HTC Case Analysis Essay
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HTC, originally founded by HT Cho and Cher Wang, was initially commissioned by Compaq to be an ODM, original design manufacturer. Their job was to engineer and design products for Compaq, all of which would be sold with under Compaq’s brand. Their innovativeness attracted business professionals and soon they collaborated and succeeded in creating the world’s first pocket-sized PC with Microsoft. Their success at fulfilling their vision of creating smaller lightweight devices then lead HTC to creating PDAs, once again a bit hit.
All of these successes lead HTC to thinking about the future of mobile phones and what their part in it would be.
Once the idea struck, it stuck. HTC’s new goal was to make smart phones and wireless PDAs. In order to achieve this, they partnered with Qualcomm, the world’s leading wireless chip maker, and allied with Texas Instruments, using their processors for the phones and internet functions that would be available through their phones.
Eventually HTC saw the future in transitioning from PDAs to smart phones and partnered with Microsoft in order to produce a smart phone together. Eventually it hooked up with Google and used its Android platform to become the user friendly smart phone that it is today.
HTC did a great job when it decided to create direct relationships with its end users. They did this by offering customized mobile phones that fit the needs of each individual customer. This tactic lead to better margins, helped HTC differentiated themselves from other ODMs, and it created a horizontal approach which helped HTC to specialize in what it did best, instead of focusing on everything concerning the supply side. Although customization was a huge hit, it did have its drawbacks. Customization produced high costs, thereby taking away from the margins. But in the end it was worth it due to the consumers feeling that they were in control of their phones and that their mobile devices were able to meet their specific needs.
Competitors: Apple, Microsoft, and Android phones. Apple was distinguished as a revolutionary, fun, advanced and user friendly phone. It was claimed as invention of the year. This provided HTC with great competition since Apple took all the hype away from its products. The app store was a genius idea that drew in consumers and took away from HTC, especially when it was still in collaboration with Microsoft, which had an app store that was too expensive to even consider. Its innovative product helped it to capture 10% of the market share within 2 years time, a huge success! Its one weakness (strength for AT&T carrier) was that it offered its products to only one carrier.
Microsoft’s Windows mobile was very popular due to its compatibility with Microsoft office, but it soon received many complaints about windows mobile due to its non user friendly experience and weak support for graphics oriented applications. Their unattractive design and slow platform detracted consumers from their products and allowed for other competitors to really shine.
Android phones were a hit! It was the first open sourced platform where it allowed third party developers to create application that could be used on different devices or carriers with no licensing fee. This approach drew many consumers due to their ability to offer apps at a lower, if not free price when compared with Apple. Seeing this opportunity, HTC hooked up with Google to be able to offer a more attractive smart phone to the market.
Overall HTC viewed its competition as its strength at times. Smart phones were still a relatively new idea, but when Apple promoted its iPhone, HTC saw the opportunity to really convince that market that it was a legitimate brand and that its innovative product would be able to support the consumer’s needs. HTC’s ability to see Androids potential is really what separated it from other phones at the beginning of the race, allowing it to have a lead against competitors in the same field.
Strength: HTC’s strength lied in the fact that they were able to were able to envision a evolutionary future and was able to fulfill its demand. Through perseverance and innovation, HTC was able to deliver a smart phone, competing at an equal level as Apple’s iPhone. Another strength is that HTC was able to make the right connections. By first pairing up with Microsoft, they were able to build a phone based off of the Windows platform, attracting many business professionals who saw the convenience in syncing their Windows phone to their Windows operated computer. When HTC found that the Windows platform was not user-friendly, they approached Google and started using the Android platform that would be more approachable and user-friendly.
Weakness: HTC’s main weakness is its lack of brand awareness. Due to its little market share in the U.S., it was hard to compete with other big brand named mobile suppliers, such as Samsung, Nokia and Motorola. By spreading itself thin globally, its concentration gave it a disadvantage. So instead of focusing on the U.S., HTC entered the European market instead due to its “unlocked” market.
Opportunities: HTC made a risky move when it started to produce its own phones under its own labels. This move eventually paid off, but its foresight into the future of mobile technology is what really gave HTC their competitive advantage.
Threats: Although HTC spent a lot of time on innovation and creating a great product, other companies were catching up very quickly. It had to find a way to differentiate itself in order stay ahead of the game.
HTC’s positioning of smart phones has really fluctuated over the years. In 2008 it had as much as 68% of market share, but within the next couple of years its hold of that market decreased dramatically. It can be seen that once HTC switched from the Windows platform to the Android platform, its revenue increased dramatically, indicating that its more user friendly platform has attracted more consumers.