HTC seeks to reverse sliding sales

Taiwan's HTC has enjoyed three golden years as the first company to make smartphones based on Google's Android software. Now, it is struggling to halt a slide in sales and keep its status as a global brand in a market increasingly divided between Apple and Samsung Electronics.

HTC phones were launched in 2006 and the Taiwanese company surged into the fast lane two years later with its Android smartphones that appealed to consumers because of competitive prices on the free operating system and their strong design.

But its sales faltered from the second half of 2011, partly because its limited financial resources put it at a strong disadvantage to aggressive marketing drives by Samsung and Apple.

And unlike its American competitor, it lacked a distinctive flagship phone that captured the hearts of consumers as a must-have product. Instead it produced many phones, trying to cater to a wide range of consumers.

HTC on Friday reported a 79% drop in third quarter profit to 3.9 billion New Taiwan dollars (£61 million) on revenue of 70 billion NT dollars. It was HTC's fourth consecutive fall in quarterly profit.

Worse may be to come. It predicted revenue will drop to 60 billion NT dollars in the fourth quarter despite traditional pre-Christmas buying and its introduction of two new models running on Microsoft's Windows 8 software.

"HTC is undergoing a difficult period of trial and error," said Stephen Su, market analyst at Taiwan's Industrial Technology Research Institute. "Its technology is good and its design capability is Taiwan's best," he said. "But like other Taiwanese makers, HTC falls behind in the area of practical application."

Mr Su said HTC's unfamiliarity with Western markets puts it at a disadvantage in developing products for Western consumers - in contrast to Apple, which always seems to be one step ahead of consumer sentiment, not only in the West, but all around the world.

HTC was founded in 1997 as a contract electronics manufacturer. Under its chief executive Peter Chou, the company switched to making smartphones in 2006, collaborating with US carriers in marketing efforts.

HTC's performance reached its peak in the April-June period of 2011, when it shipped 12 million phones and its revenue totalled 125 billion NT dollars.