One Key Market For HTC's 'Two' Series Smartphones

HTC will try to win back world market share in early 2014 by offering a series of smartphones called the One Two, analysts in the developer’s homeland Taiwan say. This new line of high-end gear would follow the developer’s One series. But will One plus Two equal world market share above HTC’s current 3 to 4%?

Doesn’t look like it -- unless HTC plugs into just the right market.

First, technical differences between One and One Two may be hard to sell. The One Two would include separate camera lenses for low and high lighting plus a fingerprint app, says Wilson Miao, an analyst with market research firm TrendForce in Taipei.

That won’t be enough to sway sales away from Apple and Samsung, which all but own high-end smartphone markets in the West. No matter who’s making the device, there’s not that much more you can pack onto a smartphone other than revamps of features that are already out there. It’s harder now than ever to stand out in smartphones as 1.3 billion are forecast to ship in 2014.

An HTC publicist says “it’s kind of too early” to discuss 2014 smartphone models, but analysts expect the One Two around March. Its opening model will be 4.9 inches high, run on a Qualcomm processor and use the Android operating system, Miao says. A probable price: $600. Those coordinates would be nothing new.

The company has tried a series of measures to sell its One this year following an overall market share drop from early 2011 high of 10.7% and a third-quarter loss of 6.3%. Although HTC’s marketing and supply chain issues of the past are being fixed, the One didn’t even dent its chief peers Galaxy and iPhone. The One may be phased out if the One Two picks up points.

The 17-year-old Taiwanese developer lagged at least five rivals including world No. 3 Lenovo and No. 5 Huawei, both from China, according to market research firm Gartner’s market share stats from the third quarter.

Did someone say China? HTC does 35% of its business there now, mainly from mid-tier models. If it can make a deal with the dominant carrier China Mobile , which has 760 million subscribers, then sales of new smartphones could add up fast. The country generally prefers mid-tier prices, and HTC has gone after that segment. But some Chinese don’t mind spending more, says Dennis Chan, handset research analyst with Yuanta Securities in Taipei. “They can afford it,” he says. “They’re already buying the Apple iPhone.”

By comparison, the United States is saturated and emerging Southeast Asian markets lack China’s scale or buying power, says C.K. Lu, Gartner’s smartphone analyst in Taipei. “In terms of market share, China is going to be important to them,” Lu says. “They need to understand what the consumer wants and alter their portfolio to meet those needs.”