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HTC profit slump confirms Samsung and Apple as smartphone leaders

Category : Business

HTC has reported a 98% drop in profits, leaving the top market tier to be dominated by Samsung androids and Apple iPhones

The divergent fortunes within the $200bn (£130bn) global smartphone market were laid bare this week when Taiwan’s HTC reported a 98% slump in profits, confirming Samsung and Apple’s seemingly unassailable lead over their rivals.

In 2010, HTC was the world’s biggest maker of smartphones that used Google’s Android operating system. Now it has joined two other former titans, Nokia and BlackBerry, in a desperate search for profit and growth.

As HTC reported a slump in first-quarter profits to £0.9m, Samsung Electronics, the world’s largest maker of mobile phones and smartphones, was basking in a forecast that its quarterly operating profit would be around 8.7trn (£5bn).

The market is splitting into three tiers that allow only for high-end products in developed markets, a bevy of barely profitable products in the middle, and a hugely competitive low-cost segment in developing markets such as China.

In the last quarter of 2012, the last period for which figures are available, Apple and Samsung together shipped 111.5m smartphones, according to researcher IDC. That’s more than 50% of a market that has tripled in volume over that time – and compares to a combined share of less than 20% back in the second quarter of 2010, when the once mighty Nokia had 37%.

The plight of HTC is even more stark when its market position is viewed through the prism of Google’s Android software. Android is the leading operating system thanks to Samsung, beating Apple’s iOS system and Microsoft’s Windows Phone, which is used by Nokia. If consumers are flocking to Android phones, they are choosing Samsung and not HTC.

Benedict Evans, technology and telecoms analyst at Enders Analysis, calls the Android smartphone market “Samsung and the seven dwarves” – a reference to the 1960s when IBM dominated the mainframe market, and its seven rivals fought for scraps. The modern equivalents are China’s Huawei, Lenovo and ZTE, Korea’s LG, Japan’s Sony, the now Google-owned Motorola, and HTC.

But Steve Brazier, chief executive of the research company Canalys, thinks that the HTC One phone, launched in February, offers a way back. “The HTC One is hot,” he said. “The problem is it’s not really shipping yet, which is why their first-quarter figures were bad. The product was delayed.” Nonetheless, it faces a significant challenge from the Samsung Galaxy S4 phones, which also hits retailers’ shelves this month.

Brazier adds that there is hope too for the other also-rans. For BlackBerry, he thinks it first needs to calm its US government clients, who have been eyeing the iPhone as an alternative. For Nokia, the solution is easier said than done: “It needs something radically different from what’s out there.”

HTC, BlackBerry and Nokia are fighting against a rapid decline. Since 2010, they have been squashed down from an aggregate market share of 61% to barely 10%. Now, none has more than 4% of the market. Samsung is at the top with 29%, ahead of Apple with nearly 22%.

HTC’s problems sum up the difficulties that competitors face when they are trying to overcome two players that dominate half the market. The One was delayed because, reports say, it couldn’t get enough cameras at the required specification to satisfy its needs.

Brazier said: “The big issue in the smartphone business is that Samsung and Apple are cornering the supply chain, so HTC can’t get ‘tier-one’ components.”

To be tier one you have to order in large enough volumes to demand quality and timeliness along with price discounts. Once you slip from that position, it’s hard to recover it.

A decade ago, Apple cornered the markets in small hard drives and then solid-state storage to build its iPod, and then iPod nano, and dominate the music player market. Now it uses its growing cash pile to hire factories and production well ahead of time – locking rivals out. “HTC has a real scale problem,” says Evans, the Enders analyst. “It’s a problem that Nokia is starting to face as well. It’s a problem of the reach and power that Apple and Samsung can bring to the market.”

Samsung, meanwhile, is completely vertically integrated, owning the factories that make everything from the memory chips to the screens, and writing its own apps and code to go on the only element of its smartphones that it doesn’t make – Google’s Android operating system. And even that is free. Buoyed by colossal advertising and marketing spend which dwarfs even the likes of Coca-Cola, and with worldwide distribution, it is determined to control the mobile phone market. It aims to ship 500m smartphones this year, more than the whole market in 2011.

Analysts argue that Apple needs to do something radical too to catch the growth in emerging markets as the west becomes saturated. A low-cost iPhone is widely expected. That could consolidate the Apple-Samsung duopoly more firmly.

Even, so Brazier thinks things can turn around. “The smartphone business is very dynamic. I don’t think it’s played out. HTC could bounce back.”

Does he think that bounceback will happen by the end of the year? He paused. “Well, no,” he said.

Zuckerberg eyes Android takeover with ‘best version of Facebook there is’

Category : Business

Facebook boss announces software system – Facebook Home – designed to push updates directly to users’ home screens

Facebook launched a supercharged mobile version of its social network on Thursday, in a risky bid to take over of a new generation of smartphones.

At a much-hyped product launch in California, chief executive Mark Zuckerberg announced a software system designed to take over Android phones by pushing Facebook messages, photographs and updates directly to users’ home screens.

“We want to bring all this content to the front,” Zuckerberg told hundreds of journalists, employees and technology industry insiders at his company’s headquarters in Menlo Park, outside San Francisco.

Zuckerberg said the new system, called Facebook Home, would be the “best version of Facebook there is”. He unveiled a partnership with the handset manufacturer, HTC, which has developed a phone with the software built into it.

Facebook hopes Thursday’s announcement will go some way to answering the critics who say it has failed to develop an effective mobile strategy. But some analysts were disappointed that Facebook stopping short of writing its own operating software or creating a Facebook-branded phone.

The family of apps will display mobile versions of the Facebook news feed and message service on the home screens of users’ phones. The software, which will initially be available only on selected Android handsets, eliminates the need to switch to a dedicated Facebook app by integrating the social network’s features into the heart of the device.

“Home isn’t a phone or operating system, and it’s more than just an app.  Home is a completely new experience that lets you see the world through people,” said an official company announcement.

Describing the software as “the soul of your phone”, Zuckerberg said: “Today phones are designed around apps not people. We want to flip that.”

Facebook Home will come pre-installed on the a handset made by Taiwain’s HTC, called HTF First. The manufacturer’s chief executive, Peter Chou, described as “the ultimate social phone”. It will be 4G-compatible, have a screen larger than the iPhone at 4.3in, and be sold first in the US on the AT&T network for $99.99. It will be available through the EE network in the UK at an unspecifed date.

Facebook Home will also available on devices from Samsung, Sony, Qualcomm, AT&T, Huawei and ZTE.

Missing from the list was Apple’s iPhone, which operates on a closed system. Nor is the family of apps yet available on tablets.

The two features Facebook hopes will set its software apart are Cover Feed, which displays content such as shared photographs, messages and calendar events onto the home screen, and Chat Heads, in which friends, family and contacts are represented by their photographs framed in a circle. These can appear on the home screen, or while the owner is reading a website, playing a game or watching a video. Chat Heads allows users to read and respond to messages without having to switch to a new screen.

More than ever, humans would be connected, said Zuckerberg. “A lot of the world thinks being connected is frivolous. It’s not. It’s who we are.”

Facebook is racing to keep up with the habits of its 1 billion monthly users, 680 million of whom now access the network from a mobile device. Before its disastrous stock market flotation last year, Facebook conceded it needed a better mobile strategy.

Shares in Facebook climbed 2% to $26.83 immediately after the announcement. Shares in Google, which may see some customers diverted to its rivals’s new product, slipped 1.5% to $793.81.

Industry observers appeared impressed by Facebook’s next step into mobile. “I think it’s pretty slick. It gives you instant access to your social context. It’ll make your mobile device a more enjoyable experience, it’ll be much easier to respond to messages. It’s all right there on your fingertips,” said Brian Blau, research director at Gartner, an information technology firm.

Critics rounded on Chathead’s name, if not the software. Others expressed concern that Facebook would have even more data on those who used the de facto Facebook phone. “Every number you dial, every page you look at on your mobile browser, every text message you send, every app that you use – basically everything you do on your phone becomes material for Facebook to use and monetize,” commented one Guardian user, Leviathan212.

“Since Facebook doesn’t make an operating system for mobile devices, this is the next best thing,” said Jan Dawson, telecoms analyst at research firm Ovum. “It will allow Facebook to track more of a user’s behaviour on devices, and present more opportunities to serve up advertising. And that presents the biggest obstacle to success for this experiment. Users don’t want more advertising or tracking, and Facebook wants to do more of both.”

Aside from HTC’s new device, at launch Facebook Home will work on just a handful of phones including Samsung’s best selling S3 and its new S4 phone. However, Facebook has also released a set of guidelines for those who want to use its brand to market their devices, and Huawei, ZTE, Lenovo, Sony and Alcatelonetouch have all indicated they are likely to do so.

Facebook’s heavy reliance on Android to put its brand in front of users leaves it vulnerable should Google, which is developing its own Google+ social network, decide not to co-operate. “Google could easily make sure Facebook home doesn’t work on future versions of Android,”  warned Gartner analyst Michael Gartenberg. “Of course, we might call that evil.”

HTC launches ‘Burmese’ phones

Category : World News

Taiwanese smartphone company HTC is the latest to try and tap into the underdeveloped telecommunications market in Burma.

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HTC posts 90% slump in profits

Category : Business, World News

Taiwanese mobile phone maker HTC reports a slump in profits as it continues to suffer at the hands of rivals Apple and Samsung.

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Apple told to disclose HTC deal

Category : Business

A US judge orders Apple to disclose details of its patent sharing deal with Taiwan’s HTC to its Korean rival Samsung.

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Regulators eye HTC stock jump before Apple settlement

Category : Stocks

Taiwan’s stock exchange is looking into HTC after the smartphone manufacturer’s shares surged Friday, the day before it settled a long-running patent dispute with Apple.

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Apple’s (AAPL) settlement with struggling HTC is a sign Apple views it (unlike Samsung) a neutralized competitor, thinks TechCrunch’s Darrelll Etherington. The Verge’s Nilay Patel argues likewise, while suggesting an HTC license for Apple’s software…

Category : Stocks

Apple’s (AAPL) settlement with struggling HTC is a sign Apple views it (unlike Samsung) a neutralized competitor, thinks TechCrunch’s Darrelll Etherington. The Verge’s Nilay Patel argues likewise, while suggesting an HTC license for Apple’s software patents will help it compete against Samsung. Regardless, it’s a surprising development in light of Steve Jobs’ declaration that he was willing to spend $40B to wage “thermonuclear war” on Android. HTC claims the deal won’t have an “adverse material impact” on financials. 13 comments!

See original here: Apple’s (AAPL) settlement with struggling HTC is a sign Apple views it (unlike Samsung) a neutralized competitor, thinks TechCrunch’s Darrelll Etherington. The Verge’s Nilay Patel argues likewise, while suggesting an HTC license for Apple’s software…

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Apple and HTC settle patent cases

Category : Business, World News

Apple and Taiwanese phonemaker HTC settle all their outstanding disputes over patents, the latest twist in a series of smartphone legal cases.

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HTC sees lower sales at year-end

Category : Business, World News

HTC says its sales will be lower than expected as the Taiwanese smartphone maker has been finding it hard to emulate the success of its rivals.

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HTC reports 79% drop in profits

Category : Business, World News

Taiwanese smartphone maker HTC reports a 79% drop in profit as it continues to lose ground to rivals Samsung and Apple.

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