Functioning originally as an equipment manufacturer “OEM” and later transformed into a manufacturer “ODM”, HTC was the key supplier of telecommunication companies such as T-Mobile, Vodaphone, NTT Docomo, and Orange. Based on its success as an effective supplier in 2006, HTC decided to launch into a brand strategy targeting PDAs and smartphones under its
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new “HTC” brand name. The company was founded in 1997 by Cher Wang, HT Cho and Peter Chou (David B Yoffie, 2009).
In 1997, HTC focused on the notebook industry new innovation of Pocket PC technology.
Slowly becoming a key player supplying in this field, HTC later joined with Microsoft in the development of devices using the Windows CE operating system (David B Yoffie, 2009). In cooperation with Microsoft, HTC eventually attempted to design its own Pocket PC models for consumers. Even though HTC’s first PC Pocket prototypes earned many technological
innovation awards, HTC was initially losing money in the venture of this competitive industry.
At this stage, HTC was still relatively immature in its technology skills, software, and design for Pocket PCs. As a result, HTC decided to focus on handheld devices and invested heavily into R&D for the next few years (Weitao, 2005).
HTC’s major breakthrough came in 2000 when HTC obtained a contract to supply the IPAQ for Compaq, a well-known brand at that time until it was acquired by HP in 2002
(www.compaq.com). The IPAQ was a commercial success in the market and proved to the technological world the competence and design manufacturing of HTC. With the success of the IPAQ, HTC realized that they wanted to be unique, so they started to design customized phones with the various carriers in the US & Europe. With the acclaimed design manufacturing &
hardware, the successful launch of handspring products & Palm Treo phones followed afterward.
By 2004, HTC had USD$1bn in revenues. In 2006, HTC’s revenues had reached USD$2.2bn.
b. Evolution of HTC
The success of HTC can be attributed to the many decisions it made in terms of transforming from the traditional ODM to a global brand that it is today. In the beginning, HTC was only known to a select few specific large telecom companies that were turning them for ODM jobs.
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The many phones HTC designed and manufactured for others included the IPAQ, Palm Treo 650 and the famous T-Mobile G1 (first android enabled smartphone). Additionally, HTC made an aggressive move toward its hardware design department and introduced many “first” into the market. It was the 1st company to produce Microsoft’s 3G smartphone, 1st to develop the android phone (T-Mobile G1), and the 1st official Google phone (Nexus One).
Going through many well managed risks one after the other, the 10+ years old HTC had caught the attention of global players such as Samsung, LG, and even Apple. With their multitude of successful hits, it’s no wonder that HTC would want to start redefining themselves as a global brand instead of an ODM company. Their heavy focus on design of each and every one of their products became the basis for the company (David B Yoffie, 2009).
Adapting American Business Ideals
There is one important aspect about HTC’s operations really set it apart from other
Taiwanese manufacturers. Right from the start, CEO Peter Chou had set up a rule that each HTC employee had to have proper English language training. Even though the company was based in Taiwan, Chou had envisioned a company with a global impact. In order to achieve this, he had HTC adapted to one of the most avant-garde American Business ideal. Employees had to embrace the idea that failing was actually tolerable within the company. Horace Luke, the ex-Chief Innovation Officer at HTC mentioned that the “target failure rate of 95%” did exist in the R&D division. He explained that in order to maximize the full potential of the department, it all boiled down to how well the company can retain the good ideas from all the bad ones. It is better to fail fast and early rather than later, which he quoted: “That’s very different from the culture at Taiwan, where you have to be successful all the time.” (Ganapati, 2009)
14 Effective Marketing Campaign
HTC set out to change the mobile industry with a brand position they called “Quietly
Brilliant.” In order to inform every one of its decision to become a global consumer brand, HTC decided to launch what they called the “YOU” campaign across 20 countries to promote their entry into the mobile market. The basic tagline for the campaign was “You don’t need to get a phone. You need a phone that gets you”. The idea is to emphasize on HTC’s goal to focus on the people, their needs, and how can a HTC mobile device suit them. (Video from HTC’s official YouTube subscription)
The YOU campaign was centered at delivering “broad, global visibility and understanding of HTC’s unique brand promise” which is all about the consumer and not just the device. CEO Peter Chou said HTC aimed for more than 40% global brand recognition by the end of 2010. By 2011, HTC’s name will go head to head with other current major global brands. This campaign was only the first of many to carry out the Quietly Brilliant brand positioning of HTC, and showed the world that HTC is truly an innovative company.
15 Illustration 3 – HTC’s Timeline
c. Mobile Phone Industry
This industry is comprised of many moving parts. There are the operators, the designers, the manufacturers, and the software developers; and all of them play a critical role in the mobile phone industry. In addition, the industry is also defined by two business approaches: the vertical model of companies like Apple & RIM or the horizontal model of smartphone companies like HTC, Samsung and LG (in PCs it was Acer, Asustek & HP). In the Vertical model, Apple is involved in all parts of the development such as software and hardware. On the other hand, companies like HTC are primarily involved on the hardware side of the business and followed the horizontal approach.
Source: Harvard Business Case - "HTC Corp in 2009" by David B Yoffie, Renee Kim (2009)
16 Figure 1 – Smartphone VS Feature Phone in 2011
The mobile phone industry is divided into two primary categories —feature phones and smartphones. Feature phones, which is the by-product outcome of simple phones (B/W screens, dial pad, address book) target consumers rather than business users with its unique features, design or size. These feature phones are usually in the mid-price range with a standard UI and function such as music players, basic calendar and camera.
With the entrance of smartphones into the marketplace along with more advanced wireless networks, the demand skyrocketed. To effectively use the improving wireless networks, business users demanded better productivity tools, such as “push” e-mail that delivered faster mobile communication. These desires for productivity provided an opportunity for various software giants to create the various operating systems, user interfaces, and unique screens.
17 Figure 2 – Global Smartphone Operating Systems
Source: Public Technology Websites – Engadget, Phonearena
As smartphones added cameras, music, GPS, and games, consumers started to adopt high end smartphones. As a result, feature phones started decreasing. While feature phones continue to dominate today, many phone vendors such as HTC, Samsung, LG, Motorola have started to launch lower end / mid end smartphones to convert the feature phone users.