HTC moves with the times to keep up with the big two

Manufacturer’s endearing appeal and ever-evolving business ethos endures as it reaches its twentieth year

When picking out a device, what do you look for? Stunning dual camera? Beautiful unibody design? Android operating system? If you said yes to any of the above, then you’d be well served to tip your hat to HTC who were the first to bring all of these to market.

The Taiwanese manufacturer turned 20 on the May 19, sparking a glance back to small beginnings, big devices and the future of a company that has done a lot for the mobile market.

From the first 3G Windows and 4G Android devices in the Meteor and the Evo to the HTC One – the first ever smartphone with two cameras – HTC has been a pioneer for new technology and a different way to use it since its inception in 1997 and first device – the HTC Kangaroo in 1998.

Founded by Cher Wang, HTC originally made notebook computers, but diverted attention towards touch and wireless hand-held pocket PCs that were much easier to carry and saw a smooth transition into mobile in 2002 with the O2 Wallaby, which ran Windows Pocket PC 2002.

Pioneers

Since then, innovation and firsts have dominated the HTC line up in almost every device that is brought into fruition. From the dual camera to a unibody design, HTC has been a pioneer for much of the aspects of today’s mobile phones we all consider to be standard components.

If you have an Android, 4G, 3G, full touchscreen device, then your current provider will have most likely taken its inspiration from the Taiwanese manufacturer, and these firsts have brought HTC a lot of success and reward.

GfK director of technology Imran Choudhary agrees that a lot of features, which seem standard and unmentioned during device launches, were first brought to market by HTC.

Choudhary says: “If you look back [you can see] they were first to quite a few important things that are now pretty standard.

“I think by having that approach as part of their business model, and the way they operate as a company means that they might not have survived because they were first. But, because they are first, and keep innovating, they continually provide things that keep them relevant.”

Handset design

One key area in which HTC has been able to stay nimble is the physical design of its handsets. Although in recent times HTC has elected to add a liquid surface finish to its recent flagship U11 and U Ultra devices, the manufacturer was the first to encase a device in an all-metal unibody when the HTC One was announced in February 2013.

The latest example of HTC remaining innovative is the squeezable Edge Sense technology that uses sensors on the sides of the phone and allows consumers to carry out functions on the device by squeezing the handset.

“Certainly, with the HTC U11, the innovations and ideas they are looking to bring is a step in the right direction to try to help gain more traction and pick up share of the market and resonate with consumers,” Choudhary continued.

“The new change in user interface on the U11 is a novel innovation and we’ll see how that lands with consumers. But the fact they are thinking and trying to push the boundary is a good thing, and I think that is at the heart of why they have remained relevant.”

However, Canalys’ technology analyst Ben Stanton feels the obsession HTC has with innovations and firsts is detrimental to the brand and feels like they are providing a solutions for a problem that doesn’t really exist.

Stanton says: “Being first to market with features and innovations is good, and it’s something HTC has done very well.

“But as we see the glass ceiling of what a smartphone can be come into view and the number of innovations that are left to make start to run out, that’s really where HTC have been hit.

“I think they are trying too hard to find a differentiator that is unique, and really what that means is they are innovating before finding a functional use case for an innovation.”

Android domination

While some may say they are lagging now, there’s little doubt that HTC have shaken up the industry consistently, none more so than having a major hand in bringing the most popular operating system in the world to the consumer market.

Today, Android dominates the smartphone market around the globe, with huge players such as Samsung, LG, Sony and, in recent times, BlackBerry and Nokia all electing to include the operating system in its devices.

According to Gartner, as of the first quarter this year, Android holds an 86 per cent share of the global market, equating to over 327 billion devices, starting with the HTC Dream.

Stanton also went on to say that embracing Android was just one of the aspects that HTC got right when they enjoyed a lot of success in the smartphone market.

He adds: “Go back six or seven years ago, and HTC was the darling of the smartphone industry. It did very well in the early days – especially the early days of Android – and it moved incredibly quickly to bring a phone to market in the HTC dream, but also rapidly expanding the portfolio with some brilliant devices like the original and different variations of the Desire model.”

Device innovation

Much of the appeal for consumers of HTC has been the innovation in each device that is brought to market. Whereas new technology such as dual cameras aren’t featured on today’s devices, HTC’s willingness to try new things has brought success.

One feature that has stuck around is the focus on sound quality and the external speakers on devices, including a partnership with Beats Audio and resulting in the current U-Sonic headphone that map the ear canals of the user and adjust the sound to the structure of the ear it is in.

Choudhary says that HTC’s fearlessness in the face of failure is a key reason why it has managed to stay in the market when some of the competition has fallen away.

He adds: “I think HTC are one of the OEMs that are very nimble and quick to react, and they are very quick to fail almost. I think that is a healthy approach to take when it comes to innovation.

“You have to be first in a lot of things, and a lot of things might not work, so failing isn’t necessarily a bad thing, it’s understanding that and moving on. Compared to some of the other names that have come and gone, HTC are one of the better manufacturers in terms of doing that.

“What that means is that they’ll eventually be bringing out things that resonate. A lot of the innovations HTC have brought were really successful – and are successful – and that is probably why they are still around today.”

Camera and unibody

A clear example of fearlessness paying off is the HTC One M8, which was released in March 2014. The release contained two stand-out features that had never been seen before in the market: a dual camera and a metal unibody.

The One M8 came with a four ultra pixel camera with a depth sensor on the back encased by metal back and side panels as well as featuring the Snapdragon 801 processor, Android KitKat and a five-inch display which, when added to the BoomSound speakers on the top and bottom, made the device one of the biggest on the market at the time.

In more recent times, the latest flagships from leading manufacturers such as Huawei and LG have also elected for a total metal design with a dual camera on the back, yet HTC has moved on.

“I think it was the HTC One M8 that had dual cameras, in the front and back first, and that’s commonplace now on all sorts of flagships,” continued Choudhary.

“It was the first, or one of the first, that had a single uniform or unishell body, and it had a really nice look and feel.”

In 2013 and 2014, the HTC One M7 and M8, respectively, were both awarded ‘Phone of the Year’ by GSMA at Mobile World Congress, with reception of the M8, in particular, sparking a 124 per cent increase in monthly revenue in March 2014.

The iPhone effect

Despite the increased revenue and awards, the One M8 could not grab a meaningful slice of the market, with HTC accounting for less than two per cent by the end of 2014. But by then Apple and Samsung had begun the current course that they are on now.

One of the major contributing factors to the poor performance of HTC and a lot of other manufacturers is iPhone. Since the inception of Apples one and only handset brand, HTC revenues have declined by nearly two thirds, finishing 2016 on NT $78.181 billion.

CCS Insight chief of research Ben Wood adds that the budget of Samsung and Apple were too much to compete with for a lot of manufacturers, but HTC had kept its heads above water because of its passion for new features and a loyal fan base.

“There’s no question, their history is phenomenal” says Wood. “If you look at HTC, this is the company that had the first Microsoft smartphone, the company that delivered the first Android smartphone and, at its peak, was one of the top smartphone brands in the world.

“I think, like most other smartphone makers, they got completely wrong-footed by the iPhone, which really hurt them, and also the step that Samsung has taken to make its flagship Android phones a very premium product. I think the reason why HTC are still in the market is because they have a loyal group of followers who have enjoyed HTC products in the past and continue to seek them out when new ones come, and it also continues to be a very innovative phone maker.”

Last year, Apple announced they had sold the one billionth iPhone and, combined with Samsung, sold just short of 130 million devices in the first quarter on this year alone. But the devices themselves are only half the story. With an electronics and computing brand to fall back on, Samsung and Apple, respectively, have the capital to push their products into the public’s consciousness in a way that HTC just cannot.

This affects the Taiwanese manufacturer twofold because, although devices may be better or with better features, the public are still not aware of them and retailers are not likely to suggest them very often because HTC can’t offer the marketing that Samsung and Apple can to push their devices.

IDC research director Francisco Jeronimo agrees with Wood adding: “They basically faced fierce competition from other players, and it’s not about having the best phone or marketing.

“HTC still have smartphones in the market, but the problem is they don’t have the money to support the channels. There’s no way Carphone Warehouse, EE or any other major retail operator will push HTC devices when they are being commissioned to sell a Samsung.

“That is the biggest problem for HTC, that they don’t have the money to address the channel properly because they haven’t been able to rely on their brand. They rely on the quality of the product, which is fair enough, it’s good. But it is not enough, and it hasn’t been enough for them to change the trend they have been on over the last few years.”

Virtual reality

Looking to the future, it may seem a little bleak for the smartphone division but nowadays it’s hard to talk about what’s next without mentioning virtual reality. As the saying goes, when one door closes, another one opens and HTC has embraced the emerging opportunity around VR with its Vive headset.

The announcement to enter the VR market at Mobile World Congress in March 2015 followed a 2014 that saw revenues dip below NT $200 billion – a seven per cent decrease to NT $187.9 billion.

Jeronimo says that the move into VR is a sensible one and adds: “They are selling today one third of what they were selling five years ago when the market is still growing. Clearly, HTC don’t have quite good health in this market, so they need to go to other categories and probably need to try to do what they did with smartphones to try to disrupt the category and be the first ones in the category.

“That’s what they are doing with the HTC Vive, but the problem is the competition moves a lot faster now and other devices are being matched at a much faster pace compared to the reaction players took when they entered the smartphone market.”

Choudhary agrees with Jeronimo, adding that it may have actually been a shrewd move by the Taiwanese manufacturer to move into a new market when another is so crowded.

He adds: “I think it was quite strategically shrewd of them to think ‘well actually mobile has become very competitive. It’s in many markets, and in Western markets it’s a duopoly between Samsung and Apple, and then everyone else fights for the remaining slice of the market and VR [virtual reality] is one of the things that’s set to get a lot more traction.

“If you look at their VR headset currently, it’s certainly the most expensive in the market and it’s certainly the one with the best specs, so again, they are being
first – and it’s not just being first and not producing something very good. They are certainly in the best position should VR become what a lot of the industry analysts are hoping it will become.”