HTC, Maker of Android Smartphones, Drops Revenue Forecast for 2009

Smartphone maker HTC lowered its 2009 revenue forecast for the year, after the Taiwan stock market closed for the day on July 31.
 
Instead of growth of about 10 percent, the Taiwan-based company is now predicting a “low to mid-single digit” fall in revenue, according to a report from Reuters.
 
The IDG News Service reports that HTC blames China’s 3G mobile networks, which have ramped up more slowly than anticipated; the delay of a few new smartphone models; and slower than expected sales of smartphones running Microsoft Windows Mobile and the Google Android operating system.
 
The economy has been hard on handsets. On July 30 Strategy Analytics reported that global handset shipment were down by 8 percent in the second quarter of 2009, which was an improvement on the previous quarter.

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HTC has also lowered the average selling price (ASP) of its handsets. In the second quarter of 2008 the ASP was $381, which fell to $364 in the first quarter of 2009 and $358 in the second half, according to IDG.
 
Apple also lowered prices when it introduced the iPhone 3GS on June 8, reducing the iPhone 3G to just $99, with contract. However, the iPhone maker stands alone in its ability to prosper in an economy that has left others to shrivel. On June 27 Apple reported profits of $1.23 billion for the quarter ending June 27, which was up 12 percent from the same quarter a year earlier.
 
“I'd say it's pretty much par for the course,” Charles King, an analyst with Pund-IT, told eWEEK regarding HTC’s announcement.
 
“Though some stock exchanges are showing signs of optimism, the global economy is still in the doldrums with unemployment still rising. Bottom line: HTC's lowered expectations reflect a consensus about weakened consumer spending through the end of the year.”
 
King said he didn’t at all read this as a condemnation against Android, which has been received with enormous enthusiasm since its arrival during the summer of 2008. Analysts have predicted that by 2012, Android will be running on 12 percent of the smartphones shipped globally.
 
In May, Google has estimated that by the end of the year, Android will be running on 18 to 20 mobile phones, and in July, T-Mobile announced it had sold over 1.5 million of the G1 handsets running Android that it first made available on Oct. 22.     
 
For now, says King, “iPhone seems to be the only handset out there capable of bucking the market.”
 
Roger Kay, president of Endpoint Technologies, points out that HTC is still fairly new to the OEM business.
 
"They haven't been a brand in this part of the world for very long, so they're still in their initial market launch, in some sense," he told eWEEK.
 
"So essentially, whatever position you were in before affects how the downturn impinged on your business. In the case of a brand that's kind of new, it can be particularly hard—you can't rely on your old customers, because there aren't any."
 
Kay says HTC "has their work cut out for them" with Android, which has had high expectations from the start, though penetration is still limited.
 
However, Kay points out, "There's not that many Taiwanese [original design manufacturers] that have managed to go from behind the curtain to in front of it. ... If they can make it through the downturn, and if others are weaker, they can move up and be in pretty good shape."