HTC embraces connected home, health to expand beyond smartphones

LAS VEGAS--HTC thinks it is turning a corner, both financially and in terms of the direction of the company, as the smartphone maker looks to produce unique products in the connected home, health, media and entertainment markets. Additionally, the specter of financial calamity is receding, as the firm posted its first quarterly revenue growth in more than three years and another profit in the fourth quarter.

HTC went from an ODM to an OEM that was once the world's largest Android smartphone maker before seeing its market share tumble in 2013 amid rising competition and price pressure. Now that the company is on firmer financial footing, it is turning to other product categories as the smartphone market matures.

In 2015, the company's new Connected Products business unit will produce products that run in parallel to the company's smartphone business in four distinct categories. Those include Connected Life, which will be focused on enabling customers to capture, share and organize their personal media, photos and stories, and is epitomized right now by the company's RE camera; Connected Self, to improve and organize mobile health and performance; Connected Entertainment, to give users easier access to content; and Connected Home, to focus on appliances, security, entertainment and environmental concerns.

HTC plans to launch at least one product from each of the four categories by the end of the year.

HTC kicked off the Connected Self unit with a partnership this week with Under Armour; HTC is supporting UA Record, a health and fitness app for Android and iOS devices that lets users to monitor and share their fitness data and goals. The companies plan to work closely together, which HTC executives said will be a hallmark of the approach HTC will take with Connected Products.

"We'll partner with companies where it makes sense," Jason Mackenzie, HTC's president for the Americas, told reporters during a roundtable discussion here at the 2015 Consumer Electronics Show. He said HTC will carefully select partners to complement its own assets, especially for specific industry knowledge, reputation and sales. HTC will also engage in co-branding where appropriate, he said.

Jeff Gattis, executive director of marketing for HTC's emerging devices business, acknowledged that HTC "can't afford to just throw products into these categories that everyone else is in and expect to win. For us it's being thoughtful in each of these four categories in a way that is unique and differentiated."

The Under Armour partnership is an indication that HTC isn't going to just launch a wearable for the sake of doing so. Instead, it's partnering with a leader in the fitness market to augment its entry into the space.

In terms of the connected home, Gattis said HTC is not going to launch another home control hub or thermostat. Instead, Gattis said HTC will release products that add value straight out the box. "We're going to make something that solves a problem in the home," he said.

Mackenzie said that HTC will look to carve out a unique position in the market. "We're not going to do me-too products," he said. That being said, he acknowledged that the more innovative a product is, the more commitment it requires, and HTC will need to be patient to make sure it is a success.

Gattis said that each of the four categories HTC will expand into will have their own core audience and demographics. The marketing plan for reach is still being developed, he said, and added that products in each category will not hit the market at the same time. HTC's partners will help the company refine its marketing message, Gattis said.

As HTC works to expand to new markets, its financial footing is improving. Mackenzie said the fourth quarter of 2014 was the company's best quarter in three years, partially due to HTC's expansion into mid-tier smartphones via its Desire line.

HTC's fourth-quarter sales jumped to $1.5 billion (NT$47.9 billion) from $1.34 billion a year earlier, the first gain since the third quarter of 2011. The company reported net income of about $14.73 million, beating the $6.64 million average of 14 analyst estimates compiled by Bloomberg. The fourth quarter was HTC's third straight profitable quarter.

For more:
- see this Re/code article
- see this Bloomberg article
- see this CNET article

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