HTC banks on revival in Q2 thanks to new One M8 smartphone

HTC expects to see stronger sales in the second quarter than the first thanks in large part to the success it is seeing in the market with its new flagship smartphone, the One M8, which went on sale at the end of the March.

htc one m8

HTC is selling the One M8 through all the major Tier 1 wireless carriers in the United States.

The smartphone marker, which reported a $62.5 million net loss in the first quarter and saw revenue fall to a five-year low of $1.10 billion in the period, is aiming for a strong comeback on the back of the One M8 as well as more mid-range phones aimed at capturing market share in markets like China.

HTC said it expects revenue in the second quarter to fall to between $2.16 billion and $2.33 billion, which would be slightly below the $2.35 billion it had in the year-ago period but a huge jump from the first quarter of 2014.

HTC CFO Chialin Chang said the company is rolling out the One M8 with "more effective and efficient marketing" than it has in the past. "In 2014, we intend to sell more units of the M8 than the (One) M7, which was already the best-selling model in HTC history," he said, according to Reuters. The 2013 flagship from HTC, the One M7, was widely praised by analysts and tech bloggers but it did little to revive HTC's sales.

HTC shipped 3.4 million One M7 handsets in the second quarter of 2013 compared with expectations of nearly twice that amount, Yuanta Securities analyst Dennis Chan told Reuters.

Chang said sales of the M8 have beaten M7 sales in the same time frame, without providing figures. Chang also added HTC is likely to break even or book a profit for the first half of the year.

HTC also started selling smartphones priced as low as $145 on an unsubsidized basis this quarter with the help of contract manufacturers in an effort gain share in emerging markets. HTC is hoping its Desire-branded phones can help out in the mid-tier by borrowing much of the design language from the higher-end One.

In terms of executive changes to try and right the ship, HTC Chairwoman Cher Wang has taken a more active management role and CEO Peter Chou has focused more on products. Additionally, the company hired Samsung Electronics' former U.S. marketing chief, Paul Golden, as a consultant to improve its marketing.

HTC hopes that the One M8's updated software, camera and industrial design will help lure buyers as well as its strong carrier distribution, especially in North America. The company is using an unconventional marketing campaign aimed at leveraging Internet buzz and solid reviews about the M8 by telling potential buyers not to take HTC's word for it on whether they should buy the phone, but to simply "go ask the Internet." The company's ads feature actor Gary Oldman.

In a recent interview with FierceWireless, Jason Mackenzie, HTC's president of the Americas, said that HTC "took big risk of when we launched that campaign" but that so far it has been paying off with sales of the One M8 coming at a "humongous step change" up from the One M7.

In the first four weeks of sales after the One M8's debut, Mackenzie said HTC had more smartphone activations during each one of those individual weeks than any other week in 2013 except for two.

In terms of its marketing, Mackenzie said HTC will be disciplined and will continue to invest and stay relevant in the months ahead. "We don't have the media budget of some of our other competitors," he said. "One thing we think we can do is go with a new and fresh campaign that we have that basically says, we're not for everyone. We're for those who are more discerning, who want the best out of the smartphone experience."

Mackenzie said the campaign will continue to evolve but that core message will stay the same.

For more:
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article 

Related Articles:
Report: HTC names new CFO as current finance chief focuses on sales
HTC posts $62M loss for Q1 ahead of One M8's debut
HTC's Mackenzie details new marketing strategy for One M8 to counter Samsung
HTC unveils One M8 flagship smartphone - and Verizon gets to sell it in stores first
HTC releases mid-range Desire phones, aims to bring sensibility of One to mass market

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