HTC’s plans for growth in 2013? It’s the emerging markets, stupid!

HTC was once a name synonymous with Android. From the original days of the G1, MyTouch, and Google’s first Nexus phone (the appropriately named Nexus One), the very first purchasers of Android smartphones likely owned an HTC device at some point, and the future was extremely bright for a previously small player in the smartphone market. Then along came Samsung’s Galaxy line, and demand for HTC’s phones was drastically reduced.

Samsung now has a stranglehold on the Android smartphone market, with over 100 million Galaxy devices sold, and HTC has seen sharp declines in revenues since the second half of 2011. CEO Peter Chou recently stated that 2013 will be the turnaround year for 2013, and after revealing that the company’s Q1 2013 earnings would be anywhere from flat to 17% below the previous three months, the company’s  Chief Financial Officer Chang Chia-Lin revealed how HTC plans to turn the company around.

Emerging Markets

The company is currently in the stages of building hype for the launch of the HTC M7, which is expected to happen at the company’s February 19th event. But the M7 has but little to do with HTC’s recovery plans, and is geared more toward the power users in developed countries. Chia-Lin believes that the key to success in the smartphone markets lies in the less saturated, developing markets where cheap unlocked Android devices have ruled the day. The company for the first time is expected to launch sub-$300 smartphones in China, with the ultimate goal of hitting between 1,000 and 2,000 yuan, or roughly $150-$300 for an unlocked device.

“We’re going to go down, but not below 1,000 (yuan). We see there’s still room to play in 1,000 to 2,000 yuan phones.” - Chang Chia-Lin, Chief Financial Officer, HTC

And the data back HTC’s theory up. In Russia and India, two markets with huge amounts of potential consumers, smartphone saturation sits at just 49% and 20%, respectively. In these markets, Android devices have proven fairly popular with smartphone users, and HTC’s offerings could easily come in and open the market up further, provided they can get to their target price points. 

Of course, HTC is no stranger to these markets. Budget smartphones such as the HTC One V and recently launched One VX have come with relatively cheap no-contract price points, though they haven’t hit the magic price point needed to make a significant dent in the market. Should HTC be successful in hitting these price points, it could attract customers who’ve shied away from smartphones in favor of cheaper dumbphones, which as previously mentioned make up a significant portion of the market in these countries.

Time will tell whether HTC’s strategy for returning to its glory days will pay off, but at least they appear to be headed in the right direction. The key to market success in the future is budget users, folks in emerging markets and even dumbphone users in developed countries who’ve shied away from smartphones due to cost barriers, which HTC and others hope to break down. One thing’s for sure, it’s going to be an interesting 2013 for HTC, BlackBerry, ZTE and others, all fighting to gain customers and buck their trend of continued financial struggles.

Via: The Verge, Reuters

Emerging Markets, HTC, HTC 2013, HTC Growth Strategy