Is HTC’s “One” device plan failing? OEM predicts first loss ever next quarter



HTC just released its quarterly results for the second quarter of 2013. Unfortunately… things are not looking up. The company only made about 1.5% gross operating margin profit on its revenue of about $2.36 billion. Those are slim profits, but profit nonetheless. Still, the trend continues to be downward for HTC, and it looks like things won’t improve in the third quarter of 2013.

According to the company’s Q3 outlook, there will be between 0% and -8% in gross operating income, meaning they either break even or take a loss. This would be the first time such a thing has happened for the Taiwanese manufacturer, which some might assume spells bad news for the future of its smartphone business.

HTC says the bulk of its losses will come from the need to clear channels of older products:

Our overall gross margin has been impacted by the relatively higher cost structure, lack of economy of scale and certain provisions needed to facilitate the clearance of aging products in the channel.

That said, 4th quarter results are expected to be better. HTC says it plans to get the ball rolling by bringing more competitive devices for the mid-tier space, and we already know of the first device set to take the reigns in that channel. It’s the HTC One Mini, though the company’s wording makes it sound like it’s going to take a lot more than that to stay in the ring with the big boys.

When HTC introduced its new strategy for 2013, the company emphasized the importance of focusing on “one” device — or, at least, one family of devices. For all intents and purposes, the company has slowed it down and shaven a lot of extra weight off of its cumbersome portfolio. And while HTC never completely abandoned the emerging devices market — particularly with the continuation of the entry-level Desire line — it definitely hasn’t been pushed quite as heavily as it once was.

The only question is whether or not these financial woes will force HTC’s hand and make the OEM slip back into its old ways. When it comes to consumer satisfaction and brand image, it’s easy to want to do the right thing, but the company can’t continue to exist if it can’t make any money. We’ll just have to accept the trade-offs necessary to keep another competitor in the market.

[via HTC]

Quentyn Kennemer
The "Google Phone" sounded too awesome to pass up, so I bought a G1. The rest is history. And yes, I know my name isn't Wilson.

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  1. Poor Chavez…. He is their #1 Fan!

  2. HTC is the worst brand making the worst phones. Period.

    1. HTC one is an amazing device… except for Camera performance… it beats the S4 in many ways…

      1. Battery size? Screen size? Storage expansion? What are the ways? The only thing it has going for it is the fastest processor out and forward facing speakers and frankly those aren’t things I need in a phone.

        1. Battery size: Usage times are similar on both devices…
          Screen size: is a personal preference….display on the htc one is better than S4 check any review…
          Storage exp: HTC one comes on board with 32 and 64 gb which is plenty…
          other advantages
          Boom sound, build quality and no touchwiz:)

          1. Never ever will I buy a phone with a bezel as large as the HTC One’s. That’s a crime in my book, and despite your beliefs, there are reasons consumers like myself buy AMOLED screens time and time again–color saturation and contrast.

          2. Everything you mention is still all based on user preferences. The LCD on the One is brighter in daylight, however the OLED from the S4 has better contrast and richer colors. Though the OLED is a bit over saturated, you can adjust it and make it to your liking. The customization option in my opinion give the S4 a slight edge with the screen.

            On board storage, again, when you say is plenty, depends on the user. For you maybe. Whether you have 32Gb or 64Gb depends on carrier. Only AT&T offers the 64Gb. 32GB was nice for me, however when I started closing in on filling it I started to become flustered. I have 16Gb internal with me S4, however I also have a 64Gb card. Both have their advantages and disadvantages. More on board means more room for apps and all those killer games like NOVA and Real Racing 3. But less room for music, movies and videos taken from my camera.

            Touchwiz vs Sense, again, preference. Having owned every generation of the Galaxy S and the note 2, I have grown to love the features that come with Touchwiz. However Sense if very nice as well. Both have great UIs but it is all preference. I tend to use several lauchers to the look and feel to the UI doesn’t always get used, it is all the features that I can use that makes a difference to me.

            I do agree though, Boom sound is amazing. I wish more devices would come with that. Both devices are amazing and you cannot go wrong with either. I simply use both on a regular basis. I cannot wait to compare the Note 3 and One Max this fall. Going to be amazing.

        2. Better low light camera performance, better audio recording, more on-board storage, less bloated UI. And frankly, I couldn’t care less about storage expansion. Having to partition your phone is a chore, not an advantage.

          1. Agree with you on everything xcept the camera part… Camera on HTC one is crap or less…

          2. I seriously wish I knew what people were talking about when they said the HTC One camera is crap. It’s low-light performance is undeniable and Brian Klug from anandtech called it the best shooter currently available for Android phones. For me personally, I find the colors vibrant and accurate most of the time. It’s wicked fast which makes it superior to any other phone I’ve ever had at capturing motion.
            I’m not saying you’re wrong. But saying it’s crap is not reflective of my experience whatsoever.

        3. The S4 has a faster processor. Both are powered by the Qualcomm Snapdragon 600 SoC. The HTC One clocks in at 1.7Ghz, and the S4 clocks in at 1.9Ghz. Benchmarks show a slight advantage to the S4 however you will not notice the difference in real world use. The only difference you may notice will all be software related and not hardware related.

        4. It uses the same processor as the S4 and the processor is actually clocked slightly higher in the S4, So the S4 is technically faster than the One

        5. seems like you are just checking off things in a check list format without actually reviewing phone experience. Much of the things you also state have little to no impact on most users

    2. You are too funny. I mean dumb

      1. How am I dumb when their profits shrink every quarter and now they are in the red? It seems like I am REALISTIC.

        1. Every company beside Apple and Samsung are not posting much of a profit. When those two companies control 90% of the market there is not much room for growth. Learn something before you talk. When Samsung and apple spend billions in advertising not millions not many companies can compete with that.

      2. You think the HTC thunderbolt was good? You think the lack of multitasking on the One X was good. You think releasing like 10 different “One” phones last year was good? How about the gimmicky “beats” branding. It’s a really bad brand, man.

        They need to just close up shop and leave it to the experts.

        1. I own a One X and they fixed the multitasking (aggressive memory management) in late summer after it’s release. Although, by then their steam was lost.

        2. HTC has certainly made some lousy phones, but if you think the S4 is better than the HTC One, it just shows you haven’t used the One.

          1. I’ve used both and the S4 wins handily, I mean handily. From feel to performance to features, the S4 wins. I quickly got tired of the HTC One, it just really wasn’t the One for me and their sagging sales says it’s also not the One for most other people. It has too many downsides compared to the S4.

            They need to go back to the drawing board and come up with something that blows everyone away for very early next year and market the heck out of it or they’re DONE!

            When a company fails to listen to their customers they go the way of the dodo.

          2. I think you’re kidding yourself here. If you think superior products drive sales, you know nothing. Marketing drives sales. If quality drove sales, “Grown Ups 2” would have bombed and Carly Rae Jepsen wouldn’t have a career. As for features, most seem like gimmicks to me. The gestures and hover things are only occasionally useful, and I haven’t heard of a killer app/feature on it that makes it worth upgrading to from last year’s phones that isn’t also available on the HTC One. Zoe and Boom Sound are pretty damn awesome features that no other phone has.
            Also, I’ve used and S4 also, and no, it doesn’t win anything “handily.” What a biased joke of a post that I’m replying to.

          3. You are handily wrong. But this is America. You’re allowed to be wrong. :-) The article says nothing of the HTC One not being successful in sales. In fact, most of the things I read after release were all good on the sales front. The article is talking about the old inventory laying around for phones that are out there that are not selling. They will have to take a loss on that inventory at some point. But the One has been successful. It’s clearly a better built phone than the S4 or any other phone out there for that matter.

          4. You’re so fake…. You’ve never owned the HTC One, and trying it on the store front doesn’t count.

            I’ve OWNED the S4 and the HTC One. I sold my S4 to my brother, bought the HTC One for myself. I gotta say, the H1 wins handily. I mean handily. From feel to performance to features, the H1 wins. I quickly got tired of the S4….

            You get what I’m trying to say here?

      3. take a look in the mirror before calling anyone else dumb!

    3. They make beautiful phones. They just don’t have an established brand identity and their marketing budget dried up in a few weeks. And they tend to release phones with a glaring bug that gets fixed 2 months later after they lost momentum.

  3. Its because they did a lousy job advertising the phone along with dumb business practices. I still don’t get why OEMs released different versions of their phones at different times. They should release all colors on all carriers so that consumers can not be disappointed when they see another carrier with a version of the phone they really want. Secondly, how about keeping their products current. It seems like we have another phone that is going to be constant behind the update curve. We are still waiting on 4.2 and now 4.3 is out. Blinkfeed is still buggy and several features are still missing. I like my phone but dam, some of the stupid crap they do just makes me upset.

    1. Or they don’t have the money to do most of the advertising. Do you ever think that it take money to make money. Samsung has spend billions on million on advertising that is why everyone know who they are. You ask the average consumer at best buy what is the difference between 4.1 4.2 4.3 and how many people can tell the you the change. The HTC one is already on 4.2 internationally.

      1. Agreed that most people don’t know the difference between one version of Android compared to the next but a lot of us do. Its the people that know about this that helps spread the word by word-of-mouth which is a free way to get the word out. However, this only addresses one argument I made. The other not being consistent with your offerings on all carriers which is more important than the first point. Of course I realize it takes money to make money, which you validate the point I made in the first place. The little advertising they do have, the campaign is pretty lame. There is a lot that can be done to improve their brand awareness but remember at one point was on top of the smartphone game. They got comfortable and now are paying the price. I also don’t see how the HTC One having 4.2 internationally already means anything to the people here in the states. If anything that’s just more of a reason to be upset, how inconsistent are things. That’s the one thing I can say about Apple. Everybody will have the same choices and options no matter the location or carrier for the most part.

        1. Thats one thing I’ll agree with, HTC is taking a pretty ridiculous amount of time rolling out the 4.2.2 update to users in the State.

          1. It is not up to them it is up to the carrier. A carrier can sit on it for months and HTC can’t do anything about it.

          2. Really, how come Samsung is able to get updates out much faster. Explain that…. that’s what I thought

          3. What update did Samsung get out faster?

          4. Exactly…none.

          5. Ummm…the HTC One is on 4.2.2 now (international) and has been for awhile. The carriers are ALL SITTING ON IT. That is no fault of HTC’s. The S4 was released on 4.2.2 so there are no updates to happen. Don’t make it sound like this is HTC’s fault. It’s not. But people like you spreading rumors is eventually going to narrow the market down to just Samsung and then we’ll all be screwed. And no I don’t own an HTC phone. So don’t even go there with any fanboy statements.

          6. Update of major Android OS upgrade…score is HTC 1 and Samsung 0 if you compare their two flagships. All the other Samsung updates were to fix their laggy ass phone that shouldn’t have been released in such a buggy state.

          7. you blame the carriers but it takes Samsung half the time HTC does to update…… quit being a fanboy and wake up.

          8. Really? 4.2.2 is out on the HTC One and has been internationally. The U.S. carriers all have it and have to take months to put their bloatware on it and release it. This is not HTC’s fault. Again, I don’t own an HTC phone so lay off the fanboy comments. Samsung hasn’t released anything for the S4 since it was released with 4.2.2. Time for you to wake up and look at the facts.

        2. I told my friend that his Tmo GS2 had Jellybean. He still kept ICS on his phone. Yea. Telling them about the updates really makes a difference.

          Also, you can’t just “put” your phone on a carrier. There has to be some agreements. Remember how the Galaxy Nexus had all the Verizon bloatware? You think Google wanted that? They had to make an agreement with Verizon. That’s why the phone didn’t come out with Verizon. They’re hard to budge.

          So HTC’s lack of money slowed the process of putting the phone on Verizon. If you see some Verizon branding on the phone, then you know an agreement HAD to be made. And I’m sure Verizon don’t play. Just look at the Galaxy Note 2 and that random symbol on the home key. And Samsung is making all this money and couldn’t get Verizon to keep their phone clean.

      2. not only do consumers not know the difference between 4.1 4.2 and 4.3, but i own a nexus 4 and i cant even tell you the difference

        1. Exactly…regular consumers don’t even know. It’s just the 10 people reading online blog sites…lol.

          1. I beg to differ there are hundreds of thousands people reading online site blogs including yourself…..

          2. I’m sure his statement was a figure of speech. He was most likely trying to state how even though there may be “hundreds of thousands”, its a small margin when comparing to the total number of buyers, or “regular consumers”.

            A regular consumer would be any phone the sales rep can get them to buy. I walk into Tmo ignoring there blander and go straight for the HTC One because that’s what I wanted and I know the difference between that and the S4 and don’t care about no move your head to scroll. LoL!! I’m sorry. Flashback. =.P

          3. You can beg to differ if you like. But let’s just say I have a heavy mathematical background. If you say a couple hundred thousand, you do realize there are more than 200,000 smartphone users in Chicago alone, right? So if you consider the entire world, you do realize that a couple hundred thousand is an extremely minute percentage of worldwide smartphone population. Heck I work as a developer for a tech company and there are about 2 people total that care about SD cards, removable batteries, OS upgrades, etc. Then to think about regular business people, my family, etc., it goes to show you that the people that care about these things are so small that it just doesn’t matter. You are the exception, my friend.

    2. Samsung used to be like them, an quickly got out of it by listening to the customers. You know, the people buying your products.

      What killed it for is when they came out and said that they’re focused on design more than battery life

  4. HTC is circling the drain. Two days and counting for me…bye bye Rezound, hello S4!

  5. They may have sold more phones…if HTC One was available on VzW. Just sayin.

    1. Agree, 100%. I’m not sure if it was VZW or HTC that delayed the launch, but if the latter, they really can’t afford to make these exclusive deals with limited partners. HTC needs to get themselves on as many carriers as they can.

      1. i highly down they made a deal with every other character to specifically exclude verizon at launch… seems more likely verizon is trying to plan out its device schedule to limit the competition within android phones of similar size.

        1. I suspect the same, but I don’t have the details of the deal.

        2. +1 for autocorrect! :)

      2. it was HTC.

        1. keep mindlessly blaming the little guy here

    2. Their marketing was left wanting compared to the likes of Samsung and Sony. Supply issues don’t help either. But yes, that pesky Verizon tradition of lagging behind everything with availability.

  6. Android is quickly becoming a one horse race. I don’t see HTC staying with Android much longer. They will probably try Windows Phone for a bit before closing up shop completely. Motorola is heading down this same path.

    1. Umm, you realize Google now owns Motorola, yes?

      1. I do realize this. It doesn’t mean that they are going to survive. Google has shareholders to report to and they aren’t going to tolerate millions in losses for too long.

    2. Hah, you’d run the company to the ground in a second if you were calling the shots. Jump from one of the most popular (and familiar operating systems) to a barely-market-penetrated WP and their sales will grind to a halt.
      HTC is failing not because of their current actions (late 2012/2013), but from their history of releasing too many products without properly supporting each one until a reasonable end of life.

      1. What choice do they have? Keep losing money with Android? Or try something different and probably lose there too.

        1. HTC makes a Windows Phone. 8x.

          1. And apparently snuck out a new model, the 8xt.

  7. It seems the problem stems from old inventory. The future could be brighter as that clears out. Also, it can only help that the One will soon be on Verizon.

    Also, guys, please chill with the fanboi debates. Competition is good for consumers, and each device has its pluses and minuses.

  8. Actually the only company that will probably be around doing strictly android will be Motorola , and maybe Sony, Samsung wants Tizen to be their new O/S and will probably abandon android in a few years! HTC may close shop til that time too! then reappear. I think its a waiting game to see if Sammy leaves the android nest, and go at it on its own with Tizen in tow.

    1. They can’t leave Android anytime soon. They will fail miserably if they try.

  9. Lets look at the HTC One and see its shortcomings;
    1.) Non Removable Battery
    2.) No Micro SD Card Slot
    3.) Smaller Battery than competition (2300mah vs 2600)
    4.) Smaller screen, yet same size as competition (maybe bigger, definitely thicker)
    5.) Zero Gap Construction has a GAP where plastic and aluminum meet.
    6.) They removed features that made HTC well liked (like the kickstand)
    7.) They also decided everyone MUST use blink feed and have NO need for a menu button.

    So many restrictions and decisions made for you here that you might as well go with the company that is best at making decisions for their customers, Apple. You picked Android because you wanted “CHOICE” not to have someone make them for you.

    1. 8.) Button placement
      9.) “Premium” metal construction (polycarb is objectively better)
      10.) History of dropping support too early

      The one great thing: loud front-facing speakers.

      1. polycarb is subjectively better*

      2. 11. One of the the hardest phones out there to repair.

      3. They released an update to lower the speaker volume because people were complaining that they were too loud. So I’ve heard at least.

    2. > 7.) They also decided everyone MUST use blink feed and have NO need for a menu button.

      Current Android design recommendations call for no menu button. Applications are supposed to move away from using them in favor of an on-screen button or slide panels.

  10. HTC really needs to advertise the One. Samsung advertised the Galaxy devices big time, everybody knows what the Galaxy S is. You mention an s3 or s4 and they know what you are talking about. The HTC One? unless you are on these tech sites, you probably never heard of it. If HTC would spend some money advertising their flagship device they could improve the sales and grow their profit. To make money, you have to spend money.

  11. I am leaning heavily toward the S4 just because of the trouble I have had with my HTC Rezound and the fact that HTC/Verizon takes so long to update their older phones and just abandon them when a new model comes out a month later. They are already speculating a new HTC phone on Verizon in the fall and the only thing I can think of is how that phone will be forgotten when the next one comes out just like every phone they release in the fall. My original Incredible was a great phone and I really like Sense but the Rezound and the lack of updates leave a bad taste in my mouth. At least I know Samsung will update the S4 when the next one comes out.

  12. HTC could have avoided this. They obviously didn’t learn from last years mistake. All they needed to have done was
    1. Better battery – 3500mAh battery would have gone a long way. Motorola did this years ago in a slim phone.
    2. SD support (I don’t consider this a big deal but a lot of people did and they could have appealed to those people by including it)
    3. 4MP camera? Really? The thing is only good for low light conditions. Most people take pics in the day time. They should have gone for at least 13MP with improved optics
    4. Having the mini was an okay idea, but it shouldn’t be a watered down version, rather it should only be smaller but pack the same specs in every other way
    5. They’ve build a reputation for not supporting their devices. They should have voiced their commitment to support their devices and demonstrated this by updating ALL of last years phones already.
    6. Lack of Software innovation. Blinkfeed is no innovation. There are little things Samsung does that are very useful, like tap to top, direct call, clipboard, handwriting recognition (very useful when your’e using the Note), excellent keyboard prediction that uses Swiftkey’s engine, etc

    Well, too bad for HTC. They used to be quietly brilliant, now it appears like they’re violently dying due to the competition out innovating them

    1. Please stop making yourself look like a moron, cause you’re doing a good job at it.

    2. I dont mind the 4 megapixel I usually use a lower resolution anyway because pictures look great (to me) when they are roughly 3 mp or so. Im a proud HTC One user and love the phone.

  13. HTC will be okay. They may post a lost & then again they may break even. Either way they put out the best phone this year so far. I’ve noticed people buying HTC One everyday on many social networks & some people are genuinely excited for the Htc one mini too. Imo HTC should put out more phones like they use to do. They were more profitable when they put out a shitload of phones. When they scaled back ,revenue scaled back too. That’s why you shouldn’t always listen to consumers & analyst. The people told htc to released fewer handsets & now they are somewhat struggling. +HTC release more phones again!!! As as marketing I see plenty of HTC ONE commercials on tv. They’re just not good commercials really. The spots are not long enough and they do not speak on the ultimate selling points of the phone at all. Maybe they should have sued Samsung for that paid negative ad stuff & used the press to maybe sell phones. It worked for Samsung when Apple sued them & vice versa.

  14. Idiots arguing online. How shocking. He who sells the most phones wins. Hence Samsung > HTC.

  15. I’ve been a long time HTC user from the G1 days all the way up to the One X but I now rock a Galaxy S4. Why? because HTC keeps changing their mantra, they rather have a pretty iPhone type wannabe as opposed to listening to what consumers actually want (unlocked boatloader, sd card, removable battery, decent RF reception) …. and this is coming from someone who used to be the president and founder of the DNPSEA foundation (Do not patronize Samsung every again)

    1. thats not what consumers want. Consumers want whats popular, hence iphone and s4. Samsung is filthy rich and can market the heck out of their products

  16. Some of their losses can be attributed to them having to sell off old, unsold phones.

  17. As someone who owns both the s4 and the HTC one, I prefer the One.

    1. are you a professional phone critic? why should we care what you prefer again?

      1. Dang… merciless.

      2. If I was a professional phone critic, I would be writing for Phandroid. I’ve owned lots of phones and love them… Just my hobby. And when you say “we;” who says you get to speak for everyone else? No reason to be rude to another human being, even if it is the internet. Just saying.

  18. didn’t spend enough in advertising and didn’t push to all the carriers at once. Yeah whiners can complain it’s VZW’s fault. That’s not true. Read up on the backstory. HTC is still horrible at marketing and distribution.

  19. I was about to commend all of you folks for your thoughtful and intelligent restraint until, just three posts from the end, someone actually did blame htc’s problems – at least in part – on “locked bootloaders”! Yeah, that’s what consumers run away from, all right…

    1. Tech enthusiasts are consumers as well, just not your average consumer.

      Finished with your strawman argument now are we?

  20. It’s amazing to see how quickly this discussion became a S4 vs H1 comparison…

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      Ummm…the HTC One is on 4.2.2
      now (international) and has been for awhile. The carriers are ALL
      SITTING ON IT. That is no fault of HTC’s. The S4 was released on 4.2.2
      so there are no updates to happen. Don’t make it sound like this is
      HTC’s fault. It’s not. But people like you spreading rumors is
      eventually going to narrow the market down to just Samsung and then
      we’ll all be screwed. And no I don’t own an HTC phone. So don’t even
      go there with any fanboy statements.

      1. Did I mention explicitly your name in my comment?
        Am I spreading rumors on why HTC sucks?
        The answer is no if you’re wondering.

        Not sure why you’re getting worked up

    2. Just like every other article about either of these phones….. If the article is about Samsung, the HTC trolls come in full force and vise versa. I too, have been guilty of this a few times. Have to say though that some posts from from die hard fanatical morons from either side of the “HTC/Samsung Saga” can be down right hilarious! Some people obviously love their damn phones more than the loved ones in their pathetic lives. lol

      1. Not only is it about loving their phones, it’s more about saying “what I have is better than yours,” and gloating about it. I usually label those people as morons.

  21. The front stereo speakers and fm radio are the only advantages of hTc One to SGS 4, and their mini is bigger than SGS4, then how do you call it mini. Sealed phones are disposable!!!

  22. I enjoy all the HTC fanboys below talking about how superior HTC is.

    Let’s face it: If they were giving people what they want, HTC wouldn’t be looking at a loss.

    I’l LOVE to see more competition among the top Android phones, but HTC doesn’t give me what I need — replaceable battery & swappable 64GB storage — so I don’t buy from them.

  23. My DNA just wants 4.2…

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