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Is the HTC One a threat to Samsung?

MobileBlog
by Sascha Segan, 20 Feb 2013Blog
Is the HTC One a threat to Samsung?

HTC's beautiful new One phone is better built than the Samsung Galaxy S3. Cast from a single piece of aluminium, with a super-sharp screen and incredible low-light camera performance, it just sings quality. This could be HTC's best chance to grab some profit share back from the dominant leader – and if HTC can't do it with this phone, perhaps nobody can.

Samsung and Apple dominate the smartphone market right now. According to IDC numbers, Samsung has 29 per cent of the smartphone market and Apple has 21.8 per cent. Nobody else has more than 5 per cent. Those two companies dominate profits, too, making almost all of the profits in the smartphone world.

HTC has spent way too much time being "quietly brilliant," with an accent on "quietly." Trained for years to take a back seat to carriers as a white label device maker, HTC was caught flat-footed by the move to manufacturer-run marketing. On one level, this is inexcusable, because Apple started that shift in 2007. But everybody else fooled themselves that Apple was somehow special and unique until 2011, when Samsung showed that this wasn't a fluke, it was a trend.

While networks offer some support, sure enough, what separates the leaders from the followers in the smartphone market is manufacturer-driven branding. It's clear enough what ingredients are needed (beyond a great phone) to guarantee sales – but the secret to those juicy profits lies in something Samsung and Apple have but the likes of HTC, Sony, and Huawei don't: Amazing control over their supply chains.

Apple's dominance over its suppliers is legendary. Tim Cook rose to CEO by mastering the supply chain, and Apple keeps a huge bucket of cash at hand partly to ensure it can do things like buy up massive amounts of flash memory at ultra-low prices.

Samsung, on the other hand, makes almost everything itself, and can be its own best customer. Screens, processors, flash memory; Samsung's incredibly broad product line means that it can be first in line for the best parts at the lowest prices. The company's huge scale means that when it needs to order from third parties like Qualcomm, it can negotiate great deals.

Other companies have part of the equation, or they're building it. Watch Huawei make processors. LG has a great displays division. HTC is great at finding and nurturing new technologies, like it's done with 1080p screens in handheld smartphones. But nobody else owns the complete package like Samsung does, or has the ability to throw weight around like Apple does. That puts every other company at a major disadvantage to the two behemoths.

Could this be the One?

So HTC has major structural obstacles to get over if it wants to rise up into the top echelon of smartphone makers once more. However, I think the One could be the product to do this.

The Galaxy S3 is an excellent phone, but it has weaknesses, and I suspect those will continue with the Galaxy S4. Most notably, it doesn't feel premium. Samsung has a penchant for using flimsy plastics in its body design; once you've held an HTC, Nokia, or Apple phone made of glass, metal or high quality polycarbonate, Samsung models tend to feel a bit cheap.

Samsung's TouchWiz Android overlay also has less visual elegance than HTC's Sense. Samsung's mobile division is focused on functionality, and TouchWiz piles a lot of features in there (see 10 tips for the Samsung Galaxy S3 for some examples). But HTC's Sense, topped by its signature clock widget, has always had more panache.

The HTC One could become a prestigious, premium leader in the global Android line-up. HTC will never match Samsung's volume, but it could carve out a niche on quality for discerning buyers. To get there, though, HTC is going to have to sell the heck out of this phone. Our TVs and bus stops will tell the tale.

For more on this freshly unveiled handset, check out our hands on preview with the HTC One here.

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