After a its success in ODM[1] and mobile operator business[2], HTC decided to sell handsets under its own name in 2007. Despite having a very innovative product line resulting from substantial R&D expenses, HTC had not yet established a distinctive brand value. To reduce costs and build its image with high-end products, we recommend that HTC not only cooperate more closely with Google's OS, but also penetrate the "unlocked" European and Chinese markets quickly, to leverage economies of scale, before its massive launch in US with the support of operators.
HTC observed the fast growing trend in the brand new Smartphone market (global sales rose 22% in 2010 and were expected to reach 350,000 in 2012) and launched the first touch screen Smartphone under the company's name in Asia and Europe. This ambitious decision implied that HTC would encounter a new landscape (See the diagram in appendix 3). Firstly, it was now in direct competition with leading handset manufacturers. The major producers of smart phones included Nokia (39.3% market share), Blackberry (20.8%), Apple (17.1%) and Samsung (3.2%) [4]. Among them, Apple was the most aggressive one [5] and targeted a consumer segment which was most similar to HTC [6], while Nokia was more eminent in the areas of phones with multiple feature, and Blackberry was in state of relatively stable development.
Except Samsung, all the handset manufacturers mentioned above had developed their own operating system; such as Apple's OS X, RIM's BlackBerry OS, and Nokia's Symbian. In addition, Microsoft's Window's Mobile and the latest Google's Android were also powerful operating systems. Overall, all these system operators had a user interface and a specific application store, which were evaluated as more or less "user friendly". Therefore, it was crucial for HTC to choose the most suitable operating system for its future products.
Tags: Marketing strategy of HTC; Smartphones; HTC OS
[...] For example, in the absence of economies of scale in purchasing, HTC had to pay 30% more component costs than Nokia in Europe VS in U.S. See exhibit 10b, “Brand Consideration in Selected European Countries” and Exhibit 10a, “U.S. Mobile Phone Users' First Brand Choice” Dopod, a well-known brand in Taiwan with strong presence in Asia 22. Smartphones occupied only of total Chinese mobile phones According to Corp. in HTC saved 50% in labor costs and 15% in full production cost by moving manufacturing to mainland China The Economic Cooperation Framework Agreement (abbreviated ECFA) is a preferential trade agreement between the governments of the People's Republic of China (mainland China) and the Republic of China (Taiwan) that aims to reduce tariffs and commercial barriers between the two sides. [...]
[...] Thus HTC has a large potential to attract this segment of the market on account of its innovative technology, and a slightly lower selling price resulting from the economies of scale achieved in Europe. China: Through the acquisition of Dopod HTC started to sell its own-brand products in China, a promising market that recently opened its 3G networks and offered great potential [22]. HTC should penetrate this high-growth market at the same time as its expansion in Europe, given its existing production facility in Shanghai (meaning lower production and transportation cost and its political advantage (ECFA US: Planning to return later to the U.S. [...]
[...] In conclusion, to be outstanding in this promising but competitive Smartphone market, HTC should choose Google Android as its long-term partner, insist on high-end products, leverage its innovative brand value, and adopt a 2-step expansion strategy. This involves building its reputation and reducing costs by economies of scale in Europe and China, and then expanding into the U.S. market. Indicative Bibliography http://www.htc.com/us/#/?slide=0 http://www.theregister.co.uk/2007/05/18/htc_new_strategy/ http://www.htc.com/www/press.aspx?id=25820&lang=1033 http://thegadgetfan.com/mobile-smartphones/who-will-win-the-smartphone- race.html Appendix 1. ODMs (original design manufacturers) are in charge of the manufacture of unmarked models sold to companies which resell these phones under their own brand Mobile Operator Business: design mobile phones to service providers New landscape faced by HTC: 4. [...]
[...] In this case, HTC interacted with the end users of its products directly. Although it was facing a number of strong competitors, HTC captured of total market share by the end of 2009, just behind Apple, Blackberry and Nokia. The key to its success was firstly due to its extraordinary capacity for innovation. The chief directors of HTC attached great importance to which resulted in the successful launch of the first Touch series in 2007 and 2008[9]. HTC's touch screen phone was famous, on the one hand, for its “thumbability” design and on the other, for its cutting-edge technology [11]. [...]
[...] Since the compatibility of Windows Mobile with Microsoft Office was highly appreciated by business users, HTC enjoyed an amazing growth at that time [14]. HTC was then chosen by Google to design the first handset to run on Android. Very different from Windows Mobile, Android was an open- source platform with no licensing fees, thus helping HTC to save a huge amount of operating cost [15]. Perfectly connected with Google products, the Android-operated phones won great popularity and were expected to contribute to 36% of HTC's total sales in 2009, and 49% in 2011! [...]
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