HTC Acknowledges Communication Problem With Consumers, Says Fourth Quarter Will Be ‘Biggest Challenge’

Taiwanese smartphone maker HTC (TPE:2498), which recently posted its first-ever quarterly operating loss, has acknowledged a communication problem with its consumers, and said the fourth quarter will be the “biggest challenge” for the company as it attempts to convince consumers that its products are as good as those produced by rivals, Apple (NASDAQ:AAPL) and Samsung (KRX:005935).

Cher Wang, HTC’s chairperson, told Bloomberg on Saturday that the fourth quarter would be the time to prove that the company is improving its innovation and marketing tactics.

“We really have the best technology and the best product,” Bloomberg quoted Wang as saying at the Asia-Pacific Economic Cooperation conference in Bali, Indonesia. “When we actually communicate better, the consumer will know it because they can feel our product is the best.”

Last week, HTC reported an operating loss of $101.3 million with a total third quarter revenue of $1.6 billion, which was less than last year’s revenue of $2.35 billion with an operating income of $42 million.

HTC said in July that it would release more competitive mid-range products in coming months, and expressed hope that its new products would help the company “regain momentum and market share in these segments in Q4.”

While current rumors suggest that HTC may release a bigger version of the HTC One, dubbed the HTC One Max, in the fourth quarter of this year, Arthur Liao, an analyst at Fubon Financial Holding Co. in Taipei, recently said that the company will launch redesigned smartphones in the first half of 2014.

While rivals such as Apple and Samsung made inroads into the smartphone market, which now resembles a battlefield, HTC’s worldwide smartphone market share dropped to 2.8 percent in the second quarter of this year from 5.8 percent a year earlier, according to data compiled by Bloomberg.

A report from the International Data Corporation revealed in July that the worldwide smartphone market was dominated by Apple and Samsung in the second quarter of 2013, with a combined market share of 43.5 percent.

Meanwhile, HTC is expected to remain in the red until the first quarter of 2014, despite the launch of new smartphones this year, Focus Taiwan reported, citing Hong Kong-based brokerage CLSA Ltd.

“With fierce competition from the iPhone 5S/5C, Galaxy Note 3 and Chinese handsets, we expect HTC to remain in losses for the next two quarters,” Taipei-based CLSA analyst CK Cheng wrote in a research note. “Chinese makers arguably may view HTC as an attractive takeover target, but such a deal would be politically unpalatable for HTC's board.”