How HTC went from smartphone trailblazer to barely breathing

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The future for smartphones is cheap

Things have changed since Steve Ballmer scoffed at the iPhone’s $600 price tag in 2007. There’s always a place for premium smartphones in both features and brand recognition, but one thing that’s certainly changed is that cheap prices are king, once again.

The world is a far different place from what it was during HTC’s peak in 2011: Smartphones are no longer subsidized; emerging markets are interested in cheaper phones; wireless service is more expensive than ever; and phone buyers aren’t necessarily looking for the latest and greatest anymore — they just want to get by with what’s cheap and what works for their budget. For most people, a $300 smartphone is more than enough. Even high-end Chinese smartphones like the OnePlus 2 start at just $330, a far cry from the $600+ for any premium HTC or Samsung device. To make matters worse, people are only willing to shell out the big bucks if they think the phone is as much a fashion statement as designer clothes or luxury watches.

Premium smartphones will always have their place, but the arrival of lower-cost smartphones is making many doubt the $600 price for high-end devices — unless they’re named iPhone. IDC’s latest data on market share shows how cheaper Chinese manufacturers like Huawei and Xiaomi are growing, while brands like Samsung fall. HTC doesn’t even make the top 10 among smartphone manufacturers anymore.

IDC: Smartphone Vendor Market Share 2015, 2014, 2013, and 2012 Chart

The spoils of victory never last long. It may have vanquished HTC from the throne, but Samsung is feeling the burn from consumers who are tired of high-priced phones. While Apple’s market share remains cyclical to its annual launches, Chinese manufacturers continue to challenge Samsung’s dominance in the Android world.

The rise of powerful low-cost phones represents what the next five years will look like for the industry. There will always be the high-cost, flagship phones from Apple and Samsung, but other manufacturers will start competing in the low-cost, mid-range market, and this spells even more trouble for small manufacturers like HTC. If HTC fails to breathe new life into its One line of premium smartphones, the company will be forced to compete on the even-thinner margins among Chinese mid-range and high-end devices.

HTC’s fate in the years ahead

So what will happen to HTC as these cheap, Chinese smartphones take the mobile world by storm? As much as HTC has fallen, the company isn’t about to go under. HTC is still cash-flow positive, despite years of poor performance, and its layoffs will likely help it weather through the next year, as long as things don’t get seriously worse. After all, even BlackBerry is still around despite its similar fall from grace.

HTC will need to make bold moves if it ever hopes to capture the hearts and minds of smartphone users again.

However, with HTC’s stock at an all-time low, the company is a prime target for acquisitions. With plenty of patents, brands, and other intellectual properties, the company could end up like Motorola — a once well-performing brand that was divided and conquered by the other wireless manufacturers for its name recognition, patents, and other intellectual rights. Google and Microsoft have already tried this strategy with limited success, so it’s difficult to say if any companies like Asus are itching to buy HTC.

Many of HTC’s devices are still among the best we review each year here at Digital Trends, and the company certainly has fans who hope it can reclaim its former glory. But HTC’s fall from grace was no accident: it’s the result of four years of crappy devices, poor sales, ineffective marketing, dumb investments, and bad decisions. It’s going to take more than a decent smartphone and a Superbowl TV ad to turn things around. HTC will need to make bold moves if it ever hopes to capture the hearts and minds of smartphone users again. Until then, it seems destined to slowly fade into obscurity.

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