HTC

Public Policy 2nd Group Assignment – Cisco Group Names: - Berna Tosun - Hamid Moghani

- Yuchen Chen - Nayma Tasnim Islam

1. Evaluate HTC’s performance performance to date. What are its competitive competitive advantages and disadvantages? Competitive Advantages: 1. Brilliant combination in efficiency of both founders and rest of the management team. 

HT Cho (one of the founders) expert in engineering.

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Cher Wang(the other founder) having very high insight of business management.

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Both with a great vision of innovation.

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Peter Chou , a highly energetic, relentlessly passionate and ambitious general manager sent to Harvard to learn the business more. Had a highly communicative, quickly running (able to come to fulfill customer demand within 5 days) and nimble workforce. Internal research centre called "Magic Lab" for innovation purpose specially for UI and product design.

2. Strategic good alliances with effective Giants like Microsoft, Compaq, Qualcomm, Texas Instruments. That resulted with 

World's first pocket pc that was a joint innovation with Microsoft. But could not carry on because of its high production cost, technical glitches, glitches, and lack of brand recognition.

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iPAQ under Compaq's brand name that ran with Microsoft Windows CE platform. Could run Microsoft Office application, handle. E-mail, and perform other media functions. This iPAQ's monthly order reached 200,000 units which not just pulled them out of the $18 million loss but also posted a profile in the international market for HTC.

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Partnership with Qualcomm (world's leading wireless chip maker) brought them the opportunity to become 1st Taiwanese company with 3G license.

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Collaboration with Microsoft brought the innovation of XDA, 1st Windows-based smartphone.

3. Providing customers customers with handsets fulfilling their demand and satisfaction turned them as one of the leading Original Design Manufacturers of big Telecom Providers like T-Mobile and Vodafone. 4.

HTC had very good early recognition as it can be noted that they received the contract from British Telecom, Orange and Vodafone. Their dedication also secured them contract from Handspring to design Treo smartphone.

5. They stayed focused on their business of ODM and mobile operator and not targeting giants until 2009. This brought them a rise in their share price of 1000% by 2003-2006. 6. As HTC focused on manufacturing smartphones at an earlier contrast it was a great vision as with the advancement of the 3G network during 2000s, the prominence of smartphones rose high. And it was deduced that by 2013, smartphone will represent a 3rd of the world's mobile phone business. 7. Worked with both the "Locked" phone operators in USA and "Unlocked" operators operators in Europe which brought them good market opportunit o pportunity. y. 1



8. Launching of iPhone together with HTC smartphone touch-screen created a platform for users to understand what smartphones really are. 9. HTC had a huge market ahead of them in USA and China. In USA their touch screen smartphones came to be less in price compared to the apple iPhone. Above that in US, users rated HTC smartphone as 8 out 10 points. 10. Emergence of next generation phone Touch Diamond with HTC "Hero" gave them solid confidence to launch their own brand. 11. Collaboration with Google made them work with Google android. Competitive Disadvantages: 1. HTC Had to face multiple license guarded by patent and intellectual property rights. 2. Apple launching the iPhone at the same time as HTC launched their smartophone. Apple also had huge back up to make all development for their iPhone as US giant AT&T is the operator for iPhone. 3. Apples iPhone offers 40,000 applications which are either free or 99 cents of cost. HTC had the Windows based OS where 20,000 applications has been written so far but they cannot be downloaded from a central store and also costs around $10. 4. HTC had windows OS which faced complains of non-user friendly experience and weak support for graphic-oriented graphic-oriented applications. 5. HTC lacked scale and budget to launch aggressive worldwide publicity like Samsung and LG. 6. HTC has strong presence in Asia but its success in USA depends on operators’ willingness to subsidize its products and offer co-marketing support. 7. 60% of US consumers still look for a recognized brand which HTC has not yet been able to establish as big giants. Its brand recognition is not yet that strong. 8. Compared to the iPhone and its features the price of HTC is lot higher. 9. As they are fulfilling the demands of customer and making different devices that raise their manufacturing cost a lot higher.

2. What should HTC’s OS strategy be? Should it stick with Windows Mobile and Android or should HTC build its own OS platform? I think HTC should turn to Android, with few handsets with other OSs. The reasons are as follows: 1. It would cost HTC a minimum of $200 million to develop a new operation system, adding a annual maintenance cost of $50 million. 2. At least two years was needed to develop a new platform for smartphones. 3. Licensing payments to Microsoft was the second-biggest expense category for HTC, next to royalty payment to companies such as Qualcomm and Nokia, which was inevitable. 4. Switching to Google's Android, an open-source platform that could be distributed through organic growth with no licensing fees and the potential to run on any network and any platform,

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was appealing. Android OS also had a better app store compared with other OSs and a more user-friendly interface and better 3D performance than Windows Mobile.

3. All Smartphone companies with operating systems have opened their own app store, trying to emulate Apple’s success. RIM has one -- Samsung and LG have announced plans

to open app stores. Should HTC build its own app store or do something something different? HTC, the Taiwanese Smartphone maker, is hiring staff to prepare for the possible launch of an online store that would sell e-books and applications, according to two people with knowledge of the situation. HTC is the latest electronics hardware maker to contemplate distributing content and services for its devices, after Acer, the world’s second -biggest PC maker, said last month that it planned to launch a “next generation” application store. These moves highlight increasing pressure on device manufacturers to differentiate themselves through content and internet services, as competition heats up in the fast-growing Smartphone sector, particularly among Google Android-based devices. HTC has grown on the back of the popularity of Smartphone, with revenues in the third quarter more than doubling from a year ago to T$75.85 billion ($2.51billion). It is, however, facing increasing competition, with Samsung overtaking it in the previous quarter to become the world’s fourth -biggest Smartphone vendor, according to IDC. One person with knowledge of the situation said HTC was hiring content editors for a planned online HTC store for its phones, including for e-books and magazines as well as for applications. The team is understood initially to include a small number of staff based in Taiwan, with plans to expand to 100 people in different locations around the world. HTC in September 2010 partnered with Kobo, a US e-books distributor, to offer Kobo’s content on HTC devices globally. Another employee of HTC said, however, that the hires involved more than just the Kobo deal and were probably linked to the expansion of the newly-launched HTC Sense.com service. service. HTC said it is “growing very fast and we are hiring for a variety of positions including marketers, developers, developers,

technical writers and many others. We are always exploring new areas we can add value to our customers but we can’t comment on our future plans.”

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Peter Chou, chief executive of HTC, had previously said he saw “little value” in HTC running its

own application store. But he has also said that it was no longer enough for HTC to simply customize the standard Android user interface with its own “skin”: “It is not enough to be skin -

deep. We need to go bone-deep.” Chou’s changing in his mind and his decision seems about right. Between the most major Smartphone companies such as Nokia and Apple, having an application store for its own Smartphones could be a turning point in the competition. An application store where users could easily download and install their favorite application specifically designed for their smartphones can be an interest point for potential customers.

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Financial Times http://www.ft.com/intl/cms/s/2/7a16b2fe-ea92-11df -b28d-00144feab49a.html#axzz14gj3dftt

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Delivering a customized app store experience, with even c ustomized ustomized versions of popular apps that take particular advantage of any HTC special hardware features to come, is an obvious move. In my opinion even if it is an obvious does, getting it right is, obviously, difficult.

4. Peter Chou and Cher Wang want to make HTC into the leading Smartphone Company in the world. Based on your group’s research, what kind of strategic acti on(s) are needed to

achieve this goal? •

One of the HTC’s competitive advantages is product differentiation and it should be maintained

but HTC has to try to lower down ASP while still providing product differentiation. •

A lower ASP will lessen the power of buyer as it will decrease HTC’s dependence on operators’ subsidy budgets when they try to break into the United States market. It will also attract final users who are purchasing the phones without contracts.

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HTC has bad brand recognition in the US markets. If HTC can form alliance or partnership with any of the four main operators in US, it can expand its branding and get a larger share of the pie of the US market. HTC should try to find a way to contract with one of the main operators in US.

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Advertising is very important. HTC can increase the advertising expense and it can leads to higher brand awareness especially in markets such as Europe where consumers are not bounded to local operators for their phone choice. In the European market, HTC a better chance to get into

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the market and gain customer confidence and loyalty. HTC can use this advantage. HTC has a very strong advantage which is internal environmental factors. It can play a very critical role in future success of the company. HTC’s firm structure and system can be further improved

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to be future success of company. HTC has a very positive firm culture. Peter Chou runs an open work environment where employees are encouraged to explore with new ideas and technologies. It is with this positive culture that HTC can stay ahead in the industry by becoming a trend setter in the smartphone manufacturing manufacturing industry instead of follower.

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Increasing the R&D expenses will help to improve chances of coming out with the latest technology ahead of the other smartphon e manufacturers. HTC’s R&D should focus on product innovation to stay ahead of the game.

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HTC can broaden its target market by capturing the entire ‘prosumer’ market and the business

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market as well. This will put HTC against companies like RIM, Nokia and Apple but HTC will have to be more aggressive to grab a larger share of the pie. HTC has to improve and employ more aggressive marketing strategies to retain current customers as well as win over new customers.

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HTC can use the Chine opportunity to expand into the China market where there is a huge growth potential.

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HTC

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