Amid sluggish sales, HTC to shut smartphone operations in India
New Delhi: Taiwanese smartphone maker HTC is shutting its India operations as the company — once the darling of Indian users — could not cope up with the changing dynamics of the market amid rapid growth of Chinese players.
In a statement, HTC said that it will now focus on virtual and augmented reality as well as Artificial Intelligence and high-speed connectivity in the Indian market.
"Smartphones will be the first step in 5G for consumers, while VR, AR and AI will be the killer applications, and no other company is better positioned to deliver on this vision than HTC. This vision, that we call VIVE Reality, will completely revamp industries and improve lives," HTC said in the statement.
"Being an important market to HTC, we will continue to invest in India in the right segments and at the right time," it added, without sharing further details.
One of the executive said HTC may look at re-entering Indian smartphone market as an online exclusive brand, but that will be only after it's able to turnaround sales globally as the brand is struggling in several markets. "As of now, it is quitting," he said.
According to the company, the recent reduction in workforce in the India office is designed to more appropriately reflect local and regional market conditions. The company has asked its 70-80 member team to leave with a few exceptions such as chief financial officer Rajeev Tayal. It is also snapping all distribution agreements in the country after halting local manufacturing for almost a year now, they said. There are nearly 10 employees in the HTC India office at the moment.
However, according to CyberMedia Research (CMR), HTC's India exit is more of a failure on the part of HTC to judge the competition as well as grasp the market realities.
The company had launched two smartphone models in India last month. "But without any marketing, sales has been negligible," said an executive of one of its distributor.
HTC has less than 1per cent share in India, as per Counterpoint Research. Samsung, Apple and China's One-Plus dominate the Rs 30,000-plus premium smartphone market in India, together accounting for 95 per cent of the market, according to the Hong Kongbased researcher.
A 2017 survey by CMR found that Samsung, Apple and HTC were rated by consumers as the most successful mobile brands in the first decade of smartphones in India. Nearly 78 per cent of those surveyed named HTC as one of the most iconic brands in the country. "HTC as innovative it was in technology could not match it with innovations in the business model or execution. The brand was either too late to adopt or didn't participate at all. This was the main reason for HTC to chart out a different trajectory against the market movements," said Faisal Kawoosa, Head-New Initiatives at CMR, in a statement.
Chinese brands like Xiaomi, OPPO and Vivo have gained a lion's share of the Indian smartphone market, leaving HTC way behind.
Earlier this year, HTC sold off its design team to Google for $1.1 billion.
According to Prabhu Ram, Head-Industry Intelligence Group at CMR, there are some key lessons for other smartphone brands emerging from HTC's India exit.
"While smartphone innovation, and the constant battle for 'latest specs' is centric to a brand success, it is critical that it goes hand in hand with consumer as well as market understanding and underlying market realities," Ram said. "HTC's most recent mid-range smartphone launch, the HTC Desire 12+, failed in getting its pricing right. At around Rs 20,000, it did not offer a compelling reason for consumers to opt for it as other mobile handset brands offer far more, at far lesser prices," he noted.
Earlier this month, reports surfaced that HTC was cutting a fifth of its global workforce after being hit by consecutive financial losses and declining smartphone sales.
The company was reportedly laying off some 1,500 manufacturing workers at its home turf, in an apparent attempt to "realign" resources, CNBC reported.
The company signed a $1.1 billion deal with Google in September last year that saw 2,000 HTC employees join the technology giant.
HTC, known for its flagship phone series called "One", manufactured Google's Pixel. The deal was part of Google's aim to boost its hardware business.
In June, HTC launched HTC Desire 12 and HTC Desire 12+ smartphones in India for Rs 15,800 and Rs 19,790, respectively. "HTC which earlier had competition with brands like Sony or LG suddenly found itself surrounded by Chinese players and could not evolve to meet the growing needs of the users amid changing mobile landscape in India," Tarun Pathak, Associate Director at Counterpoint Research,