Yet another red quarter for HTC as revenue drops 44% year-on-year

The latest HTC results, for its Q2, confirm another loss-making quarter for the smartphone and VR headset maker, with the Taiwanese company reporting revenue of NT$18.9 billion ($598 million) for the quarter versus the NT$33.0 billion ($1.07 billion) it made in the year ago quarter. That’s a drop of around 44 percent.

HTC reported a loss of NT$4.2 billion ($133 million) in its second quarter, which ended June 30. The only bright spot here is that it’s less of a revenue plunge than the company made in its Q1 when it was 64 percent down, year on year.

The company started shipping its Vive headset during the quarter, although it started taking pre-orders earlier in the year. While pre-orders of its new flagship smartphone, the HTC 10, only began at the start of the quarter, with a $699 price-tag for the device in the U.S. — but it evidently failed to deliver enough uplift to pull it out of the red entirely in Q2.

HTC reported its first loss-making quarter back in October 2013, and ever since the company has been struggling to turn its smartphone fortunes around in the face of increasingly fierce competition and a squeeze on hardware profit margins.

Since then it has diversified its business via a wearable and fitness tech partnership with Under Armor, and a side-step into VR, in collaboration with games publisher Valve — the latter a space where there are far fewer competitions but also far fewer consumers, given how early and unproven the tech yet is and the paucity of compelling content.

It’s certainly still early days for VR, but HTC is crediting the Vive VR rig with giving a boost to its brand and contributing to a 27 percent rise in revenues over Q1 this year.

The company is also touting “worldwide interest” and “sales momentum” for its HTC 10 smartphone, but isn’t breaking out any actual sales figures.

Nor is it breaking out Vive sales figures — saying only that sales were “strong” during the pre-order period in the latter half of its Q1.

That would tally with the notion of a pre-order spike from early adopters, while offering no evidence to suggest signs of any more sustained consumer demand for VR, at this nascent stage.

For that, the VR industry will need time to mature to convince consumers with compelling content. And, ultimately, prove it’s more than just a flash-in-the-pan nerd’s recurring fantasy.

Commenting on its Q2 in a statement, HTC CEO and chairwoman Cher Wang said: “In the space of one year, we have reimagined the company, reclaimed our top spot for innovation, and demonstrated solid execution across our major product lines. I believe that HTC has regained its innovative zeal and is looking ahead with confidence and ingenuity.”

Best new phones 2016: HTC 10

HTC has today (12 April) unveiled its HTC 10, successor to the HTC One M9. It continues to major on sound, but the BoomSound stereo speaker setup looks a little different at the front, with the tweeter at the top and woofer on the bottom edge of the phone.

In common with the LG G5 it's a Qualcomm Snapdragon 820-powered smartphone with 4GB of RAM, but it's slightly faster-clocked at 2.2GHz. HTC has also upgraded the screen to a 5.2in Quad-HD Super LCD 5 screen, and implemented a fingerprint scanner.

The HTC 10 is priced in line with the Galaxy S7 at £569, and available to pre-order immediately. An exact release date has not been confirmed, but according to our friends at Clove it should go on sale the week commencing 9 May.

Read more about the HTC 10 in ourComplete guide to the HTC 10, HTC 10 hands-on review, and HTC 10 vs Galaxy S7 vs LG G5 comparison.

HTC 10 Wins Heaps of Praise With a Sprinkling of 'Buts'

HTC this week unveiled its latest flagship smartphone, the HTC 10.

The phone's camera is outfitted with new, larger sensors and 12 million new-generation UltraPixels. Both the front and rear cameras sport the world's first optically stabilized, larger-aperture f/1.8 lenses on, the company said.

The rear camera also has a faster laser autofocus. The front UltraSelfie camera has a wide-angle lens and screen flash. Both cameras take sharp, high-resolution photos, even in low light, according to HTC.

"Is it a good camera? Yes. Is it a sexy style? Of course," said Ramon Llamas, a research manager at IDC.

HTC "deserves credit for makes its 10 one of the best camera phones on the market today, but mass-market consumers are not rushing into stores for snazzy camera phones, and they remain niche differentiators for now," remarked Neil Mawston, an executive director of research at Strategy Analytics.

"We expect the HTC 10 to sell reasonably well in the United States and worldwide, but it isn't an iPhone killer or an HTC savior," he told TechNewsWorld.

Standout Features

"The HTC 10 is the best phone HTC has ever produced, and it has a few standout features," noted Ville-Petteri Ukonaho, a senior analyst with Strategy Analytics.

Among them are its camera, the BoomSound feature, materials used for the body, and a UI that "differs it from the competition and offers more customization than before," he said.

"Brushed aluminum certainly is better than the LG G5's painted aluminum," Ukonaho told TechNewsWorld.

The camera, with its UltraPixel setup, is similar to that in the Samsung Galaxy S7, he pointed out. "Both are 12 MP cameras with similar apertures, and their pixel count is quite close." The wide-angle lens on the HTC 10's front camera makes for better selfies, though.

BoomSound "has been around for a while now," Ukonaho observed. "Now the dual-speaker setup returns, with the secondary speaker acting as a subwoofer."

The K.I.S.S. Principle at Work

Apart from the camera, the HTC 10's simplified app drawer captured the attention of Daniel Gleeson, a senior analyst with IHS.

"Cutting down on app clutter is a huge plus, and should make the device very easy for new users to adjust to," he told TechNewsWorld.

"People want less bloatware, less confusion and greater clarity as to whose apps they should be using," IDC's Llamas told TechNewsWorld. "The HTC 10 echoes that higher approach of simpler is better and easier."

Missing the Wow Factor

The HTC 10 "is a me-too Android rectangle and is unlikely to turn around the company's fortunes," noted Strategy Analytics' Mawston. "The hardware design looks very similar to most other smartphone models on the market, while its core specs, features and apps are little different to many of its rivals, like the Galaxy S7."

HTC will have two versions with different Qualcomm Snapdragon CPUs.

That strategy is the same one adopted by LG and others, Ukonaho said. It "saves the main chipset supply for the most important markets."

Offering two versions allows HTC "to reuse marketing assets ... and should help streamline the manufacturing process," keeping down costs, IHS' Gleeson said. That should help it compete against white-box Chinese manufacturers.

Still, the HTC 10 "lacks the wow effect that would make customers buy it," Ukonaho noted. "That, and the bad reputation it got with last year's overheating model, require heavy marketing efforts for HTC to succeed with the 10."

HTC "is feeling pressured both from Apple and Samsung at the high end and from Huawei and Lenovo at the mid- and low end of the market," Gleeson said. "Without any clear differentiating factor, it will be very tough for the HTC 10 to recover the market share HTC has lost in recent years."

IHS has predicted that HTC's shipments will fall by nearly half this year, and the company's long-term future "is not in the smartphone market," Gleeson said. "It's very much dependent on the success of its virtual reality product, the HTC Vive."