HTC profits lobbed off a cliff by rivals Samsung and Apple

Troubled Taiwanese mobe maker HTC suffered another body blow on Monday as it announced a whopping 79 per cent drop in Q3 net profits year on year.

The once proud smartphone giant admitted its net income tumbled from NT$18.64bn (£397m) in the third quarter of 2011 to just NT$3.9bn (£82.9m) in the same period this year. Revenue wasn’t much better, falling 48 per cent from NT$135.82bn (£2.9bn) last year to NT$70.2bn (£1.5bn) in the three months just gone, a 51 per cent plunge.

It’s been a pretty miserable year for HTC: the firm singularly failed to create the same buzz around its high-end products as arch rivals Samsung and Apple. In the first quarter of 2012, for example, it recorded a year-on-year drop in profits of 70 per cent.

By contrast, South Korean giant Samsung announced last week that it expects to make a record 8tr won (£4.5bn) in Q3, nearly double last year’s figure, on the back of continued strong mobile sales.

HTC was even forced to abandon its South Korean business in a bid to “streamline operations”, and has also been trying to simplify its smartphone range with the launch of the HTC One.

However, analysts were pretty gloomy about its chances of success. Gartner’s Carolina Milanesi declared the following in a Q2 market share alert:

HTC continues to struggle to differentiate its offering within the Android ecosystem. Despite the rollout of the HTC One and the fact that the device comes highly rated by bloggers and industry watchers, sales remained limited. HTC needs to focus on growing its brand value in the eyes of consumers so as to fence off competition coming from players such as Huawei and ZTE.

She added that sales in the last quarter of the year will depend on how widely distributed the One is as well as the reception given to HTC’s new Windows Phone 8 devices.

HTC recorded promising Q2 figures for China, which saw shipments jump an impressive 389 per cent year on year to nearly two million, according to analyst Canalys.

However, Ovum’s Jan Dawson told The Reg HTC can’t rely on the world’s biggest mobile market to dig itself out of trouble.

“Ultimately, the smartphone market has just become so competitive that a small-scale player like HTC is always going to struggle to get significant market share, especially now that Samsung really has its act together,” he said.

“Although China’s a huge market, it’s dominated by local players and the iPhone is also becoming a bigger option there too. So it will be at least as tough there as elsewhere.”

Dawson argued that HTC needs to invest more in services such as music and video rentals and less on accessories, such as its failed Beats partnership, if it wants to turn things around.

“It also needs to get back into carriers in a bigger way – its share of shelf space has really slipped over the last year or so,” he added. ®