Patent settlement a win for HTC, but company still needs better smartphones, analysts say

The patent cross-licensing deal HTC reached with Apple over the weekend will not be enough to get the company back on track, analysts say

By , IDG News Service |  IT Management

To mount a comeback, HTC will have to focus more on releasing better products, experts added. The company's fortunes in the smartphone market began to decline when its former chief innovation officer Horace Luke resigned last year, said Dan Nystedt, vice president and head of research for TriOrient Investments in Taiwan.

"When he was there, they came out with some really beautiful phones," Nystedt said. "After he left, they haven't been able to replace him and put out the same caliber of designs, and it shows."

It's still unclear why Apple decided to settle with HTC, given that Apple's former CEO Steve Jobs famously said he would go "thermonuclear war" to eliminate Google's Android OS. In a joint statement, both Apple and HTC said they resolved their ongoing patent disputes in order to focus on innovation.

Apple, however, likely no longer views HTC as a key competitor, and was more willing to settle, even as its patent lawsuits were successfully undermining HTC's smartphone business, Nystedt said. He speculated Apple possibly made the deal in order to better pit HTC against Samsung, the company's major rival.

"There are a million reasons you might come to this agreement. It may be that HTC had some patents that Apple had to have," he added. "But Apple could have really put HTC on the ropes."

For Apple, the settlement with HTC could also embolden the company to target other Android smartphone vendors and make them pay patent licensing fees, said Teck Zhung Wong, an analyst with IDC. Those fees would then drive up the costs vendors have to pay to use Android.

"This could further nudge vendors to consider Android alternatives, such as Windows Phone OS," he said.

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