Taiwanese smartphone maker HTC has confirmed plans to cut 15pc of its workforce after the company’s stock value plunged below its cash on hand. The company also revealed it plans to “diversify beyond smartphones.”
Just four years ago HTC dominated the Android smartphone world with devices like the One and Desire. However, the company’s demise shows just how quickly and brutal tech companies can get it wrong in markets as sensitive as the smartphone market.
The smartphone market is not only mature, it is saturated and, despite producing some of the most advanced and attractive devices in the market, HTC is fighting a losing battle in a polarised market.
At one end of the market are Apple and Samsung locked in an eternal dogfight for high-end smartphones, while at the lower end of the market Chinese players like Huawei, Xiaomi and Lenovo are pressuring the market with low-end smartphones that boast more and more high-end features.
As a result, HTC has seen its global market share plunge from the double digits to less than 2pc.
Earlier this week, HTC’s market price fell to NT$47bn (US$1.5bn), below the NT$47.2bn cash it had at the end of June, making the company virtually valueless.
The development came after a Q2 loss of NT$5.1bn (€147.47m) and a projected loss of between NT$5.51 (€0.16) and NT$5.85 (€0.17) per share in Q3.
HTC plans to diversify beyond smartphones
“HTC’s job cuts are designed to position the company to diversify beyond smartphones,” said CEO Cher Wang.
“We need a flexible and dynamic organisation to ensure we can take advantage of all the exciting opportunities in the connected lifestyle space.
HTC employs close to 17,000 people so the cuts could impact around 2,250 workers.
The job cuts will reduce operating expenses by 35pc.
HTC, which was founded in 1997 by Cher Wang and Peter Chou, originally made devices for other companies like Microsoft, Palm and mobile operator brands like Vodafone.
As smartphones entered their heyday, HTC moved swiftly to carve out its own brand and in 2011 it was the darling of the Mobile World Congress in Barcelona with a daring array of compellingly attractive devices.
However, rather than focus on one or two signature brands, HTC began to pump out a dizzying array of devices of all shapes and sizes for various operating systems and entered into a short-lived venture with Beats Electronics.
In the past two years the company began rolling back the number of devices, focusing its efforts on the One M8 and One M9 flagship phones and Cher Wang took over from Peter Chou as CEO.
HTC’s prowess is in design and manufacturing and as opportunities emerge in areas like wearables, VR headsets and internet of things, new products could see the company rise again.
But it will be a long road back.
HTC M9 at Mobile World Congress 2015 image via Shutterstock