HTC to Exit Entry-Level Smartphone Space in 2017

HTC 10 Black and White AH

HTC has put out their quarterly earnings call for the fourth quarter of 2016, and among other news, they have announced that they will be excluding the entry level segment from their smartphone business this year in order to focus on high-margin, high-profit devices. Their revenue figures for the quarter did not look great, but weren’t entirely terrible either, thanks in part to the HTC Vive gaining traction as an arcade device in some markets, and to some phones in markets outside of the US being fairly well-received. Between these factors and the moderate success seen in consumer VR and the market for HTC’s flagship and semi-flagship devices like the HTC 10 and HTC 10 Evo, they managed to post TWD 22.2 billion in revenue, with only TWD 3.6 billion in net losses.

The shift in focus for HTC may well provide a much-needed revenue stream that could bring their smartphone business back to profitability, which is the stated goal of the move, according to HTC’s Kelly Hsu. HTC has already revealed the HTC U Ultra and HTC U Play, and they are looking to put out between 6 and 7 high-margin smartphones this year. That means that consumers can look forward to either 4 or 5 new phones from HTC before the year is out. While HTC has announced that they’re leaving the low-end segment out of the equation this year, that does not necessarily mean that they will only be putting out a barrage of high-end devices. High-margin could simply mean phones with decent specs and build quality that are cheap to produce, or a few models all over the spectrum outside of the entry-level world that will be marketed more aggressively, which can be cheaper than R&D on a flurry of low-end devices, if done right.

While nobody is predicting that HTC will have a return to their glory days in the near future, the wounds from their lowest days seem to be healing somewhat nicely, according to their Q4 report, and there is no reason not to believe that this new approach stands a good chance of achieving its goal. While HTC is changing up their approach in the smartphone market, they seem to be doubling down on VR, with a mobile product reportedly in the pipeline and the Vive set to receive a rehash in the near future. HTC’s new strategy could be a new lease on life, or it could be another sordid chapter in the tale of HTC’s fall from grace; only time, and the market, will tell.