HTC will stop making entry-level smartphones by end of year

In the manufacturing business, there are two general ways to make money. You can sell a low number of units at high profit margins or a high number of units at low profit margins. While the first option requires fewer units to be made, the product must be high quality and entice consumers to buy it. This is especially true in the smartphone arena. In a market dominated by a select few manufacturers (read: Apple and Samsung), it’s not uncommon for smartphone manufacturers to focus on entry-level devices. The danger with this, however, is that in order to turn an overall profit, a manufacturer has to sell a large volume of devices.

According to a report published by Phone Scoop last week, HTC is looking to exit the entry-level market by the end of 2017. On a conference call, the Taiwanese manufacturer said that they were moving focus to higher-end devices like the recently announced HTC U Ultra. The company will continue to support entry-level devices but will not release any new low-tier phones.

The HTC Desire line has had some success in entry-level markets, but in a flooded entry-level marketplace, budget devices can be hard to sell and even may not generate a profit. HTC cited increased competition as a reason for the move. This exit and HTC’s recent financial woes are pinning a lot on the success of the U Ultra and U Play. Hopefully, for HTC’s sake, these devices will be a resounding success. HTC really needs to complete this Hail Mary if they’re to stay competitive much longer.

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