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HTC To Stop Making Budget Android Phones This Year (neowin.net)

An anonymous reader shares a report: During HTC's quarterly earnings call for Q4 2016, the company confirmed that it will not be producing new budget Android phones beginning this year. Instead, the company will focus on premium devices, which have a higher profit margin. On revenue of NT $22.2bn, the firm posted an operating loss of NT $3.6bn, and it's been some time since HTC showed a profit. Clearly, it's time to trim some of the fat. And that fat is producing a number of entry-level phones, many of which are nearly identical. For example, the Desire 530, which came to the US in July, had virtually no distinction from the Desire 626, which was introduced a year before.

40 comments

  1. Higher profit margins? by DrXym · · Score: 1
    Surely any profit margins are good, especially if the budget handsets introduce people to your brand and allows you to spread the risk across a range of models instead of putting all the eggs in one basket.

    I realise that's in theory. HTC have kind of fucked up in recent years and it's less to do with their hardware but how they've marketed them.

    1. Re:Higher profit margins? by AuMatar · · Score: 1

      Profit margins like this are usually calculated by comparing sales price to marginal costs of production. With R&D designing the phones they're likely in the red. Some loss may be ok to prevent competition/provide a brand, but if they're losing enough this makes sense. And I suspect that they are- just way too many players there.

      --
      I still have more fans than freaks. WTF is wrong with you people?
    2. Re:Higher profit margins? by pushing-robot · · Score: 1

      A 'brand' is a stamp of quality, so mixing budget and premium products into one brand is generally a bad thing. HP and Dell make a lot of good high-end computers, but also a lot of poor low-end ones, and the bad reputation earned there bleeds over to their premium lines.

      Unless HTC can make their brand stand out, they will be stuck in a race to the bottom with Huawei, Xiaomi, Lenovo, Vivo, Oppo, Oneplus, Elephone, and a million other budget Android products.

      --
      How can I believe you when you tell me what I don't want to hear?
    3. Re:Higher profit margins? by Maury+Markowitz · · Score: 1

      > A 'brand' is a stamp of quality, so mixing budget and premium products into one brand is generally a bad thing.

      Indeed.

      The problem is that making yourself a premium brand is hard, and expensive. And with Apple and Samsung already in that space, what does HTC have to offer to make themselves noticed?

      I really think this is just the endgame of the market shaking itself out. I suspect that the leaders of today will be the leaders of tomorrow and everyone else will be either niche, low-end, or gone.

    4. Re:Higher profit margins? by Z00L00K · · Score: 1

      I got a HTC M9 last year, but due to the amount of bloatware I would look at something else next time.

      I think that the first thing a phone maker should look at is to not annoy the users with unnecessary stuff and instead let the user decide what they really want. Much like a good restaurant - you will see that when you order a meal there you actually get a few pieces on your plate well prepared. When there's too much stuff you just confuse the user and scare them away.

      --
      If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
    5. Re:Higher profit margins? by ctilsie242 · · Score: 1

      I don't think abandoning budget phones is a good idea. Mainly because there is a market for VWs as well as Mercedes. Blu Mobile is doing very well for example.

      It is about marketing. I would say there is a niche for a cellphone maker that cozies up to retailers like Dollar General, Poundland, as well as MVNOs. Phones are getting "good enough" that a flagship phone isn't that much more useful than a midrange or even entry level device. So, instead of trying to dictate terms and be subject to the whims of the carriers, sell unlocked phones that work on the carriers, and find places at retail stores where people may not want the latest and greatest flagship device... but would buy something at a decent price.

    6. Re:Higher profit margins? by Lehk228 · · Score: 1

      they should badge-engineer like the auto makers do. Sell the premium models (more RAM, more storage, faster CPU/GPU, bigger battery) under the HTC name and budget models under a different brand.

      even better if they keep many models on the same form factor so accessories will work between them, like the DTEK50/60 and IDOL4/4s.

      --
      Snowden and Manning are heroes.
    7. Re:Higher profit margins? by DrXym · · Score: 2

      Samsung manage it. If you look at the firmware that Samsung puts on the premium devices vs the low end, it's virtually identical. They've managed to increase their reach with a relatively minor additional effort. I suspect Samsung are also pretty glad that they have all those sales to sustain them when they suffer a flop such as their recent battery scandal.

    8. Re:Higher profit margins? by ctilsie242 · · Score: 1

      HTC actually used to do this. The HTC Wizard I had was branded a T-Mobile MDA. It might be a good idea for them to get with retail stores and make house brand phones.

    9. Re:Higher profit margins? by fred911 · · Score: 1

      Ah.. HTC already manufacturers a premium phone, Pixel. As a brand they devalued themselves years ago with sloppy engineering.

        So, it might be too late for them to market under their brand, but they have no problem manufacturing a quality high-end product.

      --
      09 F9 11 02 9D 74 E3 5B - D8 41 56 C5 63 56 88 C0 45 5F E1 04 22 CA 29 C4 93 3F 95 05 2B 79 2A B2
    10. Re:Higher profit margins? by Anonymous Coward · · Score: 0

      Samsung can afford to heavily subsidize failures with all their other industry segments.

  2. I'd say... by Anonymous Coward · · Score: 0

    With those kinds of losses, budget phones are the least of their problem. A management team that can do math would be a good start.

  3. Does HTC... by Master5000 · · Score: 1

    ... still make phones? Had no idea.... They suck at marketing their products and it looks like they are going down the drain. Why buy products from a dying company?

    1. Re:Does HTC... by Anonymous Coward · · Score: 0

      They laid off some portion of their sales team a few months ago, rarely the sign of a company that is planning on succeeding.

    2. Re:Does HTC... by Anonymous Coward · · Score: 0

      Who cares about marketing? Go watch some TV.

    3. Re:Does HTC... by Anonymous Coward · · Score: 0

      ... still make phones? Had no idea.... They suck at marketing their products and it looks like they are going down the drain. Why buy products from a dying company?

      They made the Google Pixel phones.

  4. Not enough to cut budget product lines. by mmell · · Score: 1
    They need to start manufacturing superior products if they intend to capture the high-end market. Otherwise, all they're doing is eliminating consumer options (in order to keep prices high?). If I'm poor and can't afford the best, latest-and-greatest technology I'm not going to save up until I can afford it, I'm going to find an inexpensive if less desirable product which fills my needs now. Saving up until you can afford what you want has not been the American way for some time now - just ask manufacturers in China, Korea and Taiwan. They've been mass-producing popular products for a while now - and even while the owners of these products loudly lament having a "foreign-manufactured piece of crap", they seem to prefer buying that piece of crap as opposed to saving up to buy (an only marginally better, if at all better) product of US manufacturing.

    I don't mean to denigrate foreign (in this case, Asian) manufacturers. The fact is they're quite successful at what they're doing, which means they're doing exactly what they ought to. If people don't feel the quality is up to their standards, they should return to the old way of saving up until they can afford the quality they want - and demanding that manufacturers provide the quality they perceive they deserve.

    1. Re:Not enough to cut budget product lines. by Dixie_Flatline · · Score: 1

      What does it mean to make a 'superior' product anymore?

      The low end is built on no margins. They just don't have the economies of scale to compete at the low end; I think that much is clear. You can't compete on price anymore, because the next guy can sell for a penny less, and that may be your entire profit margin. That's not hyperbole--at some point HTC (I'm pretty sure it was HTC) was making an average profit of only 1-2c per phone. Untenable.

      So you need a product differentiator--and what is that? You run the same OS as everyone else, everyone hates it when you mess with the default OS skin, so...hardware features? But differentiating on that basis requires pretty big features now; things that nobody has, by definition. The only way to recoup that sort of outlay is by going to the high-end.

      HTC can no longer afford to care if you can't afford their phones. They have to move up-market because that's the only place where they have any potential to make money, and they can cut the costs of sourcing lower-spec components and designing those lower-spec phones. They can move this year's model down one tier next year, and sell that as their 'discount' phone since they'll hopefully already have made enough money on those phones that any additional sales are basically just pure profit.

      If they don't make money at the high end, they're doomed as a handset maker; there's nowhere else to go except out of this market.

  5. No thanks by Grishnakh · · Score: 1

    I used to have an HTC. It never got any updates after I bought it, and it turned into a horrifically slow mess.

    I now have a Galaxy S5, and before it an S4. The S4 received updates until recently, and the S5 is still getting updates. These are not new phones, but apparently Samsung still bothers to keep their software up-to-date.

    I really don't care how nice the hardware is in any HTC phone; they've shown that they don't care about taking care of customers after the first sale, and that they expect them to just buy a new phone in a year. I'll pass, and stick with companies with better track records than this.

    1. Re:No thanks by Anonymous Coward · · Score: 0

      Oh, I can top that story.

      My last HTC phone was a TouchPro 2 running Windows Mobile 6.5.

      Hey, at least it was faster and more useful than the original iPhone it replaced. And it had a slide-out hardware keyboard!

      Captcha: miseries. Fitting.

    2. Re:No thanks by Anonymous Coward · · Score: 0

      I now have a Galaxy S5, and before it an S4. The S4 received updates until recently, and the S5 is still getting updates. These are not new phones, but apparently Samsung still bothers to keep their software up-to-date.

      Has it been updated to Android 7.1? If not, it's not up-to-date.

  6. There Goes Android's Marketshare by TheFakeTimCook · · Score: 3, Interesting

    Since the vast majority of Android's oft-touted "superior marketshare" numbers is made up of these kinds of shitbox phones, if other OEMs follow suit, you'll soon see the real reason why the Android platform has so many phones in the wild, vs. Apple.

    1. Re:There Goes Android's Marketshare by Anonymous Coward · · Score: 0

      and Samsung will be filling the void. Samsung phones will dominate the world which is their plan.
      No one else apart from Apple and to a lesser extent Google will matter from 2018 onwards.
      They'll be gunning for then with both barrels from then on.
      By 2021 the only phones you can buy will be made by Samsung.
      Nice future we have to look forward to... not.

    2. Re:There Goes Android's Marketshare by Anonymous Coward · · Score: 0

      Who cares, other less know chinese companies will step in with other cheap android phones, there are no alternatives.
      Plus I never liked HTC's sense interface.

    3. Re:There Goes Android's Marketshare by Anonymous Coward · · Score: 0

      You seem to be implying it, but the real reason is price. All iPhones are expensive, but many Android phone are not.
      But getting rid of the cheap phones isn't going to make it so people can afford the expensive ones.

    4. Re:There Goes Android's Marketshare by Xenna · · Score: 1

      "you'll soon see the real reason why the Android platform has so many phones in the wild"

      It's about choice. It's about competition. It's about all those things that will make America... (sorry, scratch that)

      There's undoubtedly a lot of crappy Android phones on the market but there's also a lot of great phones among them. My current Moto Play Z is the greatest phone I ever had. Great battery life, SD storage, dual sim and everything works smoothly and reliably. At least as good as any Apple product but plays much better with others.

      Did I mention it's also a lot cheaper?

    5. Re:There Goes Android's Marketshare by TheFakeTimCook · · Score: 1

      "you'll soon see the real reason why the Android platform has so many phones in the wild"

      It's about choice. It's about competition. It's about all those things that will make America... (sorry, scratch that)

      There's undoubtedly a lot of crappy Android phones on the market but there's also a lot of great phones among them. My current Moto Play Z is the greatest phone I ever had. Great battery life, SD storage, dual sim and everything works smoothly and reliably. At least as good as any Apple product but plays much better with others.

      Did I mention it's also a lot cheaper?

      How much is your personal identity information worth to you?

      There is a difference between Price and Value. Most people don't understand that.

  7. Standard practice by sanf780 · · Score: 2
    When you cannot beat the rest on price, you try on features. And expensive features means higher margins (just slap the PRO moniker).

    It is a pity HTC is late - there are already various players at the high end market too. If you are neither number one or two, then you should bail.

    1. Re:Standard practice by Anonymous Coward · · Score: 0

      HTC isn't late you blowhard. HTC was making better feature rich phones than iphones or Samsung for years. HTC just sucks at marketing and those sweetheart insider deals that should likely be illegal. There is a reason they were hard to get with contract discounts when that was the thing, a reason you didn't see marketing tie-ins, and it's not because of any legitimate functioning capitol market reasons.

      it's kind of like for years for every Intel CPU, AMD had a CPU that was cheaper and faster. But Intel sold better because they were able to illegally bully the OEMS and were in deep with other players and were also allowed to run more leveraged for no reason expect blackmail and government friends and wall street institutional fund friends. So the little people got more expensive worse products, while Intel got to rent seek. This stuff matters, the (not fairly) government regulated capitalism is broken, and has been for awhile. It hurts everybody and creates a ruling class that steals our elected government. If you don't think it's bad yet, it only gets worse and worse as they get more power.

  8. What they really mean is: by Doloresanto · · Score: 1

    "HTC To Begin Charging Premium For Their Budget Android Phones This Year" Their devices just do not have that schick feel, regardless of the tag.

  9. There is a definite niche for HTC by ctilsie242 · · Score: 2

    Maybe I am one of the few people who have had very good luck with their phones. My first HTC phone was a HTC Wizard over eleven years ago. It lasted four years, the battery lasted a week on standby, and its dual-core TI OMAP could easily be overclocked. At the time Windows Mobile applications were decent, although it requires a stylus.

    I have bought a few HTC devices, and have been happy with them. All still work, and the only reason I set them aside was for an upgrade. For example, my el cheapo HTC A9 is still going strong, especially with CM/LineageOS.

    The nice thing about HTC is that all their devices are unlockable, bootloader wise. Yes, if you want to SIM unlock, you might have to use the Sunshine S/OFF app, but $25 separating you from an unlocked device... that isn't too bad.

    Feature-wise, I've not found anything HTC devices lack that other brands have. The camera has been decent, the phone responsive, the fingerprint scanner accurate... everyday things are well up to snuff. Since I always use a case for my phones, I'm not as worried about feel.

    From a security point of view, the devices are made in Taiwan, not China, which may not mean much, but it makes the devices feel more trustworthy.

    As for the market, maybe HTC should have another line for budget phones. HTC for the flagship lines, then have a different company or subsidiary to run head to head against Huawei, BLU, and other competitors in that field. HTC can curry favor with the prime telcos in countries, while the lower-end subsidary can focus on getting their devices into the Tescos, Poundlands, Family Dollar, and other stores.

    1. Re:There is a definite niche for HTC by pkphilip · · Score: 1

      Yes, thoroughly reliable phones with a solid build. Still use an "ancient" 526G. What I miss is the fact that they don't do any software updates

  10. HTC the next RIM by CrashNBrn · · Score: 1
    HTC Sales:
    2010: 24M, 2011: 156M ...2015: 62M
    HTC just unveiled one of the best Android phones of 2016, but you can’t have one -- The HTC 10 EVO is only available on Sprint.

    Also throughout 2016, there were numerous reports that claimed HTC would stop selling Flagship phones in America completely.

    1. Re:HTC the next RIM by Anonymous Coward · · Score: 0

      LG is pretty much done in the smartphone space too. The LG G4 had the boot loop defect, the G5 "modular" ended up being a design nightmare AND has the boot loop (on some devices), and the G6 looks like it will be way too little, too late.

      LG basically doesn't back their phones, they only fix bootloop within the original 12 month warranty (or 15 months from date of manufacture). Outside of that you're hosed.

  11. Good decision. HTCs linup is a mess these days. by Qbertino · · Score: 1

    The HTC Desire was my first touchscreen smartphone, and for more than a year it was the best device on the planet and way ahead of anything else, including the iPhones of that time. The Flyer Tablet was a seriously impressive device, topping the iPad of the day in every aspect.

    Now roughly 6 years later HTC is barely recognizable. A bloated and jumbled lineup of smartphones with nothing clearly sticking out. I'd cut 80% of the devices offered and focus on building the best smarrtphones available again.

    --
    We suffer more in our imagination than in reality. - Seneca
  12. I had one of their phones and loved it. by Anonymous Coward · · Score: 0

    Got the HTC Rezound when it first came out and it was an amazing phone.
    Then they lost their way and decided to become another iPhone wannabe (no removable battery, etc) and I left them for LG. It's too bad all these manufacturers can't seem to figure out differentiating features that people are willing to pay for.

  13. Never enough firmware updates, which end after 18 by Anonymous Coward · · Score: 0

    I abandoned HTC and android after repeatedly being let down by lack of firmware updates and having to resort to installing ROMs cobbled together by devs over at XDA. They have this weird model of deliberately obsoleting phones every 18 months which in the end pisses the consumer off.

    Have no idea why they didn't offer software upgrades after 18 months as a paid for option. A lot of people would have chosen to pay for a nominal $19 firmware update after the support ended especially it it brought newer features.

    Could have been a great source of revenue for HTC plus greener as less handsets end up in landfill.

  14. Wher are the Small but not Budget phones ?! by Anonymous Coward · · Score: 0

    I - and many, many other people - want a small ( less than 4.5" screen ) phone that is NOT budget, thinness does not matter - Width, Height and robustness do !

    Why does no manufacturer make phones like that instead of all the Ludicrous Superthin Superfragile Phablets ?!

  15. HTC high end phones are awesome by Anonymous Coward · · Score: 0

    It's a shame HTC doesn't do better. Their smart phones were real work horses built for true nerds and could handle CPU intense fringe applications. They were putting in real CPU power back when Apple couldn't even open a big image and couldn't multitask music. The old HTC phones were completely programmable too. OS flashable, could handle high density micro SD cards, switchable batteries, etc.

    They really needed better marketing years ago, I knew about them, but my friends didn't, but loved them after informed.