In short: Calling HTC Exodus “a blockchain smartphone” is a stretch at best and misleading at worst, according to Rong Chen, Chief Executive Officer of “Smart Web” project Elastos. In an interview with AndroidHeadlines, Mr. Chen said the main selling point of the upcoming handset is essentially a “trust zone” for storing cryptocurrency tokens locally. “This is not really a blockchain smartphone so much as it is merely a smartphone with a more secure way to store your cryptocurrency coins,” the industry veteran explained. HTC itself talked about some other blockchain-related features of the Exodus in the past but never claimed the device will actually be fully powered by blockchain technologies. It’s still advertising the gadget as “the world’s first blockchain smartphone” and intends to continue doing so following its launch later this month. “Using blockchain to run a smartphone is not very efficient in the first place,” Mr. Chen concluded, doubting whether a “true” blockchain handset will ever be commercialized in the form of something viable for everyday use.
What the Taiwanese tech giant did reveal so far is that it will have every Exodus unit act as a node of a decentralized network and support multiple protocols in order to enable a high level of interoperability between various blockchain technologies. Mr. Chen’s skepticism about the project isn’t shared by all industry watchers; Eiland Glover, CEO of “stablecoin” startup Kowala, told AndroidHeadlines the idea of a decentralized network based on smartphone nodes is “a particularly exciting concept.” While Mr. Glover still sees many issues with the concept, including the questions of protocol standardization, demanding latency requirements, and security practices, he’s of the opinion that solving one or more of those problems could lead to “game-changing” technologies even if the Exodus itself ends up being a commercial failure.
Background: The Taiwanese electronics company will be officially announcing the Exodus on Monday, October 22, with the gadget being expected to hit the market by this year’s holiday season. The company didn’t reveal a lot of details about the device so far, so the jury is still out on how blockchain-ey this supposedly “blockchain” handset actually is, though the skepticism in the industry is already palpable, especially given HTC’s recent track record. The last device from the OEM that was met with critical acclaim was the HTC 10 released two and a half years ago, whereas everything that followed it any many products that preceded it received a lukewarm or outright negative response from both critics and consumers alike.
The former tech darling saw its revenues eroding over the last several years, with its September turnover dropping 80-percent year-on-year, amounting to just over $40.5 million. Over the first nine months of 2018, HTC generated the equivalent of some $634 million, roughly 57-percent less than what it had in the same period last year, according to its preliminary earnings reports. While its original 2018 goal was $1 billion in turnover, HTC is likely to miss that target by a wide margin. It’s hence in dire need of a commercial win, whether in the smartphone space, virtual reality, or something else entirely. The firm combined its regional mobile and VR units earlier this year, streamlining its corporate structure and laying off many people in the process of doing so. It also lowered the number of its annual smartphone releases, with the HTC U12 Plus (pictured above) likely being its one and only 2018 flagship.
While the Exodus may end up sporting high-end hardware, the niche nature of the device puts it in a category of its own and one that doesn’t seem to be promising a significant return for the company, at least in the near term. Its efforts to promote the device have also been erratic; other than wild claims about the revolutionary nature of the handset that have yet to be substantiated by anything, the firm recently struck a partnership with Axiom Zen whose blockchain-based pet collector Cryptokitties will be pre-loaded on the Exodus.
And while the HTC Exodus will be able to work as a node for the Bitcoin and Ethereum networks, Google — the dominant force in the mobile space — isn’t thrilled with the idea of having Android handsets be used for actual mining, as evidenced by the fact that it outright banned all mining apps from the Play Store several months back. While the industry as a whole is largely unconcerned with the move, it remains to be seen how Google’s reluctance to allow for blockchain applications on Android will affect the HTC Exodus’s ability to fulfill its primary purpose.
HTC’s early bet on a combination of blockchain technologies and smartphones may also be premature; Bitcoin has been around since 2009 but by far the most popular cryptocurrency in the world has yet to affect digital payments in any significant way and other applications of solutions based on digital ledgers are even less developed. It’s hence unclear how big of a dent the HTC Exodus could actually make in the mobile space seeing how the industry isn’t rushing to commercialize blockchain in spite of some massive investments made over the last several years (even Facebook has a blockchain division as of this summer).
Impact: The Exodus is shaping up to be an aggressive innovation attempt on HTC’s part but one that’s still unlikely to help the company turn things around in the near future. The main problem that the Taipei-based OEM is now facing comes down to the fact that it may be too late for long-term bets such as the Exodus as its eroding earnings are casting doubt over the future of the company as a whole. The disjointed nature of the global blockchain community makes this segment an unreliable driver of commercial success for any product that isn’t an actual token, some insiders believe. Ultimately, the Exodus is unlikely to be a solution to HTC’s financial problems but it also isn’t expected to create a major burden for the firm, especially given how the handset is rumored to only be launching in a small number of markets with limited marketing.