HTC has announced "significant cuts" and slashed jobs after posting a $265 million net loss, with more losses promised for the future. Reuters is reporting that the poor performance has been blamed on the company's One series of flagships that, while accomplished, are losing out to "more fashionable phones" in the market. TechCrunch is saying that HTC is hoping to reverse this trend by turning its attentions to the middle-tier of the market, devices that cost between $300 and $500, parking its tanks squarely on the lawns of Chinese rivals Huawei and Xiaomi.
HTC's woes are likely to start a round of serious bloodletting in the Android industry, as companies fight off multiple threats to their business. For a start, many established players are feeling the squeeze as newer, younger rivals produce hardware of a similar quality but are happy to make a much smaller profit. Then there's the fact that the smartphone market has matured to the point where there aren't millions of people all looking to buy their first device any more. For years, China was thought of as a rich, untapped seam of fresh customers, but a recent IDC report claims that the country is now locked into the same upgrade cycle as everybody else.
HTC is hoping to get ahead of the curve by turning its attentions towards India, which is seen as the next big market for manufacturers looking for a fast buck. Unfortunately, this could be too little, too late, since OnePlus, Xiaomi and even ASUS are now directing efforts to gain a foothold in the country. In addition, established local player Micromax has teamed up with independent Android firm Cyanogen to bolster its software efforts and lure in customers. Google's not helping either, since its Android One program is ensuring that bargain-basement firms can produce devices with a half-decent experience for very little cash.
At this point you have to hope HTC has a really good plan B. pic.twitter.com/Dv4d58UJKX
— Charles Arthur (@charlesarthur) August 6, 2015
None of this bodes too well for HTC, and this tweet (above) has been circulating, highlighting how long its business has been in a state of decline. Looking at the (rough) numbers since the first "One" flagship, the general trend is clear for anyone to see. Since 2012, the firm's revenue has gently declined in a fairly regular pattern, with only the launch of each new flagship propping it up. But every new release brings in a little less cash than its predecessor, and these diminishing returns aren't putting smiles on anyone's faces.
Of course, HTC isn't going to collapse overnight, and its VR partnership with Valve might just prove the boost that the company needs. It's not unfair, however, to say that it's very hard to pull out of one of these death-spirals when you're in one. That job is even harder since, unlike deep-pocketed firms like Sony and LG, HTC doesn't have other profit-making appliance and manufacturing divisions that can prop it up when times are hard. We've already seen how this story played out at Nokia and BlackBerry, and this could be the third case of history repeating itself in as many years.