It has been a rough ride for the Taiwanese smartphone manufacturer. Despite its former flagship HTC One (M7) winning multiple awards and being professionally recognized by the industry — it was even crowned as the best smartphone at Mobile World Congress — that hasn’t translated into sales.
In the third quarter of 2013, HTC recorded a net loss of NT$2.97 billion ($98 million) for the first time since it listed on Taiwan’s stock exchange in 2002. In the final quarter, it continued posting an operating loss even though it managed a net profit after selling its remaining share in Beats. And in the first quarter of this year, it also chalked up a net loss of NT$1.88 billion ($62 million).
The situation here is baffling to say the least. Why aren’t consumers picking up HTC devices even though they generally get good press?
We recently sat down with Jack Yang, President of HTC South Asia, to shed some light on what the company is planning to do to reverse its fortunes now that its new flagship HTC One (M8) smartphone is on retailer’s shelves.
Yang is responsible for driving sales, brand development and operations in Southeast Asia, India, Australia and New Zealand, as well as emerging markets including Bangladesh, Pakistan and Sri Lanka.
What’s interesting is that Yang jumped ship from Apple, where he was the head of iPhone and iPad sales in Southeast Asia, and joined HTC in June last year. At Apple, he witnessed the HTC One (M7) being launched to a lukewarm response and said he couldn’t really understand why the device wasn’t successful, but concluded that people didn’t know enough about it.
People ask why I jumped to HTC — why would anyone jump off a perfect ship? I would say I joined because after a discussion with Peter Chou our CEO. I felt, and I can see that he has a vision…
They have some very phenomenal products. Innovation-wise, HTC leads that side of it. Many things they do, it’s something that others are just replicating. Peter was very candid about his views, success and failures and his own vision. I thought he had the vision I wanted to be part of, and I still believe in that. I think right now we’re trying to realign a lot of our internal resources to go the right way, and Peter’s doing the right thing — he’s stepping out of the day-to-day operations and focusing more on what the products will be.
To help with branding, HTC used Robert Downey Jr. –as part of a reported $1 billion marketing campaign — to kickstart things a bit. “The HTC name is not synonymous to what we call the other two big gorillas. We needed him to at least tease the consumers, so that’s what he did for us in the initial early stages,” Yang told us.
That ad was a tad weird to say the least, but Yang said that subsequently the marketing will be more usage-oriented. He noted, for example, that in the US HTC hired Gary Oldman for an ad where he was seen picking up the phone and using it.
On top of the ads, Yang revealed that HTC will be going down the social route to market its HTC One (M8), as he believes social could be the driving force the company needs, given that consumers want to hear from others who are using the device. Subsequently, bloggers are becoming a huge part of HTC’s marketing efforts — they take on the role of ambassadors to tell others what’s good about the HTC One (M8) compared to other devices out there.
This approach is interesting. Among HTC’s Android rivals, Samsung typically targets celebrities to be their ambassadors, while Xiaomi’s approach is to engage fans on its social pages. HTC is instead targeting bloggers to use and write about their devices, an approach that could make sense in Asia with the rise of what’s known as ‘celebrity bloggers’ — people who become famous on the Internet via blogging.
For its marketing push, HTC is banking on its latest flagship smartphone. Yang told us:
This product is not only going to be our hero product, but also a statement back to the market: that HTC is returning… From the perspective of M7’s performance and what we call M8 now, I would say that it’s a quantum leap.
If you’re wondering why this one will sell better versus the predecessor, I would say that we’ve actually heard a lot more from the consumers through our own research. We recognize that there are things that consumers are looking for: they’re looking for a larger display, so we’ve got a larger display now. The camera is the other piece.
However, as we noted in our HTC One (M8) review, although there were new camera features introduced, the sensor of the main camera itself is pretty much the same four-megapixel ‘UltraPixel’ camera found in the HTC One. This is a pity as it means the quality of the photos hasn’t been bumped up.
To boost its marketing efforts, HTC has reportedly hired the former head of marketing at Samsung’s US mobile phone business, Paul Golden. An HTC spokesperson declined to comment specifically, but said the company “continues to invest in talent and recruitment” as part of its broader human resources strategy.
Other than marketing, another piece of the puzzle is HTC’s relationship with carriers, Yang revealed. He told TNW that the company previously went straight to distributors, which wasn’t that wise in hindsight.
Distributors, from a market standpoint, they don’t work very well with carriers. So one of the things we’re trying to change now is to reset that relationship with the carriers…
We’re working with the carriers first, then proliferate it down to the retail channel. This gives consumers a choice of a bundle phone and (an) unlocked phone. Previously we went through distributors — they go anywhere they want. They will never help you brand your device. We are changing that aspect.
On the other hand, carriers have a vested interest to have a line attached to a smartphone on pre-paid or post-paid plans, so they tend to work harder at helping to sell the devices. “We’re going in to reset that relationship, because we didn’t have that relationship with the carriers. The previous team was just looking to drive numbers without thinking of the ecosystem,” Yang said.
Yang noted that HTC is also seeking to tap on the mass market by launching more devices and ensuring a more consistent design across all its phones, no matter in user interface or physical design. To this extent, HTC has launched new devices in the Desire family, made up of both entry-level and mid-tier smartphones.
“Our portfolio is going to be very robust between now and the end of the year. Every quarter, something is going to be coming up,” Yang said.
In response to rumors that HTC will be launching a plastic variant of its HTC One (M8) device, Yang said he couldn’t validate it but noted that HTC is looking at that space to cater to consumers who want to be a little more price-conscious, yet also want similar features and capability.
As someone who has jumped over from Apple, Yang could be seen as giving a boost of confidence to HTC. He told us that he’s confident HTC will see its losses being erased soon.
“For the HTC One (M8) globally, we’re now basically chasing to build. I just can’t build enough right now. That’s a good problem versus the other problem — you build too much and don’t know where to ship it to,” he said.
That is, of course, an optimistic view. HTC faces intense competition, in particular from Samsung, which has been trumpeting the features of its Samsung Galaxy S5 flagship smartphone and in turn, impressing people with the phone’s multitude of features including a fingerprint scanner, heart-rate sensor, and a slew of camera modes.
As Yang said, it is probably time for HTC to reverse its ‘Quietly Brilliant’ tagline — and shout out about its device instead — if it really wants consumers to sit up and notice it alongside its major rivals.