Not Even Facebook Can Save This Smartphone Maker
Apr 8th 2013 10:00PM
Updated Apr 8th 2013 10:06PM
It's been a rough couple of years for Taiwanese smartphone maker HTC. Once upon a time, it was the cream of the Android crop. Nowadays, South Korean rival Samsung has supplanted the company, primarily with advantages in distribution and marketing. With marketing being one of its biggest weaknesses, the company has realized that the whole "Quietly Brilliant" motto wasn't working so well, promising to take a louder approach going forward.
HTC is also partnering with Facebook to launch the HTC First, which will be the first device to feature Facebook Home. Pairing up with the social network will certainly appeal to avid Facebookers looking to get their hands on the first real Facebook Phone, but ultimately the First is a mid-range device that won't be able to turn the tables. That job is up to the HTC One.
Unfortunately for HTC, suppliers no longer consider it a "tier-one" smartphone maker, so it has been having trouble getting all the ingredients it needs. Cameras, in particular, are bottlenecking production, and HTC was forced to delay the global launch of its One device. The One delays have contributed to HTC posting its lowest profits on record.
HTC's bottom line in the first quarter was just $2.8 million. Revenue was down 37% to $1.4 billion, below even the low end of its guidance. In February, HTC guided to first-quarter sales of $1.7 billion to $2 billion.
A recent Chipworks teardown showed that HTC is sourcing cameras from STMicroelectronics and OmniVision . STMicroelectronics is providing the primary rear camera, which is a 4-megapixel shooter that HTC is hoping will dispel the megapixel myth in the smartphone camera wars. OmniVision is supplying the front-facing 2-megapixel sensor.
The primary sensor is the first backside-illuminated sensor that Chipworks has seen from STMicroelectronics, a technology in which OmniVision used to enjoy first-mover advantage. That's notable because OmniVIsion offers a sensor with identical specs, yet STM was still able to score the design win. However, it's also possible that HTC is dual sourcing (Chipworks only tore down one unit), but that implied commoditization isn't necessarily a good thing, either. It's not clear which of these companies is the supply chain culprit that's holding back the One.
Everything is quite literally riding on the One. The flagship launches domestically this month, barely beating Samsung's Galaxy S4 to market. Still, Samsung's same advantages will still apply. For example, the Galaxy S4 will be available on all four major U.S. carriers, while HTC said the One won't reach Verizon Wireless (the biggest of the four). AllThingsD reports that the One will indeed make its way to Big Red's network eventually, so perhaps HTC was playing coy.
For HTC, the One will make or break the company in 2013.
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The article Not Even Facebook Can Save This Smartphone Maker originally appeared on Fool.com.Fool contributor Evan Niu, CFA, owns shares of Verizon Communications. The Motley Fool recommends and owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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