Smartphone makers Lenovo and HTC both said they will cut jobs as they seek to increase profitability, an indication of both weakening demand in China and other major smartphone markets as well as the difficulty of Android-focused OEMs to achieve a profit.
HTC said that it is going to cut jobs and expenses and produce fewer smartphone models, with a focus on the premium smartphone segment. The company, as expected, posted weak financial results for the second quarter and warned of a loss ahead on the third quarter.
There is clearly still a market for flagship smartphones. They excite fans of the brands that make them and often serve as the reference point for the company's design language that filters down to mid-range and lower-end phones. But the days of the flagship smartphone as the be-all, end-all product for smartphone companies are over.
HTC is aiming to bounce back from a weak launch of its flagship One M9 smartphone by releasing a bevy of mid-range phones in its Desire lineup to U.S. carriers, especially prepaid ones. The hope is that by targeting phones that cost $200 or less without a contract at U.S. consumers, it can regain market share and mindshare while still emphasizing the software and design touches of the M9.
Apple may have captured around just 18 percent of the global smartphone market in the first quarter, according to research firm IDC. Yet according to investment bank Canaccord Genuity Apple grabbed nearly all of the smartphone profits that quarter.
CTIA said that a group of wireless carriers and smartphone makers had implemented a set of voluntary principles aimed at stopping smartphone theft. The announcement came just as a California law requiring smartphones sold in the state to have a "kill switch" went into effect.
U.S. carriers' embrace of equipment installment plans, and consumers' newfound appetite for such plans, helps operators' bottom lines. But analysts say that as consumers hold onto their phones for longer than they used to under two-year contracts, it is likely going to cause pain for smartphone makers that had grown accustomed to consumers upgrading to new phones more often.
HTC has rebutted the idea that it would consider a merger with larger rival Asustek Computer after Asustek left open the possibility of some kind of a deal.
Taiwan's Asustek Computer has not closed the door on the possibility of acquiring fellow Taiwanese smartphone maker HTC, which is struggling to revive its sales. However, it's unclear if Asustek would make a bid.
In a surprise move that reflects the continued unevenness of its turnaround efforts, HTC cut its revenue projection for the second quarter and said it expects to report a net loss amid weaker sales for its high-end smartphones.