HTC closes Brazilian operation

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Device manufacturer HTC Corp. is closing its Brazilian operations four years after it launched its presence in the country and after unveiling HTC Ultimate, the first Windows Phone 7.5 device, in Brazil.  “After careful analysis of our lines of business, HTC is closing our office in Brazil,” an HTC spokesperson said in a statement. “We will continue after-sales support for our products, so this should not result in a change in service for current customers. This decision does not have an impact on HTC’s business outside of Brazil.”

The closing took the market by surprise. When launching HTC Ultimate last October, the Taiwan-based company seemed to be optimistic about its business in the country. Lee Ittner, VP for Latin America at HTC, told members of the press  that Brazil was a “strategic country” and HTC planned to sell 16 million smartphones the following year. By e-mail, HTC told RCR Wireless that company “remains committed to growth across Latin America and the decision has no impact on other areas of HTC’s business outside of Brazil”.

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A month later in November, HTC announced a new general manager for the country, Fabio Castanheira.  At the time, Ittner said in a statement that HTC aimed to be among the top three companies in smartphone sales in Brazil over the next two years and that Castanheira had the expansion of the Brazilian office among his responsibilities.

Ittner also noted that HTC was preparing to expand its portfolio in the country, including offering smartphones with Android and Windows Phone 7.5 operating systems.

According to the research firm IDC, HTC shipped 6.9 million smartphones worldwide during the first quarter 2012, which is less than the 9 million units it shipped 1Q11 and represents  a 4.8% market share. HTC is behind Nokia, Samsung, Apple and RIM in the smartphone market. According to Gartner, worldwide smartphone sales to end users soared to 149 million units in the fourth quarter of 2011, while mobile device sales totaled 476.5 million units. In the 4Q11, HTC ranked number 8 in sales.

Last year, Brazilians bought approximately 9 million smartphones, representing an 84% increase over the 4.8 million sold in 2010.  IDC forecasts that in 2012, 15.4 million smartphones will be sold, a growth of 73%. Regarding operating systems, IDC noted that Android jumped from a 15% market share in 2010 to more than 50% last year in Brazil, which is a similar to the company’s global market share.

HTC was facing growing competition in Brazil. The company’s average devices prices were higher than others, and Latin American customers are very price sensitive. The HTC Brazilian office located in São Paulo mainly covered sales and distribution.

When launching its Brazilian operation in 2007, HTC announced investments of U.S.$10 million to manufacture devices locally. At that time, the Taiwanese smartphone maker had teamed up with the Canadian electronic manufacturing company Celestica. Following the agreement, the company set its first manufacturing plant outside Asia to supply the Latin American region. However, two years later Celestica closed its operations in Brazil, and HTC began to import devices to be sold throughout the region.

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