HTC eschews the Brazilian ‘race to the bottom’

HTC wants out of the Brazilian market. It stated that it was to close its São Paulo office, which primarily manages sales in Latin America. The device manufacturer has had something of a difficult time in the last 24 months; global shipments have stalled and its Q1 2012 market share (smartphones) was at 4.76% compared to just under 10% in the same period 2011.

Times have been notably hard for HTC in Brazil. This is a shame considering the market is one of the world’s fatest growing for smartphones.

However, my overriding feeling is one of respect for HTC. Respect for not pandering to the market demands to ‘race to the bottom‘ where consumers’ value-perceptions are artifiically distorted by low-cost product.

Brazil may be fast growing but it’s characterized by low-cost devices, hefty operator subsidies and pre-paid deals. This is a market for ZTE, Huawei and even Nokia. It’s the ultimate in ultra low-cost markets.

After Apple, HTC has the second highest Average Selling Price of any manufacturer (at over US$300). HTC is no longer an emerging ‘budget’ brand and it has to protect its brand equity. This is a balls-out move, no doubt, but a move that seems necessary to avoid being swept down the ultra low-cost route.

Manufacturers ignore emerging markets at their peril, but I believe HTC has made the right decision and the company maintains that it will continue to focus on the emerging Chinese and India markets – where mid to high-price customer segments offer greater opportunity.


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