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HTC Shuns Cheap Phones

Sarah Thomas
10/31/2011

12:35 PM -- High Tech Computer Corp. (HTC) (Taiwan: 2498) has no plans to build cheap phones, following a third quarter where smartphone shipments grew 93 percent over the previous year.

HTC sold 13.2 million smartphones in the third quarter, up 9 percent from the previous quarter, and the average selling price of its devices also climbed 0.6 percent to US$344. Most of the growth came from its high-end handsets such as the HTC Sensation and Rhyme. It also had a few entry-level products, such as the HTC Explorer and Wildfire, which helped it grow in emerging markets, but the company said it has no intention of entering the very entry-level market with sub-$100 phones.

"We have no interest in launching any low-priced smartphones because we do not want to make low-quality products," HTC CFO Winston Yung said on the call, refuting local reports to the contrary.

Instead, HTC plans to capitalize on the move from feature phones to smartphones and on dominating the high-end market with Android and Long Term Evolution (LTE). Yung said it will only dip as low as $200 to $250.

The strategy has so far paid off for the company, but there's still ground to be gained in the low end.

Attractive Android handset prices are falling, and a large subscriber base of price-sensitive, first-time buyers are seeking out low-cost phones with smartphone-like experiences. This is a growing market and an important one to target alongside higher ARPU smartphone subscribers. HTC may be short-sighted in ignoring this segment and might do well not to associate low cost with low quality. (See Hope for Nokia's Next Billion and Analyst: Nokia Faces Low-End Threat.)

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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sarahthomas1011
sarahthomas1011
12/5/2012 | 4:50:12 PM
re: HTC Shuns Cheap Phones


More evidence from Nokia and The WSJ that the entry-level market is an attractive one to target: http://blogs.wsj.com/digits/2011/10/28/nokias-u-s-plan-target-first-time-smartphone-users/?mod=google_news_blog

Gabriel Brown
Gabriel Brown
12/5/2012 | 4:50:11 PM
re: HTC Shuns Cheap Phones


Maybe hard to make much profit on the low-end? ZTE and Huawei are going to be challenging hard there for long-term share.


Btw, talking of budget Androids, the £90 ZTE Blade I brought from Orange last year is still going. It's a lot of features for the money. It doesn't like going abroad, thou. The networks in France corrupted it and I had to reflash on my return. "Swedish Spring" seems to be the ROM of choice for these budget devices. 

sarahthomas1011
sarahthomas1011
12/5/2012 | 4:50:11 PM
re: HTC Shuns Cheap Phones


I'm sure it is hard(er) to profit on the low-end, especially if you aren't building low-quality phones. But I thought it was weird he implied they'd have to be low-quality handsets if they're gonna be $100. That is the traditional perception of low-cost phones, but - as you pointed out - they are getting so much better, and that's how it should be.

pmicali1
pmicali1
12/5/2012 | 4:50:07 PM
re: HTC Shuns Cheap Phones


I wonder too how much the recent patent battle losses play into this too.  HTC is in some potentially serious trouble with the recent court decisions and how they'll affect the bottom line.  I'm sure it doesn't help the decision making process regarding low-end phones...

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