Wednesday 17 February 2016

For HTC in 2016, the problem is standing out in a very big crowd

With a new flagship on the horizon, it's time for HTC to figure out what makes its phones special in 2016.

As we approach the new smartphone silly season of 2016, we're almost two years removed from the last great HTC phone, the One M8. The M8, announced and simultaneously released for sale on March 25, 2014, wasn't perfect. But it was a spectacular phone for the time, with clearly identifiable tentpole features and a unique, instantly-recognizable design language.

Aluminum. Ultrapixels. BoomSound. Zoe. Sense. BlinkFeed. These were things you'd (mostly) only find in an HTC phone.

And with that last great product launch came palpable consumer excitement.

The HTC of 2016 is a different company. Peter Chou is no longer CEO, having stepped down to lead the firm's Future Development Lab. High-profile designers like Scott Croyle and Jonah Becker have moved on. And countless other executives have parted company with HTC, most notably a string of CMOs who failed to turn around the firm's longstanding marketing problems. In August 2015, HTC's market value fell below its cash on hand, leading to headlines stating that the brand no longer had any value.

Because of these top-level departures, and its increasingly shaky financial position, HTC has yet to recapture the magic that accompanied products like the M7 and M8. Sure, mid-level phones are important — and in this category HTC offers an alphanumeric soup of Desire (and sometimes One-branded) handsets. But differentiation and brand value flows from the top down, and the modern-day HTC is sorely missing both.

HTC remains primarily a smartphone company, at a time when it's harder than ever to make money selling smartphones.

Through all this, HTC has been trying to diversify, with efforts like the RE camera, UA HealthBox collaboration and the SteamVR-powered Vive. However, thus far only Vive has generated much buzz. For the most part, HTC remains primarily a smartphone company, at a time when it's harder than ever to make money selling smartphones alone.

As smartphone hardware has become more commoditized, the characteristics that made HTC phones so special in 2013 and 2014 have become increasingly common across the entire market. HTC, an early pioneer of aluminum unibody smartphones, now finds itself outpaced the likes of Huawei and Xiaomi — Chinese rivals with the scale to mass-produce beautiful metal phones that look and feel as good as any HTC device, and sell them at competitive prices.

Motorola, Sony and Google have gazumped HTC as leaders in front-facing speakers. Apple and Google took the Ultrapixel concept — larger pixels on the sensor for better low-light shots — and actually made it work. (And Samsung is rumored to take the same approach in the upcoming Galaxy S7.)

HTC had video highlights (later called "Zoes") before everyone else copied it, and live photos (the original "Zoe" concept) before Apple refined that idea.

HTC saw the future, but couldn't quite grasp it.

HTC pioneered a bunch of highly recognizable smartphone features and hardware characteristics, but singularly failed to turn any of them to its advantage in the long run. As much as that demonstrates the company's enormous strength in innovation, it's also a damning indictment of its inability to execute. It's like HTC could see the future, but couldn't quite grasp it.

And so in two years, just about everything that made HTC's phones unique has slipped through its fingers. From there, following the departure of several key people, the manufacturer's design direction has taken a bizarre turn. Where once a newly-unveiled HTC design would be met with awe, the major media reaction to the HTC One A9's iPhone-like frame was eye-rolling.

Then, perhaps through gritted teeth, the A9 was marketed as having "design worth imitating." Regardless of how complicated the inside story of the A9's design is — and from what knowledgeable people tell us, it is more complex than most realize — only the most credulous HTC fan would buy this marketing line.

To the rest of us, this company with a proud tradition of design seemed to have lost a piece of its soul. (And worse still, was insulting our intelligence with its advertising.) Instead of instantly recognizable models like the Desire, Sensation, M7 and M8, HTC was now fielding products which, like countless rivals from mainland China, merely replicated the broad strokes of Apple's design language. All that was missing was a Springboard-rip-off app launcher.

All of that adds up to big differentiation problem for HTC as it readies its next high-end smartphone. If the rumors are to be believed, the M10 will broadly look like an A9, complete with single speaker and front fingerprint scanner. That being the case, the question is what makes it special in the smartphone marketplace of 2016?

Having really, really good hardware is now just the starting point.

This year, every high-end phone will have screamingly fast performance, a beautiful display, premium build quality and a barnstorming camera. And thanks to more efficient processors from Qualcomm, Android battery life shouldn't be as much of a crapshoot as it was in 2015. Having really, really good hardware is now just the starting point. Indeed, it's an expectation if you're paying upwards of $600 for a handset in 2016. The market is now so competitive that any flagship-tier phone that screws up in just one of these areas will tank.

For a variety of reasons — a disappointing camera, and display quality and battery life that were actually worse than the One M8 — the M9 just wasn't a competitive piece of hardware. As a result, it was eviscerated not just by its immediate competition, like the Galaxy S6, but by cheaper "sub-flagship" products from the likes of Motorola and OnePlus. HTC can't afford to repeat that mistake — it has to nail the fundamentals of a high-end smartphone.

But those are just the table stakes — the standard at which the M10 can square up to what's next from Samsung, LG and Apple. HTC still needs a hook to convince customers to stump up the cash for an M10, and not a GS7, G5 or iPhone.

Given that, unlike LG, HTC doesn't seem likely to include any crazy, off-the-wall hardware this time around, it's possible software will become the place to stand apart. The company's Sense UI is long overdue a big visual overhaul, and the close collaboration with Google on the A9's software raises some interesting possibilities for the future of Sense. The version shipping on the next HTC flagship is reported by one longtime HTC leaker as Sense 8.0_G, with the "G" signifying a more Google-centric UI, as in the A9's Sense 7.0_G. The result will hopefully be something new and special, and not a watered-down compromise between two visions of software design.

HTC has been responsible for some of the most impressive smartphones ever created, but in 2015 it lost its mojo. If the company is going to avoid declining any further — or even stage a comeback — it's going to take killer hardware, a revamped software experience, and a more coherent (and less defensive and negative) marketing message.

Most importantly of all, it'll have to decide what HTC as a brand and HTC One as a product stand for now that fast performance, great sound and beautiful metal unibody phones are commonplace, and clearly convey that within the limits of its position as a smaller niche player. It's not going to be easy, but nor is it impossible. After all, everyone loves an underdog.










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