The Nexus 9: Is Google Inc. About to Save HTC?
Google is widely expected to unveil its next tablet, the Nexus 9, sometime this October. If past Nexus releases are any indication, the tablet will be sold under Google's brand, but manufactured by one of the company's many hardware partners.
According to The Wall Street Journal, that hardware partner is HTC: After a multi-year hiatus, the Android OEM is allegedly planning its return to the tablet market. If the history of the Nexus program is any indication, the prospects for HTC's business could be about to improve dramatically -- a welcome change for a company that has struggled tremendously in recent years.
HTC's troubled business
It wasn't too long ago that HTC was riding high -- among Android-powered handsets, its smartphones (like the Evo 4G, Droid Incredible and HTC Hero) were the best in class, fueling record sales and profits. In the second quarter of 2010, for example, HTC saw its revenues grow by more than 60% on an annual basis; quarterly profits ballooned into the hundreds of millions.
Then things changed: HTC's business hit a wall. The arrival of Samsung's Galaxy S line devastated HTC, and other, more competent Android rivals emerged. HTC's unit shipments tanked, its revenues collapsed. In the first quarter of 2013, the Taiwanese handset maker barely broke even, and by the third quarter, it was operating in the red.
To stay afloat, HTC aggressively culled its product portfolio: It exited the tablet business and reduced the number of different handsets it offered. It sold its stake in Beats. More recently, HTC has shown signs of rebounding -- it returned to profitability in the second quarter -- but it's still a far cry from where it was in 2010.
Just a coincidence?
Still, that second quarter profit could be seen as the beginning of HTC's rebound should the company's prospects continue to improve -- and there's reason to believe they will.
It might be a remarkable coincidence, or perhaps Google is particularly adept at selecting a given manufacturer at exactly the right time, but Google's past hardware partners have seen a significant improvement in their businesses following the release of their respective Nexus devices.
Samsung's emergence as the top Android vendor, for example, coincided with its release of the Nexus S and Galaxy Nexus in 2010 and 2011, respectively. The following year, In 2012, Google chose LG to make its next two Nexus phones -- the Nexus 4 and Nexus 5 -- and LG's share of the smartphone market has seen steady improvement ever since. On the tablet front, the 2012 release of Nexus 7 appears to have propelled Asus' mobile business -- prior to the release of the Nexus 7, Asus was largely irrelevant in the tablet market; now its world's fourth-largest vendor.
HTC could enjoy a similar fate, especially if other rumors about the Nexus 9 -- like 64-bit processing -- prove accurate.
HTC's design prowess could emerge as its greatest advantage
Though it's fallen on hard times, HTC has one advantage over its Android rivals: its industrial design. HTC's last two flagships, the One M7 and One M8, may not have produced the financial results the company had hoped for, but tech critics were particularly favorable to both handsets' aesthetics: the front-facing speakers and aluminum body were almost universally praised.
That design language should benefit any HTC tablet releases, and over the long-term, could become a great asset as the company pushes into wearable technology, including a widely rumored smartwatch expected to launch early next year.
HTC may never regain its place atop the Android market, but ahead of the Nexus 9's debut, its prospects have never looked better.
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The article The Nexus 9: Is Google Inc. About to Save HTC? originally appeared on Fool.com.Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Google (A shares) and Google (C shares). The Motley Fool owns shares of Google (A shares) and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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