Thursday 23 August 2012

HTC looking at deep price cut

Might look at dropping Beats audio from its mobile phones to reduce price apart from adopting other price cutting measures.

In a desperate move to increase sales, HTC is contemplating a price cut across its entire range. HTC, which has built itself as a premium smartphone brand, wants to revise the strategy to tackle dwindling sales reports .

HTC One series of phones which includes the One X, One S, and One V has received rave reviews but in terms of sales it lags behind phones in the respective price range like the Samsung Galaxy SIII which competes against the One X.

Even other phones have not been selling as much as the company hoped which has resulted in HTC losing profits. Recently shares of HTC plunged by their daily limit for a second straight session to an almost four-year low. It has said that its profits will be down 23 per cent this quarter.

In a bid to stay competitive, HTC is contemplating reducing price of its handsets and to do so it is said to be planning to remove Beats audio enhancement technology from its phones reports HTC has already sold off half their stake in the Beats Audio which it bought earlier during the year. It had also discontinued giving Beats audio branded headset which it used to during the initial period after the acquisition. Though it might keep the remaining stake in the beats audio but more has an income investment.

However, HTC said it will continue to acquire newer companies in a bid to have technology to remain competitive. For example, just hours after it disclosed an investment loss of USD 40 million on Onlive's acquisition earlier this week, it announced a plan to acquire 17.1 per cent of US software developer Magnet Systems for USD 35.4 million.

Will the reduction of prices make HTC devices more attractive to buyers? We think it will, as despite not being able to compete with the larger conglomerate like Samsung and Apple, HTC has a good reputation in the market and its phones are seen as high quality stuff. So in case its phones are available at lesser price than a Samsung, people are more likely to see it as bargain and not simply a cheaper lower quality product.

Will lack of Beats Audio technology shoo away consumers? Well we don't think it will have much of an impact. Though the technology definitely adds to the sound quality, the price at which it comes is a big dampener for consumers, and HTC has been dishing out phones with good audio quality even before Beats Audio was incorporated in its phones and therefore people won't mind a slightly lower audio quality, which many might not even be able to distinguish.

However, these plans are still not official and are based on media reports emanating from suppliers of HTC (reported by And the quantum of price cuts and what price cut measures will be adopted will be known only when HTC official comes out with its plans.

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