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HTC profits sink 98%, the One isn’t to blame

HTC’s Q1 profits have plummeted to their lowest mark since 2004, falling from US$$152-million to US$2.85-million in one year. This represents a 98% drop in profit. HTC’s revenue also fell from US$2.3-billion to US$1.45-billion. This was confirmed earlier this week during an audited earnings call, says CNET. But is it the HTC One, which is yet to release sales figures, that caused the niche gadget makers to sink so deeply into loss?

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Released too late

The HTC One saw global shortages and bizarre release dates. While this may not have been the cause of HTC’s drop in profits, it certainly contributed to it. Here’s what we know though: when we attended the launch event of the HTC One earlier this year, executives at the launch couldn’t nail down the release date of the One. “Early June,” some said. “Before May,” others chimed in. If those in charge couldn’t give us an exact release date, what hope did the HTC One ever have in terms of being a competitive product?

The One is an excellent phone and has received positive reviews across the board, but this wasn’t enough to save HTC. It goes to show that a well-designed product, loaded with an excellent mobile OS and stellar battery life isn’t enough if doesn’t come out at just the right time.

So while we can’t yet blame the One for this drop in profit, Peter Chou, HTC CEO tries to explain his companies record loss:

Last year we thought we needed to inject some new excitement in HTC’s products, and there was an opportunity for us… because everybody looks the same, I think that we have successfully launched the HTC One. We believe people are really getting our concept. Our goal is really to develop the HTC brand as a trustworthy, premier and excellent smartphone brand. That kind of brand awareness and preference is so important to us, as different suppliers are coming from everywhere and there’s no differentiation.

Our translation: “We tried to be different, but failed at it. We really like the HTC One though.” Chou admitted in January that “the worst for HTC has passed,” but this statement originates from the positive pre-orders and stock pricing after the announcement of the HTC One. Once the bubble burst, so did the any opportunity for profit.

Silver lining

According to Engadget, HTC expects to see a 63.2% jump in profit for the Q2 earnings. HTC attributes this to Windows Phone and Android support for future devices. According to Chou, HTC is doing well “in terms of cash flow”. But with no sales figures of the HTC One to backup Chou’s statement, we’ll just have to take his word for it.

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