While HTC has been facing a double whammy in patent infringement lawsuits and a dwindling of its product competitiveness, sources in the handset industry believe that the pressure to win in terms of product competition is more crucial for HTC.
Concerns of HTC losing its strength have been raised after the company lost a patent lawsuit to Apple recently and also lowered its revenue guidance for the fourth quarter of 2011, pushing its share prices down.
Although the threat of patent wars is rising, patent lawsuits are usually time consuming and mostly can be solved through compensation or royalty payments. Therefore the actual impact on HTC will be less significant than expected.
But HTC has been facing increasing competition in the product front, with its flagship models being squeezed by models not only from Apple, Samsung Electronics but also Motorola Mobility.
Since the second half of 2011, HTC has added more elements such as fashion and brand image to its product lineups but has done little to upgrade the hardware specifications of its smartphones. The lineups including HTC Ryhme, HTC Sensation XE and HTC Sensation XL are similar fashion models.
On the other hand, Samsung has been keen in rolling out innovative products. It has knocked out rivals with HD displays, sending competitors also adopting comparable displays. Motorola has decided to purchase Samsung's Super AMOLED panels for its smartphones, and HTC is also expected to follow suit.
HTC also has to further diversify its markets, given that sales generated from North America account for 50% of its total revenues currently.