All over the world there are members of one-hit-wonder bands now running whelk stalls and van hire franchises. As any modern beat combo knows, if you can't keep coming up with Top Ten hits you are toast. The same rule applies to handset manufacturers. Motorola learned that the hard way, so did Nokia, and now it's HTC's turn as Apple and Samsung show the Taiwanese company how to beat "second album syndrome". Martyn Warwick reports.
HTC is in trouble. Not only did the company's profit fall by 26 per cent in Q4, the forecast for Q1 (by comparison with what HTC admits was a bad fourth quarter) is truly dire with revenues expected to collapse by 36 per cent. The success of Apple and Samsung is largely to blame but so too is "product transition weakness".
Given incredibly tough market conditions, HTC's performance has held up comparatively well hitherto and Q4's decline in profits was the first in 24 months, but analysts and investors alike are concerned that the company will find it very hard to claw its way back to where it used to be.
HTC's CFO, Winston Yung, was uncharacteristically blunt about the company's declining fortunes when he said, "Our weakness in Q1 guidance comes from facing competition in the US from iPhone and Samsung and LTE handsets also didn't meet our expectations."
Mr.Yung says gross margins will bounce back to 29 per cent when the product transition period is over and the company will be hoping against hope for favourable reviews of the latest products it will be showcasing at this month's upcoming GSMA Mobile World event in Barcelona.
In particular, much is vested in critical approval of the HTC Ville, the manufacturer's slimmest phone to date even though it comes with an embedded Ice Cream Sandwich. Rumour also has it that the company will also show its mysterious "Zeta" handset as well as new LTE phones that, hopefully, will "meet expectations".
However, even if HTC is triumphant at Barcelona, it will be no guarantee of a return to former glories and market share.
The manufacturer has been under intense pressure from competing Android and and Windows powered devices.
In a statement HTC's CEO, Peter Chou, claims, "While short term performance may not meet the results as expected, we have gained further experience and advancement in the areas of brand management and product innovation." That, however, may turn out to be little more than corporate wishful thinking in a sector that doesn't care what you did yesterday and will rip you apart for failing to fulfill promises made today about a tomorrow that fails to materialise.
It seems HTC's master plan for 2012 is to increase brand awareness and brand value even though research shows that the majority of consumers (Apple evangelists excepted) have minimal brand loyalty.
This focus will be sharpened through "creating competitive advantages through innovation" and "optimising our go-to-market strategy with operators, retail distributors, and end-users" In other words, the same old and basically meaningless "me too" mantra that we've all heard so many times before.
The fact of the matter is that HTC will continue to decline unless it can find a way truly to differentiate itself in a crowded market and there's no indication that it is doing so.
Anyone out there remember the follow-up to "Shout, shout, knock yourself out" by Ernie Maresca, "Gimme dat ding" by the Pipkins, "General Hospi-Tale" by The Afternoon Delights, 'Power Windows" by Billy Falcon or "Wobble Wobble" by 504 Boyz? No? Thought not. But they they were all Top Ten hits in the 1960s, 70s, 80s, 90s and the Noughties.
I rest my case.
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