HTC CEO Cher Wang during an investor meeting yesterday apologized for the company’s poor performance in recent months. According to the Taipei Times she attributed it to “poor operational efficiency and overly conservative marketing strategy amid fierce competition in the global market.”
The stock in recent days has fallen to a 12-year low of NT$98, whereas late last month it was sitting at a 10-year low, so HTC’s investor meeting was a crucial time for Wang to please investors with a strong outlook.
She said that to improve the company’s smartphone business, HTC will release a new “hero product” in October and make improvements in design and innovation for the next flagship. But we’d hope the plan is to always make improvements in design and innovation, so there’s nothing really huge there to pick apart.
Wang went on to say that HTC will improve its product mix strategy for smartphones and work towards reducing its production costs by improving production efficiency as well as optimizing its component supply chain. The HTC One ME, unveiled yesterday for the Chinese market, is perhaps the first example of the company executing on this plan with it arguably taking the best pieces of two models – the One M9+ and the One E9+ – and mashing them together to make a better phone than the two on their own. We also heard just last month that HTC cut its order of components for the flagship One M9 by approximately 30% in response to weaker than expected sales of the device.
Slow sales of the One M9 have been widely attributed to the phone’s identical design to its predecessor, the One M8. It doesn’t help that rumors spread during its first few weeks on the market that the processor it uses, the Snapdragon 810, has overheating issues. Qualcomm, the maker of the Snapdragon line of processors, has repeatedly refuted the claim, calling the rumor “rubbish.”
Finally, Chief Financial Officer Chang Chia-lin said that HTC increased research and development spend 4% to NT$13 billion (US$419.33 million) last year, with its marketing spend dropping 19.26 percent to NT$26 billion from a year ago. Wang said the company recognizes that it needs to improve its marketing strategy, going on to indicate that its ad campaign with Robert Downey Jr. didn’t have any sizable impact on sales and that it wouldn’t be renewing that contract. HTC will continue, however, investment in new R&D products, naming the Vive virtual reality headset and saying that its been quite well received by the market.
These plans sound solid, but execution is the hardest part and what really matters, so we’ll just have to wait and see. Any ideas what this new product coming in October might be?