HTC announced earnings that were well below what Wall St. expected. Net income was down 98% to $2.8 million. The public corporation blamed a delay in the full launch of its HTC One product.
Apple and Samsung have had success because of a few simple, but extremely hard to achieve factors. The first is that their flagship products — the iPhone 5 and Galaxy SIII — are perceived by consumers as superior ones. And before many other smaller competitors can get new phones to market, Samsung will have fully launched its Galaxy S4, and Apple the latest version of its iPhone. These are so highly anticipated that their sales will create months of market demand for tens of millions of handsets, and this demand will be too strong for smaller competitors to combat.
Apple and Samsung also do something that is essential to consumer satisfaction. They release products on time, and these products have few, if any, flaws. As in any industry, execution is at the core of success.
Either Apple and Samsung make better phones, or they have convince customers that they do. Part of this is due to their astonishing engineering capacity, based on R&D and product management investments that their competitors cannot match. And part is due to marketing and advertising budgets that dwarf that of any other firm. The Wall Street Journal recently reported:
In 2012, Samsung spent $401 million advertising its phones in the U.S. to Apple’s $333 million, according to ad research and consulting firm Kantar Media.
Kantar put HTC’s spending at $124 million for the same period, and BlackBerry’s (NASDAQ: BBRY) at $39 million.
The conventional wisdom is that Apple and Samsung cannot be caught. That wisdom is right.
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