Do you know High Tech Computer Corp. (HTC) (Taiwan: 2498)? The name may not ring a bell for many consumers, but chances are that someone in your office or even in your family is making or receiving a phone call on a device from the Taiwanese company right now. HTC is also one of the prime reasons why many components suppliers, including Intel, Qualcomm, and Texas Instruments, see a future for themselves in the sector even without scoring a design win at Apple.
You'll be hearing more about HTC in coming years and should keep the company on your radar. Rather quietly, it has penetrated one of the most competitive segments of the consumer electronics industry over the last five years, steadily building up market share in smartphones, first via partnerships with telecommunication services providers and then with its own branded offerings.
The industry can learn some lessons from the rapid growth of HTC, but the company also may want to review the history of some competitors to know the pitfalls that lie ahead.
HTC grew initially by serving as an ODM making branded products for telecom companies. The telcos could get a higher margin on such products, and HTC used its years as an ODM (1997 to 2006) to burnish its own reputation as a reliable partner and vastly improve its design skills. The partnerships with telcos like Verizon, T-Mobile, Sprint, Orange, and NTT DoCoMo allowed HTC to tap their knowledge base for design concepts, share R&D costs, and avoid the huge startup and marketing costs associated with entry into such a highly sensitive market.
Such partnerships aren't common with the larger vendors. Companies like Apple, Motorola, and Nokia typically carry development costs alone and simply share product roadmaps with telecom companies rather than jointly develop such offerings. Apple doesn't even discuss details of its product roadmaps with telecom carriers. The company makes a point of not soliciting customer input, and the enormous success of its iPhone has further reinforced the belief it doesn't need third-party contributions.
That strategy works for Apple, and it may be a model for other companies, too -- as long as they keep on winning customer devotion. HTC, in the meantime, is straddling the line by pumping out products based on telco feedback, its own internal design teams, and customer input. After launching its own branded products in 2006, the company has flooded the smartphone market with a wide range of appealing products. In fact, the names for its offerings demonstrate a willingness to be daring while hewing closely to offerings from rivals.
The HTC Sensation 4G, for instance, is a widely sought-after product, and so is the HTC Thunderbolt. Both these and other HTC products (Amaze, myTouch, Wildfire, and the Droid Incredible) have allowed HTC to quietly establish a presence in the tough market without drawing too much negative attention from its heavyweight rivals. But such attention is inevitable and has arrived, with Apple and Samsung especially beginning to see HTC as a stealth rival that must be quickly repelled.
This is why what HTC does next is being closely monitored. Frost & Sullivan analyst Saverio Romeo best summed up the challenge facing the company in an email:
Three years ago I asked HTC: 'Where is your brand?' They answered: 'It will come'. At the recent HTC party at The Roundhouse in London, I could see the answer to that question. Today, HTC represents a specific mobile style, mobile lifestyle as Peter Chou, the CEO, highlighted during the press conference at The Roundhouse launching the HTC Sensation XE. That mobile lifestyle is built around delivering a mobile experience made of design and technological innovation.
I have the answer to my question. Without doubts, HTC is one of the protagonists in the world of mobile devices. My next question to them will then be: 'Which is the future direction of an established smartphone brand like HTC?' If HTC wants to be a mobile lifestyle provider, and I know the term provider is not very stylish, probably, devices are not enough.
What will HTC come up with tomorrow, and which markets will it next invade? The OEMs in consumer and adjacent electronics markets are now aware of the stealth warrior from Taiwan. So, the next moves will come, not only from HTC, but also from the rivals that didn't at first see its fast approach. The surprise is over; let the real war begin.