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HTC’s CEO Future at the Company Depends on the HTC One

May 3, 2013 - Written By Lucian Armasu

Peter Chou, HTC’s CEO and President, has said before that if the HTC One smartphone doesn’t prove to be a success, he will quit. He remains hopefully that the One will help turn the company around, but will one phone be enough to do that?

“If HTC fails one more time, then they’ll be under pressure to replace the CEO,” said Birdy Lu, an analyst at Daiwa Securities Group in Taipei who cites the appeal of the new handset as reason for his outperform rating. “HTC One is their last chance to come back after the past two years of declines.”

So apparently, it’s not just the CEO himself that believes that, but others, too. In fact, Peter Chou’s decision to make that public must’ve come from pressure from the board, who probably warned him that if the HTC One doesn’t significantly improve the company’s situation, then he should step down.

I do believe the HTC One is a turning point for HTC, because as a product it’s a very good one, and hopefully we’ll see many more high quality products like these from HTC in the future, but that hasn’t been HTC’s biggest problem, and why they are in the situation they are in right now, financially.

HTC’s biggest problem has been branding and marketing. He (as the CEO of the company) failed to notice that the market is moving towards “franchise brands”, as opposed to stand alone brands.

“The market changed, and it was a little unexpected,” Chou said. Now, the company will adapt by boosting its marketing, he said.

The thing is, it really shouldn’t have been unexpected. Peter Chou sounds like he’s referring mainly to Samsung here, who’s been capitalizing heavily on the “Galaxy” brand over the past few years. But he would be mistaken to think that. The first one who did it was Apple, with all of its “i” products (iPhone, iPod Touch, iPad), and also by continuing to sell the past 2 generation models in the market, which created a “family” of iPhones that people would recognize.

Samsung merely mirrored most of that strategy. So if he was looking at Samsung for indications on how to run his company and promote his products, then he was already years behind the curve. He should’ve looked at Apple, just like Samsung did. He was basically getting 2nd rate inspiration for strategy.

And it’s obvious HTC hasn’t been paying too much attention to Apple’s strategy (I think they did pay attention to the quality of their products, with the aluminum chassis and so on), because unlike Apple, HTC kept releasing a flood of new smartphones into the market, each year, all with new and crazy names.

The worst part about not having a “franchise brand” is that they let carriers stick whatever brand they wanted on their phones, and even dictated the design and hardware to them, which should’ve never ever happened. They are the manufacturer after all, not the carrier. It was crazy to ever allow that to happen, regardless of the consequences, and I think that’s also what put them back years behind the competition in terms of branding.

HTC is turning things around slightly with the HTC One, and it does look like they are serious about creating a franchise brand this time around, but the success won’t be seen overnight, and one phone, while a turning point, is certainly not enough to drastically improve the company’s finances.

It’s going to take HTC more than one flagship to do that, and I would also recommend HTC to build a true “photographer’s phone” (as I like to call it), like Sony’s upcoming Honami device, or the old Nokia Pureview 808 . They need one phone that really goes way beyond what smartphones (even ultrapixel smartphones) are capable of today in terms of camera performance.

That would be HTC’s “Note” – HTC’s flagship for the second part of the year, that would also may not necessarily appeal to the mass market (they’ll still have HTC One line-up for that), just like the Galaxy Note doesn’t either, but it could be widely successful with a certain group of people (quite a large group). It would make HTC the company that “makes really good phone cameras”, which I know they’ve been wanting to be at least since last year with the One X, and all the photography promotion they’ve done for it.

The question is will Peter Chou remain at the helm to see that through, or is it time for him to get replaced by someone who really “gets” what HTC needs to be doing next, to re-become a smartphone powerhouse?

[Via Bloomberg]