STRATEGIC

MANAGEMENT
HTC Corp. in 2012
Case Analysis

By Group AE1:
Abhinav
(14S601)
Anima
(14S607)
Dushan
(14S616)

Singh
Tapadiya
Garg

Niharika G (14S628)

HTC Corp case Analysis

Group AE1

Raviteja
(14S636)
Prem
(14804)

Palanki
Sharath

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HTC Corp case Analysis

Group AE1

I.

Executive Summary

HTCs achievement had been outstanding over the last fifteen years.
Being humble, dynamic and innovative is the companys DNA and it is
truly reflected in its tagline Quietly Brilliant. But the year 2012 posed
intimidating challenges to the company. Patent wars with Apple adversely
affected HTCs share price. Its two major OS suppliers build partnership
with its rivals. Also, growing of Samsung by leaps and bounds started
hurting HTCs business as well. Moreover, the immense success of iPhone
and iPad alongwith the severe competition in the Android market was the
concerns that needed immediate attention. Peter Chou, the CEO of HTC
decided to move HTC to the next level by introducing a new and greatly
improved product line which he thought would HTC bring back to its
reputation. The strategies to be followed next and competing in tablet
market while mitigating the patent wars were the thoughts that Peter was
reflecting upon.

II.

Top Facts (People and events)

May 1997
-

HT Chou and Cher Wang Started HTC

2006
-

Peter Chou becomes the new CEO.

Branding and selling handsets under the company's own name

2007
-

HTC branded Phones in Europe and Asia.

15 million acquisition of Do pod.

2008
-

Produces first android handset

One million plus HTC units sold

2007- 2012
-

They launched their Hero Product HTC one

HTC was involved in the patent wars.
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HTC Corp case Analysis

Group AE1

III.

Competition from Samsung increased after the launch Of HTC

One

Structure

1.0 HTCs performance till date; its strengths and weaknesses

1.1 The below table summarizes the companys performance on various
parameters such as financial, product, and brand to name a few:
Financial
Performance

Product
Performance

6 consecutive quarters of record number of sales

Revenues 06-12 up from 3233.50 to 15378.3 (up by
376 %)
ROA down from 30.2 % to 19.32 %
HTC One series
1st Colored PDA (iPAQ)
1st pocket sized PC
HTC Touch
HTC sense- customizable interface over base OS

Brand Performance

Top 5 manufacturers of smartphones

2nd largest handset manufacturer in Asia
Top 100 global brands

Other Performance

Association with Google and Microsoft (leading OS

players)
Operations with major telecom players

1.2 HTCs strengths and weaknesses can be analyzed from SWOT

Analysis:

Strengths
First mover advantage (PDA,
pocket sized PC)
HTC
brand image (HTC One
Series)
Perception of Value for money
product
Partnerships
with
Big

Weaknesses
No in-house OS
No apps offering
Tablet products struggling
Losing preference among leading
OS players
HTC sense incompatibility with
windows
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HTC Corp case Analysis

Group AE1

Firms(Google and Microsoft)

Skilled engineers

Opportunities

Dependency on a single product

(HTC One)
Patent wars with Apple
Threats

Mini tablets could be next

market sensation
Development of device centric
apps to add become number
one android
value to
customers

Threat from competitors

(Samsung)
Low customer loyalty

2.0 HTCs competitive position: sustainable or not? Challenges

faced and their impact on its position
2.1 Analysis of HTCs competitive position can be done using the VRIO
framework:

Resources/

Value

Rarity

Capabilities

Costly to

Does

imitate?

org.

Remarks

suppor
HTC Sense

Yes

Yes

Yes

t?
Yes

HTC one

Yes

Yes

Yes

Yes

Brand

Yes

Yes

Yes

Yes

Apps/Apps

No

No

No

No

store
Tablets
Tie-up

Yes
Yes

No
No

Yes
Yes

Yes
Yes

Competitive Parity
Competitive Parity

No

No

No

No

Competitive
Disadvantage

product

Sustainable
Competitive
Advantage
Sustainable
Competitive
Advantage
Sustainable
Competitive
Advantage
Competitive
Disadvantage

Google
(Android)
In House OS

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HTC Corp case Analysis

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2.2 The main challenges that HTC faces and their impact on their
competitive advantages are as follows:
a) Challenge: Tablet coverage is poor
Impact: HTCs tablets failed to translate into sales. The tablet
industry is booming with iPad leading the market share. HTC is poor
in the end to end context experience is acting as a bottleneck for
the success of its tablet portfolio. Its thus losing a potential
customer base.
b) Challenge: Sustainment of differentiation strategy (with HTC One)
Impact: HTCs main differentiating point is its customizing layer
over the basic OS. This is difficult if company ventures into lot of
product offering. So, HTC needs to further stream line its offerings
and concentrate on HTC one series with newer versions and
features.
c) Challenge: Absence of in house OS (rival firms tie-ups and
acquisitions)
Impact: With

tie ups between the major players e.g. Samsung-

Google for Nexus, Google acquiring Motorola Mobility, Microsofts

Nokia acquisition, the leading players in OS are looking for vertical
integration. This will create problem for HTC, leaving it to the
unpreffered situation.
d) Challenge: HTC sense compatibility
Impact: Not compatible with windows phone leading to lesser
exposure to windows market.
e) Challenge: Low Brand Visibility
Impact: Due to lack of brand awareness it has less sales and low
customer base.
Exhibit 11 reflects the global brand awareness of HTC as per 2011
Brands

HT

Appl

Blackbe

Samsu

Noki

Son

LG

Motor

Brand

C
7

e
11

rry
6

ng
21

a
21

y
5

10

ola
6

Ownershi
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HTC Corp case Analysis

Group AE1

p
Brand

27

14

16

31

52

32

47

43

26

30

26

58

83

76

86

88

74

84

85

Preferenc
e
Brand
Considera
tion
Aided
Brand
Awarenes
s
3.0 HTCs OS strategy: windows mobile & android/own platform
Exhibit 5 is about the market share of the different OS through 2007-11. It
shows, the drift from Nokias Symbian to Googles android.
70.00%
60.00%
50.00%
2007
40.00%

2008
2009

30.00%

2010

20.00%

2011

10.00%
0.00%
Nokia's Symbian

MS Windows

Palm's OS

Samsung's Bada

HTC has maximum opportunity in Googles Android which occupies 52.5 %

market share in the OS domain. The OS market is quite segmented with
android being the major player (iOS keeping only to Apple products).
However, android with the acquisition of Motorola Mobility and also with
its Nexus offering has given a clear indication of backward vertical
integration of having its own handsets. HTC can also consolidate all
devices under one basket based on customer segment and preferences.
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HTC Corp case Analysis

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They have a strong engineering wing having expertised in successful

customization (HTC Sense) and this factor should be capitalized upon.
Later in near future, HTC can build its self-owned Operating System in
order to have horizontal integration. HTC can also consolidate all devices
under one basket based on customer segment and preferences. HTC can
also move to Windows platform if theres a market inclination in the
coming years.
4.0 Building an own app store like Apple
Exhibit 4 talks about the apps store world for the leading players in mobile
industry. The industry leaders are iOS and Android by Apple and Google
respectively. The below table highlights their presence:
Players
Since
Apps available
Apps downloaded

Android
Nov 2007
300,000+
6 billion

iOS
Jan 2007
500,000+
18 billion

Apple needs an app store because it has its independent OS and having
its own app store will be an added advantage. Currently, HTC should focus
on the Android market which is booming and has acquired a large market
share. We see that Apple and Google are far ahead in their competitive
advantage in terms of apps store and the number of apps available and
downloaded. Hence, decision for an apps store of their own for HTC would
not lead to any value addition to their brand currently. However, in future
if HTC comes up with a self-owned OS, it should build an app store for
itself and have larger horizontal integration.
Instead, presently they can focus on development using androids Google
play as a platform for reaching the customer base. Such apps can have
an, all HTC exclusivity and add to value addition in terms of providing the
handsets a differentiated attribute.
5.0 Strategic actions to achieve the goal
5.1 Optimization of Product Portfolio & Repurchase:

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HTC Corp case Analysis

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HTC has gained the advantage of repurchases (62% of current users are
willing to repurchase). Hence, developed and better innovated products
are must to be introduced.
HTCs USP lies in delivering customizable user interface over the basic
android layer. Several products in the offering, such high levels of
customization are difficult to maintain at affordable cost. In such
condition, HTC should further streamline its product offerings in the
market, concentrating on providing increasing product differentiation for
limited products. Among the consumers, HTCs percentage of repurchasing segment, which was 62%, was second only to apple. This
factor can be utilized by HTC in providing its existing customers a unique
experience in terms of product support and service so that it can build up
on the existing market share and also increase it further.
5.2 Satisfaction factor:
Customer Satisfaction rate for HTC is very high and is just behind Apple in
this regards. Hence, it should target this for maximum benefits.
5.3 Market Expansion
Exhibit 11 shows that HTC, at a global level was lags in terms of brand
image and awareness among potential consumers. Adding to it, HTC has
to establish their mark in the tablet segment) which was mostly
dominated by Apple in U.S. This provides HTC an opportunity to come up
with a new line of tablet products with the same value propositions of
greater customizing interface and product finishing. HTC should change
their target market from US and other western countries to South
America, South East Asian countries which are great potential market.

IV.

Synthesis

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HTC Corp case Analysis

Group AE1

Smartphone Platform Market Share(3 month Average ending April'13)

5% 3% 1%

Google
Apple
Blackberry
Microsoft

52%

39%

Symbian

It clearly shows the Apple/Google duopoly still going strong, as well as the
BlackBerry/Windows Phone struggle for distant third place. Here are the
numbers behind the graph:
Share of

Share of

smartphone smartphone
Platform

subscribers subscribers

Change

End of Jan

End of Apr

2013

2013

Google

52.3%

52.0%

-0.3%

Apple

37.8%

39.2%

+1.4%

BlackBerry

5.9%

5.1%

-0.8%

Microsoft

3.1%

3.0%

-0.1%

Symbian

0.5%

0.5%

0.0%

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HTC Corp case Analysis

Group AE1

Smartphone OEM Market Share(3 month Average ending Apr'13)

8%
9%

Apple
Samsung

11%

46%

HTC
Motorola
LG

26%

Apple and Samsung are the biggest OEM players, with HTC, Motorola and
LG in a three-way tie for third place. Here are the numbers behind the
graph:
Share of

Share of

smartphone

smartphone

subscribers

subscribers

End of Jan

End of Apr

2013

2013

Apple

37.8%

39.2%

+1.4%

Samsung

21.4%

22.0%

+0.6%

HTC

9.7%

8.9%

-0.8%

Motorola

8.6%

8.3%

-0.3%

LG

7.0%

6.7%

-0.3%

OEM

Change

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HTC Corp case Analysis

Group AE1

V.

Recent developments

a) HTC posted 22.1 pct rise in December 2014 sales.

b) HTC eyes bigger pie of the Indian smartphone market It eyes 10%
market share by 2015. It is increasing its retail reach from 7,000
outlets to 10,000 outlets and launching of exclusive stores in
Mumbai and Bangalore by March 2015.
c) HTC's 2015 roadmap to be the best ever, "huge surprises" coming,
says Jeff Gordon, HTCs Senior Global Online Communications
Manager.

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