HTC Plans To Switch Focus To Cheaper Phones For Emerging Markets [Report]

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HTC is famous for quickly rolling out one smartphone after the other, and the Taiwanese company often unveils a handful of flagship devices each and every year. But high-end handsets made by HTC could soon become a rarity. The company is reportedly set to switch its focus to cheaper smartphones for emerging markets as it loses more ground to Apple and Samsung.

HTC announced its first-quarter revenue forecast this morning, and it didn’t make for exciting reading. It expects figures to be flat to 17% lower than the previous quarter — worse than analysts had predicted — while margins may also shrink as well. Although it has launched a number of impressive smartphones powered by both Android and Windows Phone, the company just cannot seem to compete with Apple and Samsung.

HTC’s fortunes have been quickly declining since the second half of 2011, and like other smartphone manufacturers, it’s struggling to claim a significant share of a market dominated by the iPhone and Samsung’s Galaxy devices. It’s now targeting China as a potential avenue for growth.

However, China’s price-conscious consumers mean that HTC will have to change its tactics. In a nation where the average annual salary is $3,000 per person, high-end devices don’t sell well, and so HTC will need to switch its focus to budget handsets instead. And according to Reuters, that’s exactly what it’s going to do.

HTC Chief Financial Officer Chang Chia-Lin told a conference call for investors on Monday that his company, which has tended to rely on developed markets for most of its revenue and in China has focused on mid- to high-end models, was now ready to offer smartphones priced less than 1,999 yuan ($320) – currently its cheapest phone in China.

“We’re going to go down, but not below 1,000,” he said. “We see there’s still room to play” in 1,000 to 2,000 yuan phones.

Although HTC won’t give up on high-end smartphones, or indeed established markets, we can expect to see its focus to be elsewhere in the days ahead. This is likely to mean we won’t see a handful of flagship smartphones released every few months, but that’s probably a good thing — no one likes to see their new smartphone replaced by a better model just three months after its release.

HTC expects its first quarter revenue to be between T$50 billion ($1.69 billion) and T$60 billion ($2.03 billion). Analysts were expecting around T$62.77 billion for the quarter, according to an average projection of 18 analysts polled by Reuters.

In addition to this, the company is expecting a first-quarter gross margin of around 21% to 23%, which is flat to lower than the 23% it saw in the previous quarter. HTC predicts an operating margin of 0.5% to 1.0%, also flat to lower than last quarter’s 1%.

It’s though, however, that HTC could see some success from its upcoming M7, a new flagship Android device that’s expected to offer a 1080p display, the company’s next-generation Sense 5 user interface, and a new “ultrapixel” camera. The device will reportedly get its grand unveiling on February 19.

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