HTC Corp.

in 2009 Case Study Bobbie Sue Fullmer HTC Corporation Background HTC Corporation (formerly High Tech Computer Corp) is one of the world's leading developers and manufactures of Windows OS based pocket PC's and Smartphone's. HTC was founded i n Taiwan, in May of 1997 by H.T. Cho and Cher Wang. The Taiwan based company operates primarily a s an original design manufacturer (ODM) and as an original manufacturer for many of the world's large st telecommunications companies. The company also became the first in the industry to produce a Pocket PC with a full-color screen. It initially focused on notebooks and succeeded by creating the world's first pocket-size PC with Microsoft. Their major success was when they manufactured the PDA for Compaq Com puter. HTC, from the beginning, kept a close relationship with Microsoft. This relationship has been very beneficial over the years. As the original designer of the (ODM), the revenues from the PDA 's became very profitable for them. With a new venture in mind they decided to enter into the m obile telecommunications market. Their new goal was to make Smartphone's and wireless PDA's. They wanted to move out of the shadows and become one of the world leaders in Smartphone technology. HTC was essentially operating in two segments: The ODM business and the mobile o perator business. All these processes were done with little or no connection to end-users. By 2006 the (ODM) market was catching up to them and the strategy of HTC had to change. The advantage that HT C had was the fact that

they had a strong organization. They always had a highly experienced management team and open work environment which lead them to their innovation. The speed that they can create new systems is astounding. Knowing the strengths that they had, HCT started branding and sellin g handsets under the company's own name. HTC started its own brand strategy in 2007. It did this by o ffering mobile operators customized phones based on products conceptualized and designed by HTC . This also meant that HTC would directly take on inventory, marketing and support. To undergo thi s endeavor HTC has a lot to look at within the telecommunication market. Executive Summary Innovation and branding is an integral part of HTC's strategy. In this report I will identify and analyze the company's strengths, weakness, opportunities and threats. I will also explore th e customer needs, activity fits, measures and activities that drive the HTC Company's strategy. This will i dentify how the strategy has evolved, changes that have taken place within and how the evolution and chan ge has impacted HTC's customer base. The strategic positioning of HTC will be addressed and recommenda tions will be provided. Steps will be illustrated within the recommendation necessary for HTC to strengthen their position in the market place and most importantly to strengthen their brand name with customers. Problem Statement HTC must determine whether to take a faster, more aggressive approach to their b rand promotion to heighten brand awareness and to meet customer satisfaction. HTC must also find w ays to achieve greater economics of scale within the corporation. They will need to explore the strateg ic actions that need to be adopted in order to become a leader among Smartphone companies in the world.

Strengths, Weakness, Opportunities and Threats Exhibit 1 SWOT Analysis

Analysis Strengths: HTC is the leading Manufacturer of PDA's smart phones. It is establishing rapidl y and gaining more and more customers from around the world. The customer base of HTC is very wide spre ad both national and international and the number of these customers is increasing rapidly. Within HT C its products have a strong setup and research development structure. This is how its brand has recei ved a good image. It's considered to be a very reliable, high quality product and is gaining more and m ore success in the market place. Weakness: HTC is not recognized as much in the market place when you compare it to its com petitors, like Apple and Blackberry. These are much more popular brands within the market and therefore a cquire a bigger part of the market share. The other weakness that is relevant to the market is the fact that they have a small range of cell phones in comparison with their competition. Other providers carry a wid er variety of products. Within these products they also offer and large price range of options ranging f rom cheapest to most expensive.

Opportunities: Since HTC cell phones have 3D technology and 3D technology has been launched wor ldwide, the opportunity is there for HTC to expand within that market. Another opportunity w ithin HTC is to collaborate with other well-known companies to gain name recognition and popular ity within that market. This example was shown when they partnered with Google. Due to the name recognit ion of Google, HTC gained popularity and increased their market share. They also need t o gain brand recognition and expand their product line by offering simple and feature phones. These opportunities would then in turn expand their market share. Threats: The biggest threat to HTC is their competitors Verizon, AT&T, Sprint, and T-Mobile, collectively they own more than 90% of the market, are already highly popular and have in demand b rands that exist within the market place all ready (example Apple I Phone). Aside from that the f act that HTC phones are expensive and not affordable to many users, this being in comparison to other br ands which are much cheaper and provide the same characteristics. Being that the world is in financi al crises at this time it seems that this would be a major threat for HTC.

Exhibit 2 Needs Analysis

Exhibit 2 -Needs Analysis (Continued) 1. Collaborating with employees 2. Controlled costs 3. Customized phones 4. Cutting edge innovation 5. Dedication to technology 6. Design Smartphone's 7. Detailed formal and informal feedback 8. Direct relationship with users 9. Distribution of products 10. Diverse customer base 11. E-mail 12. Employees 13. Employees with industry experience 14. Engineering & Flexibility 15. Experimental with new ideas 16. Filled orders monthly 17. Global markets 18. Hardware design 19. Higher cost structure 20. Highly customized approach 21. Interactive work environment 22. Internet providers 23. Internet surfing 24. Inventory management 25. Made first color iPAQ 26. Magic Labs 27. Manufactured PDA's 28. Manufacturing 29. Manufacturing around the clock 30. Market tests 31. Marketing 32. Offer subsidies 33. Open work environment 34. Partnership with Google 35. Quality control 36. Quick nimble organization 37. Ran Microsoft windows mobile operating system 38. Relationship with market place 39. Relationship with Microsoft 40. Relationship with network operators 40. Research and development 41. Sales 42. Second product facility in Shanghai 43. Secured a 3G License 44. Shipping 45. Short product cycle 46. Support System 47. Touch FLO interface 48. Touch screen technology 49. Warranty risks

Needs Analysis Understanding the customer's needs is an important first step to addressing issu es related to customer satisfaction. The Schematic (Exhibit 2) illustrates these needs, as well as the company's desired internal outcomes (Fairbairn, 2010), the measures of these desired outcomes and the opera tional inputs supporting these desired outcomes (Fairbairn, 2010), providing an overview of the considera tions and metrics critical to the development of a (customer) needs-based strategy. Primary Needs HTC strategy has been focused on having the most innovative Smartphone and most customized design. From the beginning, HTC's key differentiating factor has been innovation and agi lity. The primary needs addressed in the model reinforce the differentiating factors and addresses the n eeds the company has viewed for its target customers. Together these two factors have made HTC prospe r within the telecommunications market. Secondary Needs HTC values having a product with the highest quality and that are the most relia ble. To satisfy the particular preference of its target market (high-end) users, HTC must have the h ighest quality product. Besides for the highest quality products these (high-end) users also want a phon e that is reliable. HTC has accomplished this through great investments in their R&D, refinement of proc esses and integration of their operating systems. Ignored Needs HTC values the product that they produce. They wanted to "Build a reputation of making the BMW of

phones, slightly more expensive" (Yoffie & Kim, 2009). With R&D, technology and innovation that goes into each phone they realize that comes at a price. They choose to ignore t he lowest price due to the type of product that they are producing. By ignoring the lowest price they are a lso choosing to ignore that market as well. They do not want to lower their standards to meet a lower price market. HTC is in a position to charge a higher price for a unique and valuable product to (high-end ) users and therefore chooses to ignore the other market segments. Required Needs HTC has high end cell phone products that it offers within that structure there are requirements that HTC has to have to distribute their product to high end users. It is required that t hey have a relationship with cell phone carriers and a platform with software developers. Without these requi rements HTC could not market their products to the end users. Activity Fits, Measures and Activities For HTC, there is more to their strategy than simply the identification of custo mers needs. There are measurable internal outcomes and operational activities that are imperative to t he process of meeting the needs identified (Fairbairn, 2010). For example HTC must hire a strong R&D and e ngineering staff. The technology, innovation, research and development are what make up their product. Having the right employees and work environment can make a huge difference and HTC understands th at. They have created a great working environment for their employees. This was a strategic mo ve on HTC's part in an effort to meet its primary need of having the most innovative product. The two g o hand and hand, having a great place to work means having a great end product. This can all be measured by, low failure rate and return customer growth. Other internal outcomes that are critical to customers n eeds include the

commitment to quality, innovation and customized products. Recommendations . Innovation Since innovation is a primary need HTC must invest more resources into their R&D which includes better integration of their operating systems. This will be the differentiator from the ir competitors. The innovation can be apart of big changes within there organization. HTC can find a "blue ocean" (Kim & Mauborgne, 2004) in order to create market space, create and capture new demand and align the activities in order for differentiation. This will help it stand out with its competitors. With innovation HTC can keep their focus on brand awareness and customer satisfaction. . Brand To become competitive within the market place HTC has to improve such factors of Marketing, Processes and Distribution channels. A key strategic action is that of Training and Develo pment and of marketing skills, where there is a low presence of HTC in the market place and they need t o grow their distribution channels. They need to grow these channels within the US and other world markets where they need to gain recognition. . Product Line HTC should narrow itself to a single product. They should reduce there product l ine to the provision of smart phones only. The fact that Smartphone's are going to out grow that of the standard phone is definitely a reason to narrow their product line. Smartphone's are going to be t hat of the future. Within this industry the phones can still be customized and this will differentiate the m from their competitors.

. Growth For HTC to grow in the market place they need to sell their existing products to new markets. They can accomplish this by: 1. Entering into new geographical markets. 2. Different pricing packages to attract more market share. 3. New distribution channels. 4. New packaging of product. . App Store Expansion I do not see that it would be feasible for HTC to create there own App Store. It would be to time consuming and cost prohibited. It is hard to start from scratch in this area, es pecially with the competition that all ready exists. The cost and time HTC will save then should be invested i n the other areas above that have been explained such as Innovation, Distribution and Marketing. Conclusion I have highlighted the threats and opportunities that HTC has available to them as well as weaknesses and strengths within the market place. Within the analysis, strategic actions were r ecommended for HTC to follow. HTC will need to evaluate these actions in great detail if they want to become a leading Smartphone provider in today world market.

Source List 1. Fairbairn, Lisa (2010). Line-of-business Strategy: An Overview. 2. Kim, Chan W. & Mauborgne, Renee (2004). Blue Ocean Strategy 3. Yoffie, David & Kim, Renee (2009). HTC Corp. in 2009