HTC Corp.

In 2012
Debalina Ghosh
Malay S Mote
Sree Ramya Y
Swapnil P Shah

Group D
(14F518)
(14F531)
(14F547)
(14F551)

HTC Corp in 2012

Second largest handset
manufacturer
Six quarters of record sales
One of top 100 global brands
One of 50 most innovative
company: Fast company magazine

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History
Founded in 1997 by HT Cho and Cher
Wang
Started with manufacturing Notebook
computers
Wangs Idea: A device that could do
everything from computer based
functions to mobile calls
Worlds first pocket-size PC using
Windows CE
iPAQ a breakthrough in 2000
First colored screen PDA
First time profit in 2000
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PDAs to Wireless Devices

2002 HTC went public on Taiwanese
Stock Exchange
PDA sales contribute 80% of total
revenue
Built Treo smartphone
Bill Gates: HTC as worlds best
hardware manufacturer
Built XDA first windows-based
smartphone

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Contract Manufacturing
Business
2 main segments
Original Design Manufacturer
(ODM)
Manufacturing phone for wireless
network operators(T-Mobile,
Sprint, Verizon
For wireless network operators:
Low churn rate
Additional revenue via data services

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New CEO and the Road to

Brand
In 2006,
Palm & HP looking for other
partners
Peter Chou

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Mr. Perfect, Innovator

If you really want to capture the
value of innovation, you must have a
brand identity
Decided to brand and sell handsets
under companys own brand name,
strategy began in 2007
Acquired Dopod, got entry into
T. A. Pai Management
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Taiwan,
Asia Institute

Product Innovation
Increased marketing expenditure
Magic Labs: internal research center
to drive innovation
HTC Touch targeted launch mid2007
But in Jan 2007, Apple unveiled
iPhone
HTC ships first HTC touch before
iPhone
Touch Diamond: mobile internet, quicker
processing
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Positive
market response to Touch

Reaching out to Google

Touch Diamond: shortcomings of
Windows mobile platform
Team up with Google
No licensing fees
G1: First Android handset
More than a million units sold in
first quarter

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Smartphones
Most profitable and fastest growing
segment
One of the mainChart
features
was the
Title
100
platform
90
80
70
60

Smartphone
Mobile phone

50
40
30
20
10
0
2011
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2012

2013

2014

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2015

2016
9

Smartphone Market
Two business approaches Vertical
model and Horizontal model
OS

Owner

Major
Vendor
s

Licensin
g Fee

Launch
Date

# of
Avail
Apps

Android

Google

HTC,
LG,
Samsun
g,
Motorol
a

No

Nov.
2007

300,000 6 billion
+

Bada

Samsun
g

Samsun
g

Proprieta
ry

Feb.
2010

15,000

NA

Blackbe
rry OS

RIM

RIM

Proprieta
ry

Mar.
2002

35,000
+

1 Billion

iOS

Apple

Apple

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Proprieta Jan.
ry
2007
T. A. Pai Management
Institute

Total App
Downloa
ds

500,000 18billion
+
10

Smartphone Operating
Systems
Two dominant platforms: Googles
Android and Apples iOS
Others: Windows Phone, RIMs
Blackberry and Symbian

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OS

2007

Nokias Symbian

63.5% 52.4% 46.9% 37.6% 16.9%

RIMs OS

9.6%

Microsofts
Windows

12.0% 11.8% 8.7%

Apples iOS

2.7%

8.2%

14.4% 15.7% 15.0%

Googles
Android

NA

NA

3.9%

22.7% 52.5%

Samsungs Bada

NA

NA

NA

NA

2.2%

6.2%

3.8%

0.9%
11

Others

2008

2009

2010

2011

16.6% 19.9% 16.0% 11.0%

10.8%
9.2%
T. A. Pai Management
Institute

4.2%

1.5%

Smartphone Handset
Manufacturers
Nokia
Worlds biggest handset manufacturer
strong international customer base
Samsung Electronics
- Mobile devices only division of
Samsungs sprawling business
- Propelled forward worldwide with slick
new designs in the Android platform
Others
- Competition from LG Electronics, Sony
Ericsson, Motorola Mobility and Chinese
companies like Huawei and ZTE
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Patent Wars

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Strategic Challenges
By Q4 2011 HTC had grabbed a
significant market share with a
robust sales volume
By 2012 sales of Samsung Android
phones and Apple iPhone 4s
surpassed HTC
Operating margin of HTC reduced to
around 15%
Average selling price of HTC
reduced by 18.32%
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Product Portfolio
Streamline the products to be sold
One hero phone that could drive
the volume to create greater sales
Introduction of HTC One series
i. Sleek carbonite body
ii. Advanced digital camera
iii. Fastest processor
iv. Latest OS

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Product Differentiation
HTC Sense
i. User friendly applications
ii. Superb UI
iii. Smoother in functioning
iv. Highly customizable and fun to use

HTC targets for new acquisitions,

turns to media content and services
HTC ranked amongst the top 100
global brands in 2011

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Other Challenges
Biggest increase in consumers
repurchase intent for Samsung
Large numbers of HTC owners
switched to Samsung phones
Change in the market from operator
push to customer pull market
Emotional connection created by
Apple was irreplaceable
Increase in brand awareness did not
convert to brand ownership
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OS Strategy
HTC sense: A platform over Android
HTC no longer Googles most
preferred
Google Nexus: went to Samsung
after the first Nexus
Buy, make or continue with Android
OS?

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Tablets
Introduction of I-Pad in 2010
HTCs foray
Flyer
4G Jetstream
Android tablets
Weak UI
High prices (No subsidies by
operators)
Low applications
Ultra-books and Kindle Fire
Microsofts windows 8 for tablets
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Q1. Evaluate HTCs performance to date.

What are its competitive strengths and
weakness?
HTCs performance:
First pocket size PC, XDA, iPAQ
Preferred carrier partner
20% profit margin in mid-2000
2007: Started selling under its own
brand
Over a million G1 devices sold
Lost in patent suit to Apple
Intense competition; cost pressure;
profit margin dropped to 15%
HTC One flagship brand
Poor performance in tablet market
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Q1. Evaluate HTCs performance to date.

What are its competitive strengths and
weakness?

Strengths:
Leading smartphone
manufacturer
Strong R&D
Strong relationship with network
operators
Value for Money products (Exhibit
10)

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Q1. Evaluate HTCs performance to date.

What are its competitive strengths and
weakness?

Weaknesses:
Lack of own OS
Low brand awareness (Exhibit 11)
Average sale price/device is very
high (Lack of products in low
price range)

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2. Is HTCs competitive position sustainable? What

are the main challenges HTC faces? How do they
affect HTCs competitive position?

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Resource/C
apability

Valuabl
e

Rare

Inimita
ble

Organi
zed

CA

Innovation

Temporar
y
Advantag
e

Platform

Competiti
ve Parity

Customizatio
n to
operators

Sustained
Advantag
e

Partnerships

Temporar
y
Advantag
e

User
Interface/
HTC Sense

Sustained
Advantag
e

Hardware

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Competiti

Q3. HTCs OS Strategy?

Alternative
1. Purchase existing OS
2. Build own OS
3. Alliance with Microsoft & Google

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Q3. HTCs OS Strategy?

1. Purchase existing OS
Pros:
Head start compared to building own OS
Greater control over feature development

Cons:
High acquisition cost

But, there is no point in purchasing OS

like Nokia Symbian, RIM OS, Palm OS
because of their consistent decline in
market share
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Q3. HTCs OS Strategy?

2. Build its own OS
Pros:
No dependency on Google & Microsoft
More control

Cons:

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Time consuming
High cost
Problem of mobile application
May lag in tablet boom period

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Q3. HTCs OS Strategy?

3. Alliance with Microsoft & Google
Pros
Android:

No license fees
Lots of applications ( more than 300000)
Ice Cream Sandwich for mobile and tablet
Most popular smartphone OS (52% of overall
market)
Highly customizable

Windows:
Vastly improved UI
Tight integration with Microsoft Office

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Q3. HTCs OS Strategy?

3. Alliance with Microsoft & Google
Cons:
Android:
Patent war
Windows:
Very few applications (~30,000)

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Q4. Should HTC build its own app store? Do something

else?

Own app store

Pros:
Differentiate itself from others
Filtered apps, better quality to consumers

Cons
Separate team for maintaining an app store
High development and maintenance cost
More R&D required
Development time is high

Limited app reach to consumers

Low motivation to developer for developing new
apps
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Q4. Should HTC build its own app store? Do something

else?

All the smartphone companies with

their own OS has opened an app
store, but HTC doesnt own its OS.
Its better to rely on Googles Play
store

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Q5. What are strategic actions

needed to make HTC leading
smartphone company?

Focus more in Asian and European markets

(Exhibit 2b)

From, Global brand awareness Q3, 2011

(Exhibit

11)

HTC has low aided brand awareness

Solution:
High marketing to create a brand image
Consistent brand experience through out
Market Sense UI as its USP

Innovation
Maintain shorter product life cycle
Diversification in lower price smartphone
range (Exhibit 9)
Develop more products in handset and
tablet category
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Q5. What are strategic actions

needed to make HTC leading
smartphone company?

Customer satisfaction
Regular distribution of latest OS
versions
Patent Lawsuit is restricting HTCs
growth hence create an alliance
with other companies to boost its
patent portfolio

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THANK YOU

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