HTC taps Orange for new CEO

Struggling Taiwanese device maker HTC has finally found a full-time CEO by tapping into the European telecoms scene.

Former Orange exec Yves Maitre (pictured, no relation) takes over as CEO with immediate effect. He replaces owner and Chairwoman Cher Wang, who stepped in as CEO more than four years ago after deciding to throw in the towel on smartphones.  Wang has spent that time pivoting HTC towards virtual reality and the Vive headset, as well as some other connected devices.

Maitre was most recently EVP of Consumer Equipment and Partnerships at Orange was well as being a member of Orange’s innovation technology group, with a focus developing disruptive revenue opportunities, so his appointment is consistent with HTC’s new direction. Wang and the HTC board have clearly committed the company’s future to emerging mobile devices.

“When I took over as CEO four years ago, I set out to reinvent HTC as a complete ecosystem company and lay the foundations for the company to flourish across 5G and XR,” said Wang. “So, now is the perfect time to hand over the stewardship of HTC to a strong leader to guide us on the next stage of our journey.

“I am truly delighted that Yves is taking the reins; he has a long association with our company, and he shares our passion for innovation. I firmly believe Yves is the right leader to continue to lead HTC to its full potential.”

“HTC has long been a bellwether for new technology innovation and I’m honoured to be selected by the Board of Directors to lead the next phase of HTC,” said Maitre. “Across the world, HTC is recognized for its firsts across the mobile and XR space. I am incredibly energized to grow the future of both 5G and XR alongside HTC employees, customers and investors.  We will set out immediately to continue the transition from building the worlds’ best consumer hardware to also building complete services around them to make them easy to manage and deploy.”

XR refers to mixed reality, which covers all forms immersive digital experience, including augmented reality. The advent of 5G is a potential boon for this kind of tech, especially when the low-latency stuff starts to kick in, as it will enable wireless VR without the kind of lag that makes people throw up. Recruiting someone from the operator side appears to be an acknowledgement of that.

HTC was arguably the most successful Android smartphone maker initially, establishing close ties to Google and shipping in impressive volumes a decade ago. But then much bigger players like Samsung and Huawei got their acts together and HTC simply couldn’t compete with their deep pockets and economies of scale. It will attempt to replicate that feat with XR and hopefully will have a better strategy for fending off the big guys next time.

HTC debuts eye-tracking with enterprise VR launch

HTC has announced it is bringing its enterprise VR product to North America, after teasing executives at CES in January.

The product itself, Vive Pro Eye, is not cheap, $1,599, but features the latest in eye tracking technology with HTC claiming it is ‘setting a new standard’ for VR in the enterprise market. While the consumer VR segment has been relatively sluggish, despite the incredible promises made by technologists, though there does seem to be a bigger focus on enterprise in recent months.

The Vive Pro Eye follows up HTC’s Vive Pro which is already in the hands of various different enterprise customers throughout the world, introducing new features such as precision eye tracking software, deeper data analysis, new training environments and more intuitive user experiences.

And while some of the features might be considered excessive at the moment, there is always the potential to influence mainstream adoption.

“We’ve invested in VR technology to connect our fans to our game and deliver a new level of engagement through VR game competitions and in-ballpark attractions,” said Jamie Leece, SVP of Games and VR for Major League Baseball.

“By integrating eye tracking technology into Home Run Derby VR, we are able to transport this immersive baseball experience to any location without additional controllers needed. Our fans can simply operate menus by using their eyes.”

This is perhaps where the VR industry has fallen short of expectations over the first few years; cash conscious consumers do not have the funds to fulfil the promise. These are after all individuals who have been stung by various difference financial potholes over the last decade and might be hesitant to invest so handsomely in such an unproven technology.

The focus on enterprise is a much more sensible bet for many of the VR enthusiasts to follow. Firstly, in working with organizations like Major League Baseball, new applications can be created, and experiential experiences can be offered to consumers at the games. This might have a normalising impact for the technology on the mass market.

Secondly, there is a lot more money in the enterprise world than in the individual’s wallet, with decision makers much more enthusiastic about investments when it isn’t linked directly to their bank accounts.

Finally, there are more usecases in the enterprise world. Some of them might be boring, but they are realistic and important for the companies involved. Training exercises are an excellent example.

What this product also bringing into the equation is eye-tracking software, offering an entirely new element for developers to consider.

“Our virtual venues come to life as individual audience members can react with various animations when a user makes direct eye contact with them,” said Jeff Marshall, CEO of Ovation, a company which uses VR to help media train customers in public speaking environments.

“As a developer, there’s just no going back once you’ve seen all that eye tracking makes possible.”

From an experience perspective, the eye-tracking software can also add to the gaming world. Foveated rendering is a graphics-rendering technique which uses an eye tracker integrated which helps reduce rendering workload by reducing the image quality in the peripheral vision. By focusing processing power where it is needed most, the strain placed on the device and experience is lessened.

Many have suggested this technology could be at the forefront of the next generation of VR devices, both in the consumer and enterprise world. Whether this is enough to force the potential of VR from promise to reality remains to be seen, but something needs to be done.

Is the VR market primed to pluck?

For all the promise of virtual reality (VR) the consumer appetite remains as somewhat of an unknown. Theoretically the technology could revolutionise the entertainment space, but we’re currently in a bit of a waiting game.

HTC is ready to gamble the consumer appetite, supporting ecosystem and product portfolio has evolved to such a position to provide the fuel for a subscription-based library of premium VR content.

“We have built a new model for VR that shines a light on the great library of VR content this industry has developed and gives users a reason to spend more time in headset than ever before,” said Rikard Steiber, President of Viveport.

“At the same time, we’re increasing developer reach and potential revenue as more developers can monetize a single Infinity user. We believe this model matches how consumers want to experience VR”

In pursuit of simplicity, Viveport is effectively a ‘Netflix for VR’. Customers can either pay $12.99 a month or $99 a year to access a VR content library with more than 600 titles already listed. As with other subscription models such as Netflix for content and Spotify for music, customers will have unlimited access to all content hosted on the platform.

However, you still have to answer the question as to whether the VR segment is ready to deliver the much-anticipated riches.

For the profits to be made, three criteria have to be satisfied. Firstly, is there an ecosystem which is creating enough volume of content, wide enough variety and immersive enough experiences. Secondly, is the hardware priced to allow the opportunity to generate mass market penetration. And finally, is there enough demand from the consumer.

With 600 titles already listed on the platform, this would suggest there is a large enough ecosystem in place to create the content. HTC is promising more titles, as well as some co-ordinated launches such as ‘Angry Birds VR: Isle of Pigs’. Secondly, the price of VR headsets has been coming down recently, and while it is still expensive, it is not prohibitively so. Consumers can spend thousands at the top end, but then again Google Daydream View can be purchased for £69. The breadth of products is now available to make this segment potentially viable.

The final criterion is the consumer appetite. This is incredibly difficult to gauge without launching a product, but as long as there are early adopters it is a good time to launch. Let’s not forget, Netflix was not an immediate success, it took time to develop the monstrous subscription base it has today, but it steadily attracted more and more thanks to it being first to market, while also offering an affordable (and very good) experience. Much of this was done through word of mouth.

Another lesson which HTC will have to learn is that enough is never enough. Netflix has maintained it position as the leader in the content world because it is constantly driving for more. Last year, the team spend almost $8 billion on content acquisition and creation, a number which will drastically increase this year. Not only is Netflix funding bigger-budget productions, but it is also expanding the local content libraries around the world. With Viveport, HTC could do the same, but it needs to ensure it is constantly expanding.

HTC has crafted itself a leadership position in the VR world, and the raw materials are currently in place to make this a profitable segment. Add improved connectivity with fibre penetration increasing and 4G constantly improving to the above three criteria, and HTC could be onto a winner.

Who knows, maybe in a few years’ time we’ll be referencing Viveport as the heavyweight of the entertainment space, not Netflix.

The HTC fall from grace is quite remarkable

In years gone, HTC was one of the most successful and sought-after smartphone brands worldwide, but time has not been kind for the Taiwanese firm as financials for 2018 emerge.

Back in 2012, your correspondent had a One X model HTC and it was a very good phone. Due to a slight malfunction more recently, there was also a couple of months with a second-hand HTC 10. It wasn’t a phone which set the world on fire (although ask Samsung how that went down), but it was a perfectly good device. Unfortunately, it appears the brand is just not doing enough right.

As you can see from the table below, 2018 has not been a kind year as the team brought in revenues of 23.7 billion New Taiwan Dollar (NTD), 61% down on 2017.

Month Revenue Year-on-year comparison
January 3,404 -27.03%
February 2,613 -44.04%
March 2,772 -46.66%
April 2,099 -55.47%
May 2,445 -46.03%
June 2,230 -67.64%
July 1,400 -77.41%
August 1,389 -53.72%
September 1,256 -80.71%
October 1,307 -78.44%
November 1,474 -73.98%
December 1,352 -66.36%
Full year 23,741 -61.78%

All figures in New Taiwan Dollar (millions)

Just as a comparison to previous years, in 2017 HTC brought in revenues of 62.120 billion NTD, 2016 was 78.161 billion NTD and 2015 was 121.684 billion NTD. If you go all the way back to 2012, the team brought in a remarkable 465.795 billion NTD.

Of course, you have to bear in mind the business has offloaded a substantial part of its business to Google for $1.1 billion, most notably c.2000 engineers who were working on the Pixel device anyway and a horde of IP, but HTC is still running as a standalone business. Back in November, Sprint announced it was partnering with Qualcomm and HTC to develop a mobile ‘smart hub’ that will run on 5G next year.

Every now and then it is useful just to look back through the years and remember how different things were. HTC used to be one of the mobile industry’s heavyweights, alas, no more. RIP HTC.

Sprint partners with Qualcomm and HTC on new 5G device

Sprint has announced a new partnership with Qualcomm and HTC to develop a mobile ‘smart hub’ that will run on 5G next year.

Details are relatively thin for the moment, though the term ‘smart hub’ perhaps suggests it will be some form of mobile hot spot. This is the second 5G-specific partnership Sprint has announced in the devices realm, after partnering with LG to develop a 5G-compatible smartphone for its in-progress network. This device might be one of the first to reach the market next year.

“We’re excited to continue building our 5G device portfolio and announce another way our customers can be among the first to experience Sprint 5G next year,” said John Saw, Sprint CTO. “This innovative product will allow customers on the go, at work or at home to enjoy Sprint 5G on multiple devices with incredibly fast connectivity for content sharing, mobile gaming, entertainment and so much more.”

“We are thrilled to be working closely with Sprint on this innovative new design,” said Cher Wang, HTC CEO. “This collaboration brought our cutting-edge technology together with Sprint’s industry-leading 5G network to create the next generation smart devices.”

With Sprint’s 5G network set to launch in the first half of 2019, we might not have to wait long to find out more details. What we do know right now is the data device will be powered using Qualcomm’s Snapdragon X50 5G modem, allowing it Gigabit LTE and 5G capabilities.

Google cherry-picks the best bits of HTC for $1.1 billion

HTC has accepted $1.1 billion to hand over much of its smartphone engineering talent and IP to Google.

Some kind of M&A involving the two has been on the grapevine for some time but the assumption was that Google would simply buy HTC with the kind of cash Larry Page routinely finds down the back of his primary-coloured beanbag-sofa. In the end Google was able to just pluck out only the parts of the company it wanted.

The main acquisition is a reported 2,000 smartphone engineers, many of whom are already working on the Google Pixel phones, which are white-labelled by HTC. On top of that Google gets a non-exclusive license to a bunch of HTC smartphone IP. For this Google is shelling out $1.1 billion which, at first glance, seems like a good deal for HTC.

HTC’s total headcount is currently around 10,000 and its market cap is around $1.9 billion, so Google is handing over cash that’s equivalent to 58% of the company for just 20% of its people and no outright ownership of any of its assets. HTC is spinning this as enabling it to reduce overheads and redouble its efforts on its own flagging smartphone operations as well as future bets such as VR.

Another way of looking at this move, however, is that HTC is mortgaging the future for an immediate cash injection. HTC has been running at a loss for ages and while losing 2,000 of its best engineers will reduce overheads, it must surely also cripple its smartphone R&D efforts.

In a masterpiece of doublespeak, HTC made the following statement at the top of its announcement: “Transaction Reinforces HTC’s Commitment to Innovation and Its Branded Smartphone Business.” It’s very hard to believe how getting rid of the cream of your smartphone engineers can achieve anything but the opposite of that.

For Google the big question is: How come you’re doing this after the Motorola acquisition went so wrong? The answer is probably two-fold. Firstly the main purpose of the Moto buy was probably to stockpile smartphone patents at a time when predatory patent litigation from the likes of Microsoft, Oracle and Apple threatened the whole Android ecosystem. Google messed around with phones for a bit but then flogged all but the patent parts to Lenovo.

Secondly Google has since decided to take making its own smartphones a bit more seriously; looking to take the lead in the premium Android segment with the Pixel range as Samsung continues to try to develop its own ecosystem. Google seems to have learned from the Moto move that it’s better to pay a premium for just the bits you want than aquire a bunch of superfluous stuff at a bargain, the disposal of which ends up costing more in the long term anyway.

“This agreement is a brilliant next step in our longstanding partnership, enabling Google to supercharge their hardware business while ensuring continued innovation within our HTC smartphone and VIVE virtual reality businesses,” said Cher Wang, Chairwoman and CEO of HTC. “We believe HTC is well positioned to maintain our rich legacy of innovation and realize the potential of a new generation of connected products and services.”

“HTC has been a longtime partner of Google and has created some of the most beautiful, premium devices on the market,” said Rick Osterloh, SVP of Hardware at Google (pictured above with Wang and a veteran of the Motorola acquisition). “We’re excited and can’t wait to welcome members of the HTC team who will be joining Google to fuel further innovation and future product development in consumer hardware.”

Superficially this looks like a win-win, but scratch under the surface and it seems likely that HTC gratefully accepted whatever Google offered. That offer was probably more generous than it needed to be, perhaps partly because Google genuinely doesn’t want HTC, which was its very first OEM partner for the Nexus 1, to die.

But as this excellent Bloomerg analysis shows, HTC is unlikely to turn the corner without shedding a lot more overhead, especially in manufacturing capacity, which it over expanded after a couple of strong years at the start of the decade. What seems more likely is that HTC will gradually phase out its smartphone brand and focus entirely on things like VR, but it’s not about to shout that from the rooftops. Here’s the official rationale.

HTC Google strategic rationale