Cliff Maldonado of analytics firm BayStreet Research is predicting that HTC will probably not release a new flagship smartphone offering in 2017 in the United States mobile market, especially across all four major US wireless carriers (Verizon Wireless, AT&T, T-Mobile, and Sprint). According to the analyst, HTC has been left with no other choice, after the company went through significant layoffs in its field sales workforce.
Maldonado pointed out that because the Taiwanese phone maker had to lay off majority of its field sales team a month ago, it no longer has enough manpower to effectively market a major smartphone release through the Big Four mobile operators in America. The likely next move for HTC will be to revert to an original design manufacturer (ODM) business structure, in which it will handle the designing of mobile devices for specific clientele (like Sprint or Google), and move away from launching its own flagship handsets and selling them via wireless carrier partners.
When HTC conducted its third quarter earnings conference call, various industry watchers had asked the Taiwan based mobile manufacturer if it was indeed going back to an ODM set up. According to Chialin Chang, the chief financial officer of the company, recent HTC mobile devices, like the smartwatch it made for Under Armour for instance, are part of the tech giant’s strategy of producing devices that can be branded as “powered by HTC.” Chang, however, clarified that such an approach is not the same as an ODM business model.
Maldonado, however, believes going ODM is the likely course of action for HTC at this point. With the launch of Google’s Pixel devices via Verizon Wireless, and HTC’s Boltexclusive via Sprint, coupled with the recent sales workforce layoffs, an ODM approach seems practical. Maldonado sees the HTC Bolt as a good collaborative effort between the phone maker and Sprint, and such a partnership should be financially rewarding for the phone maker. Moreover, by focusing on design, the company will no longer have to worry about shouldering promotion and distribution costs, not to mention be burdened with the financial risks that come with that.
And it is not like HTC is a stranger to ODM. The tech giant actually has roots in that business model, manufacturing devices for other firms that would then handle the sales and distribution to mobile users. For instance, around fifteen years ago, HTC produced the Orange SPV smartphone for European mobile operator Orange, the first smartphone to be powered by Microsoft’s mobile operating system. By 2010, HTC had transitioned to building and selling its its own smartphones.
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