HTC Corp. is pushing back the rollout of its new flagship smartphone due in part to some component shortages, a setback for the Taiwanese smartphone maker which is banking on the HTC One to turn around its flagging sales. Several retail distributors and telecom operators including Vodafone Group said HTC has notified them of shipment delays of the new smartphone. Best Buy Co. said in a statement the retailer was planning to sell the HTC One around the third week of March, but the date has been pushed back. HTC executives attributed the delay in shipments to shortages of components including metal casings and camera parts.
This is what a death spiral looks like:
- HTC is a smartphone-only vendor with limited capital reserves
- HTC foolishly wastes cash on acquisitions, including VIA and Beats, and pisses off the carriers to boot by allowing their phones to be unlocked
- HTC underinvests in marketing, including above-the-line (advertising), commissions, etc.
- Samsung does the opposite, plus a whole lot of other interesting stuff (lots more about this soon)
- HTC sells relatively few phones compared to Apple and Samsung, resulting in less cash for marketing
- Less cash for marketing means fewer phones sold; fewer phones sold means less buying power in the component markets
- Less buying power for components means their “Savior” phone is late, which means they get less cash
Which means they’re dead.1
UPDATE: The article has been updated to include this startlingly honest quote (emphasis mine):
One HTC executive said the company has a had a problem managing its component suppliers as HTC “changed its order forecasts drastically and frequently following last year’s unexpected slump in shipments.” The executive added that “HTC has had difficulty in securing adequate camera components as it is no longer a tier-one customer.”
- Hopefully they’re acquired by someone interesting; they really do have great engineering and the best product. However, even that advantage is being eroded by the cash crunch. From the same article:
Apart from supply chain issues, HTC is also facing employee turnover as rivals such as Acer Inc. Asustek Computer Inc. and Huawei Technologies Co. have been beefing up on hiring, some HTC engineers said.
“This was the first time that HTC didn’t give out a year-end bonus…management probably wants to reserve the money to boost marketing this year,” said one engineer.
I can confirm this is absolutely true. [↩]