HTC named Chairwoman and co-founder Cher Wang as its new CEO, replacing longtime CEO Peter Chou. However, Chou is not leaving the company. Instead, he will lead HTC's "Future Development Lab," where he will be focused on future product development and growth opportunities for the firm. The shakeup is in many ways the culmination of a process that began in October 2013 when Wang took over some of Chou's day-to-day duties running the company so he could focus more on products.
The timing of the changes is notable, since HTC is about to releases its latest flagship smartphone, the One M9 (the phone's U.S. debut is set for April 10). In a statement, HTC said its board and executive team "agreed that it was now appropriate to formalize that progression and make the organizational changes necessary to enable HTC to proceed to the next stage of its development."
Chou led the company's transformation from an ODM to a branded OEM with a global presence. HTC released the first smartphone running Google's (NASDAQ: GOOG) Android platform, the G1, in 2008. Before every carrier had Apple's (NASDAQ: AAPL) iPhone, Chou turned HTC into a smartphone powerhouse with Android phones like the Evo for Sprint (NYSE: S) and Incredible for Verizon Wireless (NYSE: VZ), which helped make HTC the top Android smartphone player in the U.S. and the world at its peak in 2011.
However, since then, product delays, marketing missteps, increased competition, executive departures and other factors have taken their toll. All of that has coincided with Samsung Electronics' rise in the smartphone market and its willingness to spend billions of dollars marketing its phones, a budget HTC never had and likely never will. Meanwhile, HTC has been attacked in the low-end and mid-range parts of the market by a raft of competitors, including Xiaomi, Lenovo, Huawei, ZTE and others.
HTC has been plagued by a rotating cast of chief marketing officers (the newest is Idris Mootee, who was appointed in February). The company has also had a partnership since August 2013 with actor Robert Downey Jr. to be its spokesman that has not translated into a large uptick in sales and has produced some strange ads along the way. HTC has seen its market share dwindle, revenues plunge and profits fizzle--until recently.
Yet HTC has reported a slim profit the last three quarters and in the fourth quarter of 2014 it saw its sales rise year-over-year in a quarter for the first time since the third quarter of 2011. The company's smartphone sales are starting to pick up again, and the company has been pushing into new categories. Specifically, HTC has released the small portable Re camera, the Grip smart fitness band in partnership with Under Armour, and the Vive virtual reality headset in partnership with Valve.
HTC alluded to these shifts in its statement. "We are seeing rapid changes in the industry, with the smartphone as our personal hub connecting us to a growing world of smart devices," Wang said in a statement. "We pioneered the smartphone industry; now we are applying that thinking to realize the potential of a new generation of connected products and services. The overwhelming response that our virtual reality product, HTC Vive, received earlier this month underlines the importance of these new connected technologies for our future."
Some analysts were not impressed by the change. "Peter had done poorly, but even with Cher's return it will be difficult for HTC to turn things around," Yuanta Financial Holding Co. analyst Jeff Pu told Bloomberg. "Her appointment may also imply that it's difficult to find a fresh leader from outside."
Yet Wang has basically been at the helm for the past year and a half, and so she bears both some of the blame and the credit for HTC's position in the market and its strategic choices. For her part, Wang said the decision seemed natural and said she is comfortable fully taking the reins.
"I know the company, I know the people, and I have the vision," she told Bloomberg. "I think I am the best candidate. I suggested it."
Both Reuters and the Wall Street Journal noted, citing unnamed sources, that Chou has a reputation as an abrasive and brusque manager and that his demanding style hurt morale. Some unnamed sources, presumably from within HTC, told the Journal that they privately questioned if Chou had the strategic vision to revive the company's prospects.
Wang told the WSJ she plans to be CEO for the long term. Since taking over more of a day-to-day role, Wang has also shifted some responsibilities to CFO Chialin Chang, making him head of sales and of the smartphone business. Chang told the Journal he will hand off CFO duties when a successor is found.
As HTC looks to expand its product range into connected health, home and multimedia product areas, the company is still focused on the smartphone business. Earlier this week HTC announced it will offer a phone-replacement service to U.S. One M9 users at no additional cost. Through its new Uh Oh Protection phone-replacement program, HTC said it will replace a One M9 with a cracked screen or water damage within the first 12 months after a user buys the device. The company also said it will replace the phone if a user decides to switch carriers and their existing phone isn't compatible with the network of their new carrier. If any of its customers don't make use of its Uh Oh Protection program, after 12 months it will send them a $100 credit they can use to buy a new HTC phone. The company also said the program can be applied to its existing One M8 phone.
- see this release
- see this Bloomberg article
- see this WSJ article (sub. req.)
- see this Reuters article
- see this The Verge article
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