Htc Case Study

Executive Summary

Taiwan based company HTC engaged in the research, development and manufacture of handheld wireless telecommunications devices based on Android and Windows Mobile operating systems. HTC was founded in 1997 and evolved from a PDA original design manufacturer for famous computer giants to a smart phone original design manufacturer for cell phone network operators, and eventually an own brand smart phone manufacturer for mass consumers. It enjoyed tremendous successes in the past by putting its resources at right technology of right market at right time. However, today's dynamic changing competitive environment put new threats to HTC. These new threats were how to build and market HTC's own brand globally.

Based on detailed analysis of HTC's industry environment, its own product and brand strategy, conclusion was drawn that HTC's product and brand strategy didn't support its ambition to be leading player in the smart phone market. Countermeasures were then proposed: 1) streamline product portfolio, and 2) reconsider the "quietly brilliant" marketing campaign.

Introduction

This case, "HTC CORPORATION: A SMARTPHONE PIONEER FROM TAIWAN", introduces to us the history and overview of the Taiwan cell phone maker HTC and the ecosystem in which HTC operates. In less than two decades, HTC had started in ground from zero and became one of the top smart phone providers of the world transmitting data over the sky. In such a dynamic progress, though HTC had made huge achievements through adapting itself up in front to the future market trend, the case left an open question mark about HTC's future continuous success.

HTC was founded in Taiwan in May 1997 as an original design manufacturer (ODM) of personal data assistant (PDA) devices for Western computer companies like Compaq, HP, and Dell. In 2000, HTC successfully adapted the Windows CE operating system, a Windows software platform developed by Microsoft originally for large consumer electronic products, to its PDA to enable communication with PCs and operation of Windows applications such as Microsoft pocket Office. This technology development helped HTC's customers earn many business professionals who use Office software every day.

In 2002, HTC started to switch its business to smart phone from PDA by making Microsoft-powered smart phones under names of several big mobile network operators including O2, Orange, and T-Mobile. These network operators purchased ODM smart phones from HTC and used them as promotional tool to attract consumers.

In 2006, HTC made another strategic move - move away from ODM business and move into own-brand manufacturer (OBM) business. HTC launched a new smart phone product line under its own name. Since then, HTC had released over hundred smart phone models with the HTC logo and enjoyed positive response in the market. While continuing partnership with Microsoft to develop devices based on Window Mobile operating system, HTC diversified its core technology dependency by utilizing Google's Android operating system to make smart phones beginning in 2008. With numerous technology developments and admirable growth in late 2000's, HTC gained high recognition from industry media and received several awards from the media. The move from contractual manufacturing to brand marketing was a tremendous success, yet it posed new challenges. In late 2009, HTC revealed its first global advertising campaign - quietly brilliant. Facing a rapidly changing competitive landscape, HTC entered into a new territory of brand building and global marketing.

Analysis of the issues

The challenges facing HTC are analyzed in below.

Dynamic change of strategic context

First phase - from 1997 to 2002, HTC's main business was ODM of PDA.

PDA (Personal Data Assistant) was a mobile device that functions as a personal information manager. At the time of HTC's early days, due to PDA's mobility and compatibility with computers, PDA became more and more popular among professionals in developed countries where desktop and laptop computer had already been everywhere. Well known brand companies such as Compaq, HP, and Dell outsourced design and manufacturing of PDA to low cost high tech companies in Asia. HTC was established in Taiwan by two computer industry veterans: Cher Wang and H T Cho. HTC's founding team also consisted of nine other engineers including Peter Chou who was named CEO in 2004 after H T Cho. Before HTC was founded, Wang had created a successful enterprise making computer chips, Cho had had years of engineering experiences with DEC which was an US mini computer manufacturer that had a plant in Taiwan, and Chou also worked as engineer in DEC. With experiences and relationships of HTC's key members of founding team built from computer industry, no wonder in its early days HTC aimed at customers and niche market in computer industry. HTC started to design and make PDAs for Compaq and later expanded its business to other computer companies like HP and Dell. HTC integrated colored screen and Windows software platform to its PDA. While technology development was a necessity, it couldn't secure HTC's unique position in the industry. Reasons were simple: HTC's customers would never put all their eggs in one basket, and there were bunch of alternatives for HTC; plus cost was a big driven force for vendor selection.

Second phase - from 2002 to 2006, HTC's main business was ODM of smart phone.

With technology advancement and consumer's increasing demand of connectivity, smart phone was widespread adopted and thus made PDA obsolete. Smart phone was mobile phone built on mobile operating system with advanced computing capability and connectivity. It combined the functions of a PDA with a mobile phone. HTC grabbed the industry trend - it gradually gave up its PDA ODM business and stepped into a market segment that had been under served, that was supplying phones to network operators. The operators had difficulties to make deal with major handset providers since the order size was not attractive to these cell phone companies comparing to their global sales. HTC made a beautiful business transformation in that period, but faced limits of subcontracting. Consumers were using smart phones designed and made by HTC but under network operator's name, they didn't know who HTC was; HTC's products were actually delivered to end customers without modification in essence while HTC was doing B2B (business to business) business. In the meantime, network operators