HTC Beats Apple in China, With Help From Allies

By Paul Mozur

From China Realtime Report:

HTC Corp. faces declining profits and market share and increasingly tough competition from the likes of Apple Inc. and Samsung Electronics Co. But the Taiwanese smartphone maker appears to have three potentially critical allies: China Unicom (Hong Kong) Ltd China Telecom Corp. and China Mobile Ltd.

During a meeting of the leaders of many of China’s largest state-owned enterprises on Friday at China’s 18th Party Congress, China Unicom Chairman Chang Xiaobing said something that can be seen as a rare positive for HTC’s shareholders: “Well-known Taiwan brand HTC’s smartphones are selling great in China, and their cooperation with China Unicom and with other carriers in China is proceeding smoothly.”

Mr. Chang added that China’s smartphone demand would continue to grow in 2013 and that he hoped to “implement stronger cooperation with Taiwan companies in similar industries.”

With total control over where smartphone subsidies and marketing dollars are spent, the big three could be a key help to HTC, which has said the China market is a key part of its future.

In 2010 and 2011 HTC gained a healthy share of the global smartphone market as a first adapter of smartphones that featured Google Inc. ’s Android operating system. But over the past year it has failed to compete with several larger rivals, most notably Samsung, that have rolled out an increasing number of middle- and high-end smartphones. As a result, HTC’s profitability has declined, and in the fourth quarter it has forecast greatly diminished margins, leading some analysts to worry that the company could post a loss in the fourth quarter.

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