HTC may stop selling flagship phones in the US

HTC launched the first two Android smartphones as part of a close partnership with Google back in 2008 and 2009, and for a time it was one of the top Android device makers. It was later eclipsed by Samsung, LG, and more recently Chinese firms like Huawei. After struggling recently, analysts at BayStreet Research are now predicting HTC won’t even bother to launch a flagship smartphone in the US next year. The rationale for this prediction is surprisingly believable.

The Taiwan-based smartphone maker is in the midst of a radical restructuring after reporting a fourth consecutive quarter of big losses. Its Q3 2016 earnings were about $60 million in the red, which is actually an improvement over the last few quarters. That’s how dire things have gotten at HTC.

The changes come as the company’s 2016 flagship, the HTC 10 has failed to sell in significant numbers. The unfortunate thing is that the HTC 10 isn’t a bad phone. It a lot of ways, it’s actually a very nice device. However, the price was far too high (even higher than the GS7) and HTC lacked the marketing muscle to really push it. T-Mobile, which is known for ditching underperforming devices in its lineup, discontinued sales of the HTC 10 after just three months.

According to BayStreet Research’s Cliff Maldonado, the lackluster performance of the HTC 10 may have been the last straw for HTC. Maldonado reports that HTC last month fired almost all of its sales force. These are the people who would work to forge deals with carriers to sell HTC’s branded phone hardware. Without that sales apparatus, it’s unlikely HTC would be able to focus on getting its devices on multiple US carriers. That could point to HTC’s return to the less glamorous world of ODM (original design manufacturer) electronics.

HTC 10 and Galaxy S7

The deal HTC has with Google to build the Pixel is an example of an ODM arrangement. HTC builds the hardware to Google’s specifications, and Google brands it however it wants. One step removed from this is the deal HTC has with Sprint to make the HTC Bolt. In this case, it’s exclusive to Sprint and the carrier has a lot of say in the hardware, but it’s branded as an HTC device. Both deals guarantee HTC a certain amount of revenue and limits its risk. This is the kind of business HTC ran in the past, and now Maldonado says it’s headed back that way.

It’s possible HTC will still try to make its own branded phones, but Maldonado does not believe they will be sold in the US market, which has shown little interest in HTC’s products. Without a carrier partner to sell the devices, it’s simply not worth the effort.