June 8, 2015 / 8:57 AM / 2 years ago

Smartphone trailblazer HTC loses more than market share

TAIPEI, June 8 (Reuters) - Taiwan's HTC Corp, a pioneer in early smartphones, was dismissed by industry watchers as confused, unoriginal and uncompetitive as the already battered shares of the smartphone maker sank to levels that preceded even the era of the iPhone.

The nearly 10 percent slump in HTC's shares on Monday was their largest ever, spurred by an almost 30 percent cut in the company's second-quarter revenue outlook announced on Friday after the market close.

HTC downgraded its outlook due to slower demand for high-end devices powered by Google Inc's Android operating system and weaker-than-forecast sales in China. That, coupled with a dismal slate of recent monthly sales figures, has made industry watchers increasingly skittish about the fortunes of the smartphone maker.

They blame a lack of product differentiation in an increasingly crowded market, especially in China, the world's largest smartphone consumer. They say that unlike chief competitors Apple Inc and Xiaomi, HTC is weak in software and services, which can draw consumers into a brand's overall ecosystem.

"Traditional smartphone makers like HTC think as long as they make the best hardware, they'll be able to sell well," said Wanli Wang, an analyst at Taipei-based CIMB Securities. "That's just not the case anymore."

Wang estimates HTC's global market share at less than 2 percent, a steep fall from the nearly one-in-10 share it commanded at its peak in 2011, when the company's shares were worth 15 times more than today.

Even in Taiwan, the brand's home base, HTC sat in third place behind Apple and domestic rival AsusTek Computer Inc as of the end of last year, according to data crunchers IDC.

TURNAROUND

When HTC said in March that it had replaced former chief executive Peter Chou with founder and chairwoman Cher Wang, it was meant to herald a turnaround.

Instead, shares have fallen 28 percent since then, capped by Monday's 9.91 percent tumble, which was in part due to a change in Taiwan market rules which allows individual stocks to rise or fall by 10 percent instead of the previous 7 percent.

The firm's poor performance spurred chief executive Wang to apologise to shareholders at the company's annual general meeting last week. She admitted to flaws in the company's marketing, which she called "overly traditional."

She also said the company had terminated its collaboration with Iron Man star Robert Downey Jr, who represented the firm in a high-profile advertising campaign for its flagship HTC One device.

HTC was founded in 1997. It helped design and manufacture Microsoft-powered smartphones way back in 2002. Five years later, the first-generation iPhone hit the market. Samsung Electronics Co Ltd entered the fray in 2010 with the high-end Galaxy S series.

"They thought that advertising was enough to get their message across," said Daniel Lin, strategy director at Direction Design Group, a Taipei-based brand consultancy. "That can't work when the message is unclear to begin with." (Editing by Ryan Woo)

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