HTC's Problems Go Way Beyond Marketing

Smartphone maker HTC had a down year in 2012. That's not news, the company's troubles have been well documented. Samsung, the playground bully of the mobile industry, basically beat up HTC and stole its lunch money. Apple, that conniving and clever older sister, boxed HTC in to a corner and took whatever what it wanted. 

Yes, Apple and Samsung are HTCs biggest problems. Why? Because they have deeper resources, better distribution and a better position in the minds of phone buyers. They also have better… marketing? At least that's the real problem according to HTC.

Marketing? Really? That's What You Think The Problem Is?

"Our competitors were too strong and very resourceful, pouring in lots of money into marketing. We haven't done enough on the marketing front,” HTC CEO Peter Chou said in an interview with The Wall Street Journal

Stop me if you've heard this before. A CEO of a once-powerful smartphone manufacturer addresses a poor year, claims that the company is basically fine and blames the marketing department and budget for undercutting potential sales. 

The RIM Example

Oh wait. We have all heard that one before:

"What we need to get a bit better at here is to have a little bit more of an ear toward the consumer. I want to strengthen this by bringing really good marketing expertise in,” said Research In Motion’s CEO Thorsten Heins when he was announced as the head of the company in January 2012.

RIM would go on to have the worst year in its history - making its previous problems seem like a Golden Age. 

HTC’s problems are not the same as RIM’s, of course. The BlackBerry maker’s major flaw in 2012 was that it did not release a new smartphone to the market and its aging BlackBerry 7 operating system was forced to carry the load while waiting for an upgrade. Most of RIM’s sales in 2012 came from international liquidation of old products ahead of the BlackBerry 10 launch. RIM’s problem was not a failure of marketing, it was a failure to do… anything. 

HTC Has A Host Of Issues

On the other hand, HTC came out with its One series of devices in 2012 which were generally well regarded by the few people that bought them. The Droid DNA on Verizon proved a decent addition to the market at the end of the year. 

HTC’s problems stemmed from a variety of faults. Foremost among them was distribution. Samsung and Apple have both realized that the best way to gain rapid market share is to be everywhere all the time. Samsung typically releases its flagship Galaxy smartphones (including the S 3 and Note II last year) on all four major carriers in the United States and most of the equivalent carriers around the globe.

Apple has worked hard to increase its international and pre-paid market presence and, since the iPhone 4S, sells the iPhone on all three top U.S. carriers (AT&T, Verizon, Sprint). When HTC’s flagship One X came out in May 2012, it went exclusively to AT&T. Lesser One-series phones went to the likes of T-Mobile. Verizon was notably absent from any One-series phones, a gap HTC was slow to rectify until the DNA made its debut. 

Availability Is Key

HTC needs to recognize that its problem not just marketing, but availability. That's no doubt why the company is making a renewed effort in China with the Butterfly - and initial reports are encouraging. According to The Wall Street Journal, HTC sold 2.8 million smartphones in China in the third quarter of 2012. 

HTC launch of the One X was derailed when Apple temporarily won an injunction from the U.S. International Trade Commission blocking sales of the device shortly after it was released. The One X was forced off of AT&T’s shelves for close to three weeks in May/June 2012. HTC never really recovered and later settled its patent disputes with Apple and will pay a licensing fee to Cupertino for smartphones that use Apple's patented technology. 

Patents and distribution. Those were HTC’s biggest problems - not marketing. Failure to create a product intriguing enough to stop the hordes from buying iPhones and Galaxies ranks third. HTC lost ground to budget Android manufacturers ZTE and Huawei as well, so it is not just an Apple/Samsung problem.

Marketing? Sure, that probably played a role in HTC’s overall poor performance, but it was not the biggest contributing factor. HTC’s problems had more to do with logistics than advertising. 

When HTC comes out with its next flagship device (likely to be called some derivation of “M7”) later this year, it needs to get it released on AT&T, T-Mobile, Verizon and Sprint in short order. Build hype through marketing, then win with ubiquity and beauty. 

So, here we are at  the dawn of a new year, once again hearing the “marketing was our biggest problem” story from a struggling smartphone leader. Can HTC avoid what happened to RIM  after Heins made his proclamation? Perhaps, as long it manages to release new smartphones that continue to push the envelope on design and features.