Extreme sport enthusiasts have been waiting to see what smartphone developer HTC (NASDAQOTH:HTCXF) would be unveiling as it moved into the camera market.

While it's teased us with a video taken with the camera showing us some of its potential (and little else), and though Bloomberg News hinted at its design by describing it a tube-shaped device, quoting a person familiar with the project, the big reveal of the new rugged camera set to challenge GoPro (NASDAQ:GPRO) wasn't expected until a press event HTC had scheduled for Oct. 8 in New York City.

However, a Reddit user may have just cracked open the mystery. According to The Verge, the sleuth discovered two pictures on HTC's official teaser site that may have given away the surprise. Compact and decidedly simple in its design -- it's already been described as looking like little more than a PVC elbow fitting -- it could be a real threat to the industry-dominating GoPro Hero3.

HTC deleted those pages now from its site -- you get a 404 error when you visit -- but it's really like trying to put the toothpaste back in the tube as the Internet is forever (go ahead, search, you'll find them!). 

Seemingly more compact than a GoPro Hero (and much more stripped down), the RECamera could be a way for HTC to reverse the slide it's witnessed in smartphone sales.

But should GoPro investors be worried?

The camera maker has already worked to diversify its business, perhaps presciently seeing that the industry it virtually created would be ripe for imitators to enter. And rush in they have: Sony has its line of Action Cams; Drift Innovation introduced its HD Ghost; Monoprice offers its MHD, which resembles a Hero more than the other action cams; Polaroid just revealed its Cube; and even GPS maker Garmin has a rugged sports camera on the market, the VIRB.

Never get lost with the latest action cam from Garmin. Image: Garmin.

That explains why GoPro has moved swiftly over to the media side of things. Second quarter sales were up a hefty 38% year over year, but equally important is the amount of viewer-generated content that is being viewed on Google's (NASDAQ:GOOG)(NASDAQ:GOOGL) YouTube. 

GoPro recorded a 200% increase in video views on the site, which it notes is a "virtuous cycle" that's driving hardware sales. It also helps build out its GoPro Network, the place where user-generated content is curated and distributed to its channels on on Facebook, Instagram, Twitter, Virgin America, Microsoft's Xbox 360, and, yes, YouTube.

GoPro investors have long been plagued by Hero worship. Image: GoPro.

Of course the risk is still that almost all of GoPro's revenue still comes from its hardware sales. All the new competition poses a risk, but thus far not one that's been all that material, or so it seems. Manufacturing costs associated with its popular Hero3 + Black device while it was able to push through a 5% price increase. That allowed gross margins to widen from 32% to 42%, but it still recorded losses -- much wider losses -- because other costs ballooned.

While some of those were related to a blossoming business, such as those associated with hiring more people and greater research and development expenses, others had to do with generous compensation policies. Indeed, almost 90% of the 489% increase in selling and administrative costs were due to higher stock-based compensation.

For its part, HTC has problems of its own. It's recorded three straight years worth of falling quarterly sales and it needs to find new revenue streams. As much as it was planning on unveiling the new RECamera next month, it wouldn't be surprising if it purposefully hid those images of the device in plain sight for the purpose of generating buzz ahead of its reveal.

For all the competition that has entered the market on the camera side, GoPro is proving it can still go head-to-head with even the best out there. A new rival on the scene could be more of a headache for the competition than for GoPro itself. HTC hasn't proven yet it can make cameras and its falling phone sales means it needs for them to be a success.

Competition is always worrisome, but GoPro investors shouldn't lose any sleep over the latest wannabe coming to market.

Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google (A shares), Google (C shares), and Twitter. The Motley Fool owns shares of Facebook, Google (A shares), Google (C shares), Microsoft, and Twitter. 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.