Business Strategy: HTC Corp. in 2009

Thèmes abordés

HTC strategy case

Résumé du document

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

Extraits

[...] in “More than three million Touch phones were sold worldwide in about 11 month, about half of iPhone sales in the same period.” Diamond delivered a solid mobile Internet experience and quickly emerged as HTC's product of the year, selling two million units within the first two quarters of its launch with 30 operators in 50 countries.” 10. Extract from Corp. in ‘Thumbability', the ability to use the phone with just one hand . 11. In the second generation Touch Diamond, there was a new built-in GPS and a central processing unit that boasted a speed 18 times faster than the standard 3G phones The product cycles in HTC were only about three quarters, on average two quarters shorter than other handset manufacturers According to Corp. [...]

[...] One was the so-called “internal customer”, which appeared mainly because of the particular feature of the U.S mobile market. As customers could only use a phone approved by a certain network operator, the network operators acted as internal customers of HTC since the later has to convince the former to sell its products. The European and Asian markets, however, were completely open. Individuals could switch relatively easily from one operator to another. In this case, HTC faced directly the end users of its products. [...]

[...] Perfectly connected with Google products, the Android-operated phones won great popularity and were expected to contribute 36% of HTC's total sales in 2009 and 49% in 2011! Despite the current prosperity of HTC, the company faced several crucial challenges and should therefore take into account the following points. In the first place, it should always be made clear that HTC's brand value was innovation (cutting-edge and high-end), without such distinctive image a company in the rapidly evolving smartphone market could hardly capture long-term followers. [...]

[...] ODMs (original design manufacturer) 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 3. New landscape faced by HTC: 4. See Exhibit 5b, “Smartphone Sales to End User by Vendor” 5. As indicated in Exhibit 5b, the market share of Apple in 3Q2008 and 3Q2009 was respectively and Therefore, the growth of market share in this one-year period was ( 17.1 12.9 12.9 Extract from Corp. [...]

[...] The strong innovation capacity and the nimble organization of HTC gave birth to a competitively short product cycle[12], meaning that HTC could better react to the feedbacks[13] of its consumers and thus gain a first mover advantage. However, it was rather costly and difficult to maintain this superiority. Another factor that drove HTC to success was its wise choice of operating system. Thanks to its reputation in providing high quality product and rapid innovations, HTC won the trust of Microsoft and then Google. [...]