HTC-Huawei Merger Should Be Considered, Says JP Morgan Analyst
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HTC-Huawei Merger Should Be Considered, Says JP Morgan Analyst

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Regardless of the critical acclaim garnered by the company’s flagship HTC One smartphone, HTC remains in dire financial straits. The Taiwanese electronics manufacturer’s shares hit a seven-and-a-half year low this month, posting an 83 percent drop in profit for the second quarter of 2013. In the U.S., HTC handsets dropped to being the tenth most popular, down from peaking at number one in late 2011. Globally, HTC ranks even lower, at number 13.

HTC’s epic fall from grace has been attributed to multiple factors, including less-than-stellar management, a lack of presence in emerging markets, and failing to market devices at the same caliber as other industry heavyweights. An analyst with JP Morgan’s Asia-Pacific branch believes that a merger with Chinese telecommunications giant Huawei could save the struggling company.

“Combining Huawei’s China expertise with a brand that has a superior product and consumer experience could boost future growth for the company by bringing complementary expertise in-house,” said the analyst, Alvin Kwock, in an interview with Taipei Times.

“As Huawei lacks a major consumer brand, but has a large home market, HTC might find it profitable to team up with Huawei because it has excellent products but lacks the right market with a strong demand for high-end smartphones,” Kwock added.

If HTC decided to pursue a merger with Huawei, the combined entity could be positioned to capture the fourth largest share of the world’s smartphone market. According to Android Authority, Huawei held about 3 percent of global smartphone market share in the first quarter of 2013. HTC lagged slightly, with less than two percent of the global market share during the same time frame.

A combined 5 percent share would push a joined HTC-Huawei ahead of the current fourth-place handset manufacturer – LG, which currently boasts 3.7 percent of worldwide smartphone market share.

“We know that HTC is capable of producing products with outstanding quality, and Huawei has managed to break the competitive but lucrative Chinese market. Between them, there’s a potential threat to the other major players in the smartphone industry,” said Android Authority.

HTC is hoping to revitalize sales with the rumored upcoming releases of the One Mini and the One Max.

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