SINGAPORE — Long-term HTC shareholders must be looking at their investment with a sinking feeling.

After reaching a record high of NT$1,300 (S$54.70) last year, when the Taiwanese company was riding the crest of the smartphone tsunami, shares have steadily lost ground, falling to NT$194 earlier this month — a more than five-year low — shortly after HTC made gloomy predictions about its performance in the rest of this year. Since then, shares have clawed back some ground, closing Wednesday at NT$241.50, but that is still a fall of more than 80 per cent from the record high.

So what has gone wrong for HTC, which until recently looked like a heavyweight challenger in the booming smartphone market?

Part of the problem is that Apple and Samsung are becoming increasingly dominant — between them they account for nearly 50 per cent of smartphone shipments — forcing companies like HTC into a dogfight to preserve their much smaller market share.

Indeed, HTC warned last month that it is facing a challenging last few months of 2012 after a tricky third quarter during which, according to research firm IDC, its share of the global smartphone market dropped to 4 per cent from 10.7 per cent a year earlier.

HTC said revenue for the three months ending Dec 31 will likely fall 41 per cent on year. And its operating margin will likely drop to a wafer-thin 1 per cent from 12.7 per cent in the same period last year, with marketing expenses likely to chew into profit as it seeks to preserve its brand appeal.

Simon Bell, Director of Strategy at brand consultancy Landor Associates said: “The glow HTC enjoyed this time last year has dulled, but speed to market seems to be their problem, not brand.”

Certainly, some of the buzz which previously surrounded HTC seems to have disappeared.

Last year, rumours of the HTC Evo 2 created a wave of interest among consumers looking for a faster LTE update of the Evo in the United States. That momentum continued with the announcement in February this year of the One X, with its market-leading camera. The Evo 2 was launched in June this year to great reviews.

Since then, HTC has been relatively quiet and the recent launches of the One X+ and 8X did not generate as much excitement as the latest Apple and Samsung products.

“In many ways Samsung has all the cards; they have the marketing budget, they have a stronger branding. So what HTC can do is to carve itself a different niche,” said Ms Melissa Chau, Research Manager for smartphones and tablets at market research firm IDC.

HTC recognises the challenges it faces in a hugely competitive market.

It said recently it is increasing its distribution channels in emerging markets, which have greater sales growth potential than the US and Europe where demand has weakened. It is also continuing to focus on China, the world’s largest smartphone market.

Speaking on the sidelines of the regional launch of the Windows Phone 8X and 8S, Mr Lennard Hoornik, President, South Asia, HTC Corporation said: “We have been doing very well in Asia. We are very happy about the response that people have to the HTC proposition — especially when we look to China, India and other countries.”

He declined to comment on HTC’s falling global sales.

Principal Analyst at research firm Gartner Anshul Gupta said looking to new markets may help HTC regain momentum: “(For HTC to work in emerging markets) they have to have an appealing portfolio in the range of US$200 (S$245) or less. As for matured markets, they have to have a flagship device along the lines of the iPhone 5.”

If the company’s strategy succeeds, there is no reason why its market share cannot go back up. But it will be an uphill challenge to drive its share price back to the dizzy heights seen last year.