Declining smartphone maker HTC booted from blue chip index

A woman speaks on her mobile phone in front of an HTC mobile phone billboard in Taipei

Taiwan’s stock exchange has removed smartphone maker HTC from its index of blue chip companies, signposting the dramatic decline of a business that once ranked as Taiwan’s No. 1 brand and dazzled consumers with some of the world’s first Android handsets.
The exchange removed HTC from its FTSE TWSE Taiwan 50 index yesterday after the company’s market value declined below the level required for inclusion in the market benchmark. The index lists Taiwan’s 50 biggest companies which together represent 70 percent of the market’s value.
It’s a humbling comedown for a company that once sold more than 1 in 10 of phones worldwide, received plaudits for innovation and represented Taiwan’s ambitions to spawn its own globally recognized electronics brands.
In the past several years, HTC has struggled because of marketing and supply chain glitches as well as intense competition from Apple, Samsung Electronics and Chinese makers such as Xiaomi. Last month, it announced a 15 percent cut in its staff of about 15,700 after a second-quarter loss of USD247 million.
“They made a lot of missteps, but they were also caught in the crosshairs of a shift to commoditization of the market,” said John Brebeck, senior Taipei adviser with Hong Kong investment consultancy Peace Field.
HTC, an 18-year-old company that started out doing contract work for other high-tech firms, came out with its HTC Magic phone in 2008. It ran on Google’s Android operating system when other vendors were still working on feature phones — the kind with buttons rather than touchscreens. Company revenues shot up 93 percent in 2010.
By early 2011 those handsets, backed by a reputation for lightness and technical quality, had taken HTC to its world market share peak of 10.7 percent.
That year the New York-based consultancy Interbrand ranked HTC as the No. 98 brand worldwide. That laurel cast the company whose initials stand for “high tech computer” as a model for an island dependent for decades on high-tech contract work but with few globally known brands of its own.
HTC’s decline began as the number of smartphone vendors surged along with total shipments that reached 1.2 billion units last year, up 28 percent over 2013.
Samsung and Apple captured the United States through sales contracts with wireless carriers while local Chinese brands such as Lenovo and Xiaomi led in China as HTC was trying to establish a customer base. Its world market share is estimated now at 3 to 4 percent.
HTC attributes its losses to slowing use of high-end Android phones, changes in its product lineup and increased competition.
It will keep working on high-end handsets along with connected devices and “virtual reality,” the company’s media office said last week.
“We remain confident that, with the diversification of our product portfolio and our continued investment in innovation, our market share will grow,” it said. Ralph Jennings, Taipei, AP