Following layoffs in its field sales force and the resulting change to HTC’s U.S. business, the company likely won’t launch a new flagship smartphone next year across major wireless operators in the United States, according to Cliff Maldonado at handset research firm BayStreet Research.
“I don’t expect HTC to launch a new flagship phone across carriers next year,” Maldonado said.
Maldonado said that last month HTC laid off much of its field sales force, which means the company doesn’t have the staffing necessary to sell a major smartphone through all of the nation’s top wireless carriers. As a result, Maldonado said the company will likely move back into an ODM business model, where it will design devices for specific customers like Google and Sprint rather than designing its own flagship phones and selling them through as many carriers as possible.
HTC did not respond to questions from FierceWireless on the topic. Last month, GeekWire reported that HTC had laid off workers in Seattle as part of a larger corporate restructuring.
During the company’s third-quarter conference call, analysts asked HTC executives whether the company was returning to an ODM model. According to a transcript (PDF) from HTC of the event, HTC’s Chialin Chang said that HTC’s recent devices like the smartwatch it built for Under Armour are part of the company’s strategy of making “powered by HTC” devices. But Chang said “powered by HTC” is a different model than “a traditional ODM thing.”
“We believe the launch of the Pixel at Verizon and the Bolt at Sprint, combined with the recent headcount reductions, indicate HTC will follow more of an ODM business model going forward,” Maldonado wrote in a recent report from BayStreet. “It is our understanding that the Bolt at Sprint is a collaboration, much like the Pixel with Google, with Sprint committing to guaranteed volumes in return for better pricing. We believe HTC has astutely restructured to compete with their hardware design strengths and partner with brands to lower marketing and distribution costs and overall risk. It will be interesting to see how and with whom HTC partners with next.”
Interestingly, HTC got its start in the smartphone industry through an ODM (original device manufacturer) business model by building devices for other companies that would then sell those devices to end users. For example, HTC was the company that built the Orange SPV smartphone for European wireless operator Orange in 2001, the first device to run a smartphone operating system from Microsoft.
HTC continued to expand its smartphone sales through the ODM model until it transitioned to a model in 2010 where it built and sold its own devices directly to consumers. Earlier this year, the company launched its flagship HTC 10 Android smartphone in the United States through Verizon, T-Mobile and Sprint, though T-Mobile discontinued the device (PDF) just three months after launch.
Now it appears HTC is returning to its roots as an ODM that builds devices for other companies like Sprint and Google.
“I think this is an astute move by them,” Maldonado noted.
HTC reported improving revenues and margins in the third quarter.