UPDATED 09:11 EDT / AUGUST 14 2014

HTC launches software unit in effort to reverse declining fortunes

htc phone back logoIt’s been a long fall from the top for HTC Corp., the Taiwanese handset powerhouse that went from providing outsourcing services to becoming the second-highest-earning smartphone vendor behind Apple in the span of a few years. However, with 11 straight quarters of revenue declines since its 2011 peak, the company is trading at a small fraction of where it had been three years prior and  ranks a distant fifth in the U.S.  with a mere 4.8 percent share of the market, compared to the iPhone maker’s 41 percent.

In an attempt to stop its financial freefall, HTC is now shifting its focus from low-margin consumer hardware to the considerably more lucrative software and services space, where it possess little experience or footprint. Recode broke the news that the manufacturer had assembled 260 employees from existing units into a new division called HTC Creative Labs that will develop Android apps for its own phones as well as those of competitors. The group is headquartered in Seattle and includes employees from the company’s San Francisco and Taipei offices as well, according to the report.

The move is reminiscent of the recent push by BlackBerry Ltd. CEO John Chen to double down on his firm’s mobile security business as part of his efforts to pull it back from the brink of bankruptcy. The BlackBerry Enterprise Server stands as one the Canadian phone maker’s last remaining revenue sources, owing in large part to its compatibility with Android and iOS. But there’s more to the establishment of HTC Creative Labs than just economic desperation. Delivering value-added capabilities has become a competitive necessity now that market leaders Samsung Electronics Co., Ltd. and Apple, Inc. are doubling down on software, a race that recently saw the latter enter a partnership with one-time arch-rival IBM to develop more than 100 enterprise apps for the iPhone and iPad.

Headed by user interface guru Drew Bamford, HTC’s newest unit has already produced its first application, a revamped version of its Zoe photo app that works with Android devices from competing manufacturers. The previously exclusive software allows users to put their pictures, video and audio files together into highlight reels up to 30 seconds long.


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