With Desire Eye 'selfie' phone, HTC hopes to capture mass market

The "selfie" phenomenon is inescapable.

If you log on to Facebook, Twitter, Instagram or any other social network, your feed is likely deluged with digital self-portraits, taken with a smartphone's front-facing camera. "Selfie" was Oxford Dictionaries' word of the year in 2013. There's even an eponymously titled sitcom featuring a character obsessed with social media.

So it makes sense that HTC, which is on the hunt for a catalyst that will reverse its flagging revenue and turn the business around, would want to jump on the phenomenon with a smartphone specifically designed to take higher quality selfies. The result: the Desire Eye, a smartphone that packs equally powerful rear- and front-facing 13-megapixel cameras, packaged at a price that likely undercuts higher profile rivals such as the iPhone 6 and Galaxy S5 by $100.

"It doesn't matter what side you're looking at, you'll always look your best," said Claude Zellweger, who co-leads the industrial design group for HTC.

Little known in the US, the Desire series of low-cost smartphones has been steadily making headway since they debuted at Mobile World Congress in February. If HTC can pull off a comeback, it may be the Desire line that ends up turning the tide. While the aluminum-clad HTC One M8 may get all the critical praise and attention from gadget enthusiasts, the company sees more opportunity in the market for more-affordable smartphones. The Desire Eye represents HTC's attempt to build up its affordable brand in developed markets like the US.

"On a scale of 1 to 10 in importance, this goes to 11," said Ramon Llamas, an analyst at IDC. "(The Desire family) allows HTC to cater to a different market segment, and that's an area that the industry believes will grow."

HTC's strategy is not unlike that of rivals such as Motorola and LG, which are similarly finding diminishing returns in betting solely on a flagship super-smartphone. Apple's iPhone and Samsung's Galaxy franchises dominate that category, forcing its lower profile rivals to cater to consumers with tighter budgets.

HTC stands apart from its rivals because it's a relatively small, pure mobile-device maker competing against massive companies with hands in different businesses and far more resources. Its market share has fallen precipitously over the last few years. After peaking in 2011 with nearly 9 percent of the smartphone market, it has dropped to 1.7 percent of the market in the first half of this year, according to IDC.

Financially, the company is still on its heels. While HTC posted a better-than-expected profit in the third quarter, revenue continued its three-year decline. The Desire Eye won't turn things around by itself, but it helps to further build out the company's portfolio of affordable smartphones, allowing it to potentially expand its addressable market.

In the US, things starts with AT&T, which will be the exclusive carrier partner for the Desire Eye. Though the carrier hasn't provided pricing information, the Desire Eye will cost $100 on contract, representing a step down from the $200 on-contract price of the flagship One M8.

An easier sell

The Desire Eye's main selling point is obvious when you pick it up: the massive lens sitting atop the face of the smartphone, matching the one on the back. For lovers of selfies, it's easy to see the benefit. "Making them equal makes a tremendous amount of sense," said Avi Greengart, an analyst at Current Analysis.

In addition to potentially attracting younger customers and selfie fans, the Desire Eye and its two 13-megapixel cameras help address the criticism that HTC's smartphones have had weaker cameras.

In 2013, HTC opted to get away from the megapixel race with the original One, dropping down to 4 megapixels but focusing on what it calls "Ultrapixels," or its technology for what it argued would result in better quality photos -- especially in low-light situations.

But by dropping down to 4 megapixels at a time when rivals were going to 8 or 16, HTC failed to fully explain why its camera technology was better. It didn't help that it was hampered early on by a purple tint that affected some photos shot with the original HTC One. While camera aficionados know that megapixels aren't everything when it comes to a great photo, average consumers see the lower number and automatically assume the camera is inferior. The successor HTC One M8 kept the same 4 megapixel Ultrapixel camera but added a second lens for 3D effects.

Watch this: HTC announces the RE camera and Desire Eye smartphone

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HTC said it intends to continue on with its Ultrapixel technology, which is more expensive to produce and is reserved for the One family of smartphones. But many of the software tricks loaded onto the Desire Eye, under the umbrella of the Eye experience, will be available to existing and future HTC smartphones.

By opting for two more-traditional high megapixel cameras, the Desire Eye will be an easier sell. AT&T is expected to back the smartphone with a strong retail presence in its stores. But the carrier's track record of failed exclusive smartphones -- Amazon's Fire Phone and HTC's own First (a.k.a., the Facebook phone) -- means this phone is by no means a guaranteed hit.

"It's a good idea, and I'd like to see them expand the product globally and to other carriers," Greengart said. "Its market impact is somewhat limited."

Expanding the family

The Desire family is critical to HTC even in developed markets such as the US, where the decoupling of service plans and device costs have revealed how much smartphones actually cost. A base model iPhone 6, for instance, costs $199 if you commit to two years of wireless service, but $650 without a contract.

It's that growing realization that HTC is banking on. Aside from the Eye, HTC had broken up the Desire line with a numerical series of smartphones. The Desire 8 line would represent the top mass-market phone, then the 6, 5, 3, and finally the low-end 2. In the US, Virgin Mobile sells the HTC Desire 816 for $300, AT&T sells the Desire 610 for $200, and Boost Mobile sells the Desire 510 for $100 -- all without any contracts.

While HTC has shown a willingness to go lower on pricing, the company wants to stay in that middle ground between the premium smartphone category and the ultracheap tier, where players such as Motorola and its $180 Moto G successfully compete. There are a slew of players with smartphones priced at $500 and above or $200 and below, but nothing in between.

"We see that middle ground growing," said Darren Sng, head of global product marketing for HTC.

HTC's lower series smartphones are reserved for emerging markets such as India or Russia, where LTE isn't prevalent, and price sensitivity is even more of an issue. But Sng said the company intends to stay ahead of the competition and above the ultracheap fray by bringing out smartphones with better specifications and features at a faster pace.

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"What HTC brings to the table is an offering in the affordable midrange and entry-level phones that don't look or feel cheap," Llamas said.

The Desire Eye, which sits atop the Desire family on its own, is an example of a smartphone that doesn't quite hit that premium range in price, which HTC believes provides more bang for the buck.

Now all HTC needs is for selfie addicts to stop looking at themselves and start looking at the Desire Eye.