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The HTC death watch has officially begun


HTC’s ability to survive as an independent company may be past the point of no return. Asymco’s Horace Dediu notes that once most manufacturers start posting operating losses on their handset sales, they very rarely recover and usually get bought out by larger companies. History has shown that this has been the case with Motorola and Nokia, that it’smost likely about to be the case with BlackBerry and that it will probably be the case with HTC as well.

That doesn’t mean you should expect HTC to be sold off tomorrow, however. In the past it’s taken anywhere from a year-and-a-half (BlackBerry) to five years (Motorola) for a company to get bought out once it starts posting negative handset operating margins. The one exception to this pattern has been LG, which Dediu points out is a conglomerate that has lots of other revenue sources and thus doesn’t rely primarily on mobile phone sales to make its money.

In other words, the chances that HTC — which does rely heavily on handset sales — will be able to stay alive as a standalone business look very slim indeed.


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