believe Nokia’s new Microsoft Windows smartphone, the Lumia, could snatch the Finnish handset maker from the jaws of defeat (for the record, we aren’t one of them).
The tale of HTC’s fall from grace couldn’t be more different. Last year, it was in bullish mood, having chalked up impressive gains in the US, where its 24 per cent share of the smartphone market bested even Apple (20 per cent). At the end of October, the firm was saying it expected to grow fourth quarter revenues by a third.
In fact, they fell by 23 per cent compared to the earlier quarter, causing profit to drop for the first time in two years. Now it expects sales to fall a further 35.5 per cent in the first three months of the year. This car crash is happening at breakneck speed.
Although it is still in fine fettle compared to Nokia, the direction and speed of travel is alarming nonetheless.
So where did it all go wrong? Firstly, HTC’s strong sales had more to do with the runaway success of the Google Android software that powered its phones; the handsets themselves were pretty unremarkable, especially when pitted against iPhones and Samsung Galaxys. Now there is a greater choice of Android phones, and customers aren’t choosing HTC.
We always argued HTC would be better placed focusing on the low-end smartphone market that is ripening up in emerging markets. Even that looks unlikely now, with ZTE and Huawei making strong gains in the sub-$200 space.
So HTC finds itself caught in a pincer movement, with luxury titans Apple and Samsung on one side, and budget players on the other. We don’t fancy its chances.
