Report: HTC starts outsourcing production in an attempt to return to profitability

Report: HTC starts outsourcing production in an attempt to return to profitability
Looking to cut costs in an attempt to return to profitability, Taiwan based HTC has started outsourcing production of some of its handsets aimed at developing markets. HTC is turning to contract manufacturer Compal, also based in Taiwan, and China based Wingtech. Three handsets from HTC's mid-range Desire series have been produced by the two manufacturers since this spring. Being a former contract manufacturer itself, HTC is used to producing all of its models in-house. Last year, the cheapest phone sold by the manufacturer was priced at $230. With the outsourcing, HTC hopes to sell its phones for as low as $150 to $200 this year.

HTC has seen its market share continue to decline, despite the pre-launch hype of the HTC One (M8), and the company has been flowing red ink over the last few quarters. The company has had an issue marketing its phones, and has hired Paul Golden, Samsung's former U.S. chief, as a consultant. After wasting $12 million on a forgettable ad starring Robert Downey Jr., HTC lost a lot of the momentum it had for the HTC One (M8) by producing an ad starring Gary Oldman that had the actor repeating the nonsensical line, "blah, blah,blah, blah," over and over.

Despite this new reliance on contract manufacturers by HTC, the company says that it will not outsource production of its top-shelf models like the HTC One (M8), or key mid-range models like the HTC Desire 816. Those phones will remain in HTC's hands. But Wingtech, which also builds phones for China's Xiaomi, is getting ready to roll the HTC Desire 616, off the assembly line. This model will feature the true octa-core MT6592 chip from MediaTek. Compal, which also produces handsets for Nokia, just started production of some Desire models this quarter.

source: WSJ

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25 Comments

1. mmmanuuu

Posts: 403; Member since: Nov 05, 2013

Good move htc.Waiting for m8 max

12. sgodsell

Posts: 7044; Member since: Mar 16, 2013

They need to stop wasting money on making WP devices, because no one is buying them. They lose money on designing, promoting, advertising, and training people for their WP devices. Even Nokia saw a 30% decline last quarter in its smartphones. I guess that's why Microsoft's Nokia started to pump out 3 forked Android phones instead of pumping out more WP devices. At least HTC is investing in the right OS, Android.

16. AJagtiani

Posts: 466; Member since: Apr 24, 2014

You just need an opportunity to mention Nokia and WP don't you

23. 0xFFFF

Posts: 3806; Member since: Apr 16, 2014

This is not axe grinding, but basic business sense. Windows Phone is a loser of an OS that every company in the tech business wants to fail -- out of hate of Microsoft. Why get on a road to nowhere?

2. LikeMyself

Posts: 631; Member since: Sep 23, 2013

We need competition to move forward. Go and give Samsung a run for their money! The One (M8) can be found cheaper than an S5!!

3. hassoups

Posts: 473; Member since: Jun 06, 2013

What a shame considering their origins.

4. ArtSim98

Posts: 3535; Member since: Dec 21, 2012

As long as quality remains, I don't mind.

19. The-Sailor-Man

Posts: 1095; Member since: Mar 25, 2014

NOT THE MARKETING is the HTC's PROBLEM. Their problem is that they have NOTHING for "marketing". They must undestand that ppl are on the market for HIGH TECH phones, NOT for aluminum. LOL They are not Apple to sell whatever POS packed in cheap aluminum, because they have not the Apple's Unique Breed to buy it.

5. dannyboy287

Posts: 4; Member since: May 05, 2014

Poor HTC...they make awesome phones but can't seem to put it all together...

9. tricky

Posts: 34; Member since: Dec 18, 2013

I agree, unlike Blackberry and Nokia they don't really deserve to be in the position they are in. They make really good high quality phones, but I guess bad marketing is getting the best of them.

11. dannyboy287

Posts: 4; Member since: May 05, 2014

Yeah. It's like I wannnt to root for them, and I wannnt to like their marketing.... ...but then they go and pay Gary Oldman to say "blah blah blah" for 30 seconds.

17. AJagtiani

Posts: 466; Member since: Apr 24, 2014

They deserve to be in the position they are. They continued their mistakes of last year with the ultra pixel gimmick. That will cost them again this year. Don't compare legendary companies like BB & Nokia to this gimmicky HTCrap,

20. The-Sailor-Man

Posts: 1095; Member since: Mar 25, 2014

they make "awesome"..... cheap dent-able aluminum, huge bezels, mediocre specs, ultra "magic", two nonsense ugly cameras, heavily sealed "design"...????

22. uncfan44

Posts: 9; Member since: Apr 24, 2013

aluminum dents and plastic breaks, both suck, but i'd rather my s*** not break. ultra "magic" was a great idea, tho do to software may not have worked. 2 cameras was a great idea again, and thus far has proved to be good for what it was intended, social networking. their cameras are not designed to be for high end photography, at least i hope not lol. heavily sealed isnt a bad thing at all, thats what battery packs are for as opposed to removable batteries. big bezels? dont be mad bro, alot of phones have them. pretty sure your comments come off as angry lol, stay calm and post on!! :)

6. ILikeBubbles

Posts: 525; Member since: Jan 17, 2011

it's really heart wrenching to see... i have been loyal to HTC since my first smartphone (HTC Eris) back in 2009... they have by far the best aesthetics and the snapdragon series of processors has always been my favorite. yes, partially for the name lol. and they've had moderatley sized phones for the most part also.. except the m8... which is huge... but that's where the market is going i can't really hold it against them. there's no reason i see for them to be struggling like this... do the masses really not know how awesome they are? i'd take an HTC over a Samsung any day...the only thing that could take me away from HTC right now is perhaps the Nexus series..

10. Astoni

Posts: 649; Member since: Sep 28, 2013

Held m8 for the second time today and my sis older one X :p. M8 feels A LOT smaller than one X both in the pocket and the hand. IMO its freakin perfect in size and how its designed. But overall it falls short on the camera diviosn :(

7. Anshulonweb

Posts: 468; Member since: Feb 07, 2014

in my country india.....htc phone's sales are not good due to reason of over pricing..... htc one(m7) retailed for more than galaxy s4,htc one mini price was close to xperia z!!,.....and other phones such as desire 600,700,500 were over priced and all had that horr I snapdragon 200 processor and price of desire 700 was close to note2 and desire 600 was close to xperia sp and galaxy s3.......sony recently became number 2 smartphone vendor in india due to sole reason of aggressive pricing and better hardware......

8. csoulr666

Posts: 116; Member since: Nov 04, 2013

Let's hope this move makes them use Snapdragon processors instead of mediatek ones in entry level phones....... Mediatek HTC phones have an abominable combination of Sense and stock android

13. Liveitup

Posts: 1798; Member since: Jan 07, 2014

@sgodsell maybe you haven't noticed HTC haven't made a WP device since 2012, HTC is focused on Android yet they fell 136% YOY maybe they should stop making Android devices.by your reasoning. Lets face it you hate competition and anything that has to do with Windows Phones and your point about WP nit selling is clearly BS.

14. Arte-8800

Posts: 4562; Member since: Mar 13, 2014

Wp platform sucks that every company that has been making are all making losses Wp has big problem having no apps no games You have to wait 4 months while iOS android gets them first Wp should just declare bankruptcy rip Wp is the most hated platform

15. Arte-8800

Posts: 4562; Member since: Mar 13, 2014

Wp only sells cause of loyal Nokia users L520 sold millions cause it was half price Even giving the 1020 1520 for free wont help Nokia and wp to sell

18. AJagtiani

Posts: 466; Member since: Apr 24, 2014

That's a healthy load of BS.

25. Arte-8800

Posts: 4562; Member since: Mar 13, 2014

Coming from a fan boy like you who loves MS and WE It's hard for you to believe the truth and accepting it Never take a fan boy seriously, cause the truth to them is a lye

24. 0xFFFF

Posts: 3806; Member since: Apr 16, 2014

This is largely the situation. No one other than Microsoft wants WP to succeed. Nokia had an extremely loyal following and some of these people bought Nokia even though they didn't like WP. At least there was a good (but slow) camera on the devices. But now that it is Microsoft, there's been a 30% drop off in sales. Which should continue. No one in tech likes Microsoft.

21. Taters

Posts: 6474; Member since: Jan 28, 2013

Good. Now maybe you can actually get a flawless handset during the first batch like you can with every other company in existence.

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