A customer-centric strategy for HTC | Knowledge Network: Faculty & Research

19/10/11 11:59 PM

Knowledge Network: Faculty & Research

The following post on global strategy is by Thunderbird students Ethan Chutkow , Jordan Levine, Bruno Pavanelo, Daniel Roman and Fabio Subieta. HTC Chairwoman Cher Wang recently announced HTCs new partnership with carrier ChinaMobile, exclaiming, We are proud to introduce the HTC brand in China and look forward to bringing a fresh customer-centric Smartphone experience to consumers in China. A fresh customer-centric Smartphone, you ask? If any company can do it, HTC surely can. Customer-centric Smartphones There are few things more important in the world of technology today than to empower customers to make a product fit their interests, hobbies, and lifestyle. Until now, Apple has been the best-recognized company for its fanatical customers. With its innovative touch screen design and application distribution platform, Apple opened a new marketplace for developers looking to make games, social networking tools, and most any application imaginable. In the process it has cultivated a customer base of unparalleled loyalty. The wealth of applications created for the iPhone/iPad/iPod, however, are not available on any other mobile platform; neither is the massive volume of media (television, feature films, and music) available on iTunes. This form of customer lock-in has given Apple a stranglehold on the consumer smartphone market. Despite having the second-largest market share behind RIMs Blackberry OS smartphones, it is Apple that dominates the market for young, socially-connected consumers. While the number of applications developed for Android is increasing rapidly, success in the smartphone market will be determined by the availability of content and functionality in the form of applications. HTC must ensure it is poised to supply the handsets for whichever platform hosts those ever-critical applications. HTCs U.S. market strategy and entry

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A customer-centric strategy for HTC | Knowledge Network: Faculty & Research

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Cher Wang, HTC chairwoman and one of Taiwans five wealthiest people, has led her quietly brilliant company into the spotlight this year. Having entered the North American market by producing white-label phones for service providers and other brands, HTC established strong distribution channels and a reputation for great technology without receiving a great deal of media attention, which has helped it avoid aggressive retaliatory marketing by its competitors. But the quiet days are coming to a close for HTC as they have firmly penetrated the North American market and will move strongly into the Chinese market, launching their newest phone the Evo as a direct competitor to the iPhone 4. But this time, their brand name is no longer hidden underneath the phone casing in the battery compartment. No; HTC is confidently moving into the world of high-profile brands and taking market share with it. Was this strategy of subtlety and quiet market entry the best approach for HTC? This question is soon to be answered. Not having an identity in the marketplace leaves them highly dependent on their technology to build the name brand people will choose. While countless consumers will purchase an iAnything because it has an Apple logo on it, HTC has not developed this customer loyalty. As was demonstrated recently with Apples antenna fiasco on their iPhone 4, the company can afford to make mistakes thanks to its massive brand equity; HTC does not currently enjoy this luxury. But what did Mrs. Wang mean by using fresh and customer-centric side by side in her statement? Is there a Smartphone manufacturer out there that can out-do Apple in this area? Perhaps Wang has found a way to realize the idea that everyone has been waiting for: can she draw iPhone customers to a device free from Apple and AT&Ts stranglehold? Lets consider two strategic innovations that would permit this: synchronization in the Apple world, and addition of entertainment based products that specifically target the youthful marketboth in the US and China. HTC product offering and partnerships HTC has developed its own highly-personalized user interface (UI) to add substantial value on top of the base Windows Mobile or Android operating environments. It has done so by carefully building partnerships both with Microsoft and Google, acknowledging their superiority in operating system design and brand name, and
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A customer-centric strategy for HTC | Knowledge Network: Faculty & Research

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leveraging the power of their partners brands. HTCs American subsidiary in Redmond, Washington, was established primarily to interface with Microsoft, and was instrumental to HTCs success with Windows Mobile handsets. HTC would do well to establish another office in Mountain View to deal directly with Google and to enable HTC engineers to work closely with their Google counterparts. In this manner, HTCs American subsidiary will add a great deal of strategic value in a very important market. Given its open-minded policy toward strategic partnerships, HTC could benefit from a similar partnership with Apple. While history shows that Apple is loathe to strike licensing deals or to partner with almost anyone, the overwhelming growth rate of the Android-based handset market might give them cause to consider. Making the iTunes/App Store environment accessible to Android handsets would certainly make the entertainment aspect of Android-based devices much more appealing, and would expand Apples reach far beyond what it is with the iPhone alone. When Apple extended iTunes and Safari availability to Windows, the company showed that sometimes strategy should transcend pride. It makes the authors optimistic that Apple would consider porting the iTunes environment to Android. Further benefits to Apple, should it choose to partner with HTC, include technology transfer: HTC builds some of the worlds finest handsets and since Apple is in the handset-design business it stands to learn a great deal from HTC. For fee-based apps, Apple could retain the same business model for the App Store (collecting 30% of the revenue from application sales and passing on the rest to the application developers). Perhaps to preserve attractiveness of the iPhone hardware, Apple might charge HTC a one-time fee for each handset enabled to run iTunes; from a technology standpoint, after all, some sort of iPhone emulation or execution environment would be required to run iOS applications on top of Android. In todays marketplace, the only differentiation between the various Android handsets is customization of the interface and minor differences in hardware features; connecting HTC handsets to iTunes would give HTC a tremendous advantage over competing Android phones, specifically LG, Samsung, and Motorola (which has already taken about 75% of the Android market with its popular Droid product line).
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A customer-centric strategy for HTC | Knowledge Network: Faculty & Research

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For the growing number of consumers who find themselves increasingly undecided between the benefits of the iPhone and those of the Android platform, this would provide a have your cake and eat it too option. If HTC truly wants to put the customer at the center of its strategy, it will allow for the divided world of smartphone users to converge on a single platform iTunes. With its history of successful partnerships and cutting-edge technology, HTC is in a unique position to bridge the gap between mobile operating system platforms. To build on its youth-oriented, entertainment focus, HTC could benefit from booms in Cluster marketed products in its domestic market for products initially sold in the United States. Korean-based Samsung is already producing smartphone accessory projectors, which HTC could emulate or license to enhance the entertainment aspect of HTC handsets. A partnership in Asia with a friendly manufacturer like Mitsubishi or DFAOptoma could allow HTC to leverage its Asian regional dominance. In addition, HTC would benefit from a similar partnership with a stereo-capable sound company located in the region, like Pioneer or Kenwood, as this is one particular area in which all handsets currently suffer quality and high-volume sound capability. The addition of the projector and stereo-capable playback, coupled with an iTunes partnership would give the company a very strong platform from which to attack the popular US Entertainment based Smartphone market. With a steadily-increasing presence in the US, HTC will be able to leverage its relationships with Apple, Microsoft, and Google to break into the China market. But because HTC would be the only truly domestic corporation in the mix, it could leverage its familiarity with the marketplace and necessary methods of obstacle aversion to benefit not only from the North American-based companies innovations, but also to negotiate directly to try to establish a share or royalties from their sales of non-HTC branded products. References Yoffie, David B and Kim, Renee. HTC Corp in 2009. Harvard Business School Publishing. Revised: Dec 4, 2009. 9-709-466 T-Mobile Unveils the T-Mobile G1 the First Phone Powered by Android. HTC Webhttp://knowledgenetwork.thunderbird.edu/research/2010/08/19/htc/ Page 4 of 5

A customer-centric strategy for HTC | Knowledge Network: Faculty & Research

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T-Mobile Unveils the T-Mobile G1 the First Phone Powered by Android. HTC Website. Retrieved: July 19, 2010. http://www.htc.com/www/press.aspx? id=66338&lang=1033 Mann, Justin (2009). HTC shifts focus away from Windows Mobile to Android. Tech Spot. Retrieved July 19, 2010. http://www.techspot.com/news/37259-htc-shiftsfocus-away-from-windows-mobile-to-android.html Reardon, Marguerite (2007) . Google unveils cell phone software and alliance. CNET News. Retrieved: July 19, 2010. http://news.cnet.com/8301-17939_109-9810937-2.html This paper was written for the global strategy class of Thunderbird Professor Nathan Washburn, Ph.D.

Posted: 08|19|10 at 11:45 am. Filed under: Global Strategy, Washburn, Nathan. Pinging is currently disabled.

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