HTC drags its feet in low end market

The HTC One has managed to turn HTC’s fortunes around, but its success is not helping the company in the mid- and low-end markets, Goldman Sachs has warned.

Goldman Sachs analyst Robert Yen wrote in a note to investors that positive changes are visible at HTC, but the company has underperformed in its mid-to-low end business, especially in china. Yen expects HTC’s shipments in China to remain flat this year, which sounds disappointing as other brands should see up to 75 percent growth.

Although HTC was the first major handset maker to enter the Chinese mid-range market a couple of years ago, cracking the frugal sector is proving more challenging than ever. The mid- and low-end smartphone market in China is dominated by local companies who offer smartphones with impressive specs for peanuts. Despite this, Yen sees better times ahead for the troubled smartphone maker, Focus Taiwan reports.

“We still think a recovery is in sight for HTC, with its flagship model, a healthy high-end competitive landscape, and ease of supply-chain bottlenecks,” Yen said. “But the disappointment at the low-end may still hinder operating margin recovery due to less scale benefits.” 

HTC is about to introduce a mini version of the successful HTC One and it rolled out the low-end Desire 200 last week. However, countless Chinese smartphone makers, mostly unheard of outside the country, are already selling heaps of cheap Android devices in all shapes and sizes. 

Perhaps it is a sign of things to come – at this rate big brands might find themselves outpriced and outmanoeuvred in China in a matter of years, so clinging to posh high-end gear could be the only viable strategy in the long run.