Even With Iron Man, HTC Is Losing the Android Wars

Robert Downey Jr. pitching HTC handsets. Sources: HTC, YouTube.

Pity poor HTC (HTCKF 75.68%). The Taiwanese handset maker is suffering shrinking sales even as Robert Downey Jr. -- a.k.a. Tony Stark and "Iron Man" -- pitches its wares.

Revenue plummeted 33% on lagging handset sales in the third quarter, and further declines are expected in Q4. Specifically, management pegs its fourth-quarter haul at NT$40 billion to NT$45 billion. Cost cuts and gains from selling its stake in Beats Electronics should help the company eke out a small profit during the same period, executives said in a call with analysts. Yet it's the downward trend that matters.

Android competition seems to be a big part of the problem. Here in the U.S., HTC saw its share of smartphone subscribers dip 1.3 percentage points from May to August, the largest decline among the majors tracked by comScore. At 7.4%, HTC now enjoys less than one-third Samsung's share of the market and not even a fifth of Apple's (AAPL 0.11%) commanding 40.7% portion.

HTC is following in other ways, too. The new HTC One Max is the first Android smartphone with a fingerprint sensor, but Apple introduced a similar feature last month in the popular iPhone 5s and 5c. About the only thing that makes the company distinctive is Downey's backing and the quirky ads he's starred in.

Then again, maybe the ads are also part of the problem. Remember the video at the top? The entire premise is that no one really knows what HTC stands for, ending, ultimately, on the refrain "here's to change" without ever defining what users should change from.

In the meantime, HTC is chasing its own tail with yet another new handset (i.e., the Desire) that's modeled after lower-end smartphones such as the iPhone 5c. In that sense -- and maybe this is the biggest problem of all -- HTC doesn't stand so much for "haute troll couture" or "hot tea catapult" or "here's to change," but simply "hard to create," especially when it comes to a smartphone the market deems truly innovative.

HTC's new low-end Desire handset. Source: HTC.