HTC launches smartphone for Malaysian market as shares slump

• Cheaper, high-spec smartphone comes amid turbulent time
• Good products but let down by poor marketing

HTC Corp has launched the HTC One E9+, a scaled-down version of its flagship smartphone the HTC One M9+, in Malaysia even as it reported disappointing second quarter earnings globally.
 
HTC Malaysia executives may have been upbeat about the prospects for the HTC One E9+, but industry analysts say sales of the device are expected to be lacklustre at best, and would not contribute to the company’s global recovery.

The Tauyuan, Taiwan-based smartphone maker’s share price was pummelled when it revealed its second quarter earnings on Aug 6, falling by more than 10% – which is the daily trading limit in the Taiwan Stock Exchange – to NT$63 (US$2) from NT$71.20 the day before.
 
The share price has since further dropped to NT$57.50 at the end of Aug 10.
 
This is the lowest ebb for HTC since 2005 and indicates how far the company has fallen – back in 2011, its shares used to trade at NT$1,200 (US$37.9) for a market capitalisation of about NT$900 million.

[NT$1 = US$0.032]

Industry watchers Digital News Asia (DNA) spoke to said the announcement of the new E9+ model was ill-timed, but added that there was little HTC Malaysia could do about it, given that the launch had to go on regardless of the timing of its corporate parent’s second quarter earnings report.
 
Still, HTC Malaysia Sdn Bhd country manager Cheong Wah Tong remained hopeful that the smartphone would perform well in the market.
 
“We are confident the market will respond well to the new HTC One E9+ as it offers the best of both worlds – stylish outlook and finishing, coupled with state-of-the-art mobile technologies designed for both work and leisure,” he told DNA via email.
 
“While it is priced slightly higher than a few devices within its category, it is packed with innovative and more advanced features, giving it an edge over its peers in the market,” he claimed.
 
Believing in it
 
The HTC E9+ is priced at RM1,899 (about US$484 at current exchange rates) and is targeted at the sub-RM2,000 smartphone market category.
 
Its rivals just launched competing products in this segment, such as the Xiaomi Mi Note (RM1,549), the Huawei P8 (RM1,799), the Oppo R7 Plus (RM1,598), as well as the Asus ZenFone 2 (RM1,299). [RM1 = US$0.25]
 
The HTC E9+ comes equipped with MediaTek’s latest 2GHz Octa-core processor, 3GB of RAM, 32GB of internal storage expandable to 128GB via a micro SD card, and a 1440 x 2560 pixel (534-pixel density) Corning Glass 4 display.
 
It sports a 20-megapixel rear camera, is dual SIM capable, weighs about 150g and comes with HTC’s Boomsound with Dolby Audio and the latest version of the company’s user interface, HTC Sense 7.0.
 
HTC Malaysia’s Cheong (pic) declared that the HTC One E9+ “addresses the market demands for smartphones with a larger screen size and beautiful design.”
 
“HTC understands that asking what a customer wants [today] is not enough as we need to offer our own vision on how to make the experience better, and the new HTC One E9+ attests to this philosophy that we are upholding.
 
“This approach will allow us to win new customers and retain existing ones,” he claimed.
 
Quizzed as to why the company believes that its product will resonate with Malaysian smartphone users, Cheong said design and innovation are HTC’s two key pillars when producing smart devices, and these factors are aptly manifested in the HTC One E9+.
 
“We believe the HTC One E9+ sports a stylish outlook that adapts the iconic look of the award-winning HTC One series,” he said.
 
Too little, too late?

Analysts were not as optimistic about HTC’s appeal in today’s highly competitive sub-RM2,000 market.
 
Neil Shah, research director at Counterpoint Research, noted that HTC achieved peak position in the smartphone space in the third quarter of 2011, reaching its highest market share ever at about 10%. This corresponds to the time its share price was at its zenith.
 
Speaking to DNA via email, he said that since then, the company has been on a freefall, reaching its lowest market share in smartphone space ever at a measly 1.4% in the second quarter of 2015.
 
According to Shah’s analysis of HTC, the Taiwan smartphone maker has been too dependent on North America and Europe as its primary markets – which contributed most of its sales revenue – when it held about 10% of the smartphone market share in 2011.
 
“However, with the rise of brand competition from Samsung, Motorola and Apple in both the United States and Europe, HTC began declining and there were no other growth markets to bank on.
 
“HTC never recovered from falling off that cliff, losing premium market to Samsung and Apple which have greater marketing, brand and distribution power,” he said.
 
Another analyst contacted by DNA concurred, saying that HTC’s flaws are not in its design and manufacturing, but in its marketing and branding.
 
“The company makes good products and does so at the highest of quality that can rival the rest," he said, speaking on condition of anonymity.
 
“It had leading class designs, like when it first came up with the unibody all-aluminium design in the HTC One M8, which was followed up by the HTC One M9.
 
“But it has struggled to differentiate itself from the [competition] and it also failed to control its manufacturing costs. Samsung is better off due to its larger scale and its semiconductor capabilities, while Apple has greater profit margins,” he added.
 
The analyst also argued that there is not much room anymore to market a smartphone that is close to RM2,000 when other products such as Xiaomi’s Mi Note and Asus ZenFone 2 all come with high specs but at a sub- or near-RM1,500 price point.
 
“The choices in that range are just too competitive and a few hundred ringgit more isn’t going to get you market share,” he said.
 
HTC also bombed in some of its highly extravagant marketing campaigns such as its two-year partnership with Iron Man trilogy star Robert Downey Jr, which reportedly cost US$12 million over two years.
 
“While that got HTC some mileage in the beginning, it wasn’t lasting enough to sustain the momentum and was certainly too expensive for its own good,” the analyst said.
 
Next Up: A deeper look into HTC’s fortunes in the global smartphone industry
 
Related Stories:
 
DNA Test: HTC's One M9+ offers pluses aplenty
 
Xiaomi Mi Note rolls out in Malaysia … finally!
 
Huawei to expand presence and device line-up in Malaysia
 
DNA Test: The Asus ZenFone 2 hits the right pricing notes
 
 
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