HTC's New China-Only Mobile OS is a Risky Bet
As financial struggles mount, the company tries its hand at another mobile market.
Wed, August 28, 2013
IDG News Service — Not to be held back by reports of its ever-decreasing marketshare, HTC is reportedly working on a new mobile operating system that should debut in the Chinese market later this year.
The OS will have native integration with China-specific apps, like its own microblogging service, as well as a few others that are to be vetted by Chinese government officials.A It'sA unclearA whether the software will be built from scratch or be built on top of the Android framework, though the latter sounds unlikely since HTC already does that with the Sense interface on its current stock of Android handsets.
HTC entered the beginning of the year with high hopes and clear intentions for turning around its deteriorating business. But even after the launch of its new flagship, the HTC One, the company struggledA through most of the year with profit losses and hardware missteps, like the Facebook-backed HTC First. What's worse, HTC will likely post its first loss in history as it trails behind the likes of hardware manufacturing giants like South Korea's Samsung, which has a veritable stronghold on the mobile industry.
Currently, the company is experiencing phenomenal growth in China, jumping from 2.6 percent to 6 percent marketshare in just one fiscal quarter. Other companies are also looking to expand within the country, and this particular project will likely play into China's efforts to create its own country-wide ecosystem and reduce its reliability on American-owned companies like Apple and Google. However, China might not be the light at the end of the tunnel. "The market is very competitive, due to the presence of Whitebox [hardware]," wrote Carolina Milanesi, Gartner's research VP for consumer markets and techologies, in an email to TechHive. The ever-growing market of non-branded hardware, coupled with manufacturers that already have a stronghold on the Chinese market, like Xiaomi, can offer more competitive pricing.
Milanesi also writes that HTC's own operating system shouldn't be seen as an entry into the OS wars, but as "a good strategy to penetrate China...you need to look at this more as a custom [operating system] delivered to China." She adds that, "if they are working with the carriers or the government, where basically they are securing sponsorship, they will have an advantage."
Charles Golvin, principal researcher at Forrester Research, posits that because the Chinese market is huge, even a small gain in marketshare within the country could help translate into significant sales for them. "If they can grow sales and marketshare--even a small gain in marketshare--in China, just given its gargantuan size, that will translate into significant sales for them." He added that while it wouldn't be a panacea for the company's financial woes, it would help their bottom line.