Taiwanese smartphone maker HTC Corp. reported on Friday, Aug. 3, a 58 percent decline in second quarter profit year on year, marking its third consecutive quarterly decline amidst increasingly tougher competition from Apple and Samsung Electronics.

HTC reported a profit of 7.4 billion New Taiwan (NT) dollars ($248 million) from revenue of NT$91 billion in the quarter that ended in June. The company also reported a 70 percent decline in the first quarter and a 26 drop in the final quarter last year.

Looking ahead, HTC also predicted a sharp drop in revenue and narrower profit margins for the third quarter, reflecting the highly competitive environment with rivals Apple and Samsung increasingly dominating the market. HTC has been steadily falling behind the two giants in the rapidly evolving smartphone market.

HTC phones run on Google's Android operating system, and in 2010 they were the strongest challengers to Apple's iPhone in the U.S. Many mobile users were just starting to replace their traditional cell phones with smartphones back then and HTC was present to ease the transition. Samsung, however, overtook HTC last year to become the biggest vendor of Android-based devices in the U.S.

HTC CFO Chia-Lin Chang said his company "needed to work harder" to win consumer preference in such a competitive market. The United States will continue to be an important market for HTC, but China "will be a key driving force for our future growth," added Chang, according to the press release.

HTC said it expects revenue for the quarter ending Sept. 30 to total NT$70 - NT$80 ($2.33 billion - $2.67 billion), down 41 - 48 percent from NT$135.80 billion the previous year, and a gross profit margin of roughly 25 percent, down from 28 percent. The company also expects an operating margin of around 7 percent in the third quarter, down from 14.9 percent the previous year.

According to analysts, HTC's outlook for the quarter was worse than expected and attributed the gloom to increasingly tougher competition, as well as potential price cuts aiming to help clear inventory.

Apple and Samsung together accounted for nearly half of the world's smartphone market in the second quarter, research firm IDC found. Samsung topped with a 32.6 percent share, bolstering its lead over Apple's 16.9 percent share, while HTC's share was only 5.7 percent. Moreover, Samsung shipped more than 50 million smartphones in the three months ended in June, and the numbers are expected to surge even further, fueled by great demand for the Samsung Galaxy S3. The South Korean company also announced the launch of a new Galaxy Note at the end of the month. Meanwhile, Apple is expected to launch its next-generation iPhone soon, in September or October.

"The problem is HTC is unlikely to launch new flagship products in the third quarter, while price erosion is going to accelerate with more new model launches from rivals," said RBS analyst Wanli Wang, as cited by The Wall Street Journal.

"We will continue to invest in the future," Chang added in the press release. "But we will allocate resources to focus on key growth areas, such as product innovation, sales and marketing."