HTC lays off thousands of people behind: Three years ago show-hand a bet on VR, and today’s price war with Google

On the evening of July 2, Taiwanese technology company HTC announced layoffs. The layoffs involved 1,500 employees in the Taoyuan area of Taiwan and are expected to be completed by September this year.

After the previous layoffs, as of June 2018, HTC's global employees had only about 6,450 people left. After the layoffs, HTC will have no more than 5,000 employees worldwide. 23% of employees will leave their jobs. Just five years ago, the mobile phone manufacturer had 19,000 employees worldwide.

On July 3, HTC's share price was reported at NT$52.80, down 6.71% from the previous trading day. In 2011, HTC's share price once reached the peak of NT$1,300. In the past seven years, the share price has fallen by 96%.

In the layoffs statement, HTC said that the market and production demand faced by enterprises are seasonally changing, so there is a need to constantly review the allocation of human resources to ensure that production capacity is in line with market demand. HTC believes that the layoffs are a "organizational optimization of the manufacturing sector and strategic human resource allocation adjustment."

In fact, in the past few years, HTC has conducted several "organizational optimization" and "human resource adjustment".

On December 29, 2015, HTC announced that it will sell the TY5 building in Taiwan's Taoyuan factory area to Inventec at a price of NT$6.06 billion (about RMB 1.2 billion). The TY5 building is the largest of the HTC Taoyuan plant. It was built in 2011 and opened in 2013. It is only two years since the sale was announced to be put into use.

In March 2017, HTC announced that it would sell its Shanghai manufacturing plant to Shanghai Xingbao Information Technology Co., Ltd. for 630 million yuan. The factory's production line has been discontinued for more than a year before the deal was confirmed. On March 20th, HTC explained on the official Weibo: "HTC's production line is now concentrated in the Taoyuan plant in Taiwan, China. This time, the Shanghai factory will not only concentrate production, but also improve operational efficiency."

Today, more than 4,000 employees in the Taoyuan factory area will be cut off by nearly 40%, and production will be more concentrated. HTC use the money obtained by the seller investing in the VR business.

On September 21, 2017, HTC announced a deal with Google, which acquired the team members and assets of the pixel mobile phone for $1.1 billion and purchased some HTC proprietary communications patent licenses.

Pixel is the first step in Google's integration of hardware and software. This phone is completely designed by Google, and HTC is only responsible for production and assembly. The relationship between the two is similar to Apple and Foxconn today.

After the pixel mobile phone team was acquired, HTC said it will continue to invest in its own brand mobile phone business. The acquisition is also seen as a renewing of HTC's own VR business, providing it with the cash flow needed for longer-term operational and R&D investment.

Just after the transaction was completed, Zhang Jialin, president of HTC's smartphone business, announced his resignation. At the same time, HTC announced an organizational adjustment to integrate smart phones and virtual reality (VR) businesses, and to manage them in a single market in each regional market.

On June 14, 2018, the 3GPP Plenary (TSG#80) approved the fifth-generation mobile communication technology standard (5G NR) independent networking (SA) function freeze. The SA standard, together with the NSA (non-standalone, non-independent networking) standard released in December last year, 5G has completed the first phase of full-featured standardization. This is a good news for the VR industry.

5G's high performance, low latency and high capacity features will better support the VR user experience. For VR users, lack of clarity and resolution will affect immersion, which is what VR wants to bring to people.

At the same time, the screen refresh rate is insufficient, and the change in the content displayed when the head is turned can not keep up with the speed of the head rotation, which will affect the feeling of use. The high bandwidth and low latency of 5G can solve this problem.

And this market where HTC bet early, has gradually shown a prosperous situation. Digi Capital expects the VR/AR market to total $150 billion in 2020, while Goldman's report is more optimistic, which they believe will exceed $182 billion.

HTC clearly has a good position in this field. In March of this year, IDC released the "2017 VR Industry Annual Review Report". The report shows that among the "three big heads", Sony PSVR installed the number one, reaching 16% (about 2.096 million), HTC Vive and Google's Oculus Rift accounts for 6% (about 786,000).

Source: 52rd

http://www.52rd.com/S_TXT/2018_7/TXT106963.HTM?WebShieldDRSessionVerify=BUseK6pPVnNBxapCnKUD