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Business Strategy: HTC Corp in 2009

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case study
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  1. Introduction
  2. Types of customers
  3. Competitors
  4. Recommendations
  5. Conclusion

After a its success in ODM[1] and mobile operator business[2], HTC decided to sell handsets under its own name in 2007. Despite having a very innovative product line resulting from substantial R&D expenses, HTC had not yet established a distinctive brand value. To reduce costs and build its image with high-end products, we recommend that HTC not only cooperate more closely with Google's OS, but also penetrate the ?unlocked? European and Chinese markets quickly, to leverage economies of scale, before its massive launch in US with the support of operators.

HTC observed the fast growing trend in the brand new Smartphone market (global sales rose 22% in 2010 and were expected to reach 350,000 in 2012) and launched the first touch screen Smartphone under the company's name in Asia and Europe. This ambitious decision implied that HTC would encounter a new landscape (See the diagram in appendix 3). Firstly, it was now in direct competition with leading handset manufacturers. The major producers of smart phones included Nokia (39.3% market share), Blackberry (20.8%), Apple (17.1%) and Samsung (3.2%) [4]. Among them, Apple was the most aggressive one [5] and targeted a consumer segment which was most similar to HTC [6], while Nokia was more eminent in the areas of phones with multiple feature, and Blackberry was in state of relatively stable development.

Except Samsung, all the handset manufacturers mentioned above had developed their own operating system; such as Apple's OS X, RIM's BlackBerry OS, and Nokia's Symbian. In addition, Microsoft's Window's Mobile and the latest Google's Android were also powerful operating systems. Overall, all these system operators had a user interface and a specific application store, which were evaluated as more or less ?user friendly?. Therefore, it was crucial for HTC to choose the most suitable operating system for its future products.

Tags: Marketing strategy of HTC; Smartphones; HTC OS

[...] For example, in the absence of economies of scale in purchasing, HTC had to pay 30% more component costs than Nokia in Europe VS in U.S. See exhibit 10b, ?Brand Consideration in Selected European Countries? and Exhibit 10a, ?U.S. Mobile Phone Users' First Brand Choice? Dopod, a well-known brand in Taiwan with strong presence in Asia 22. Smartphones occupied only of total Chinese mobile phones According to Corp. in HTC saved 50% in labor costs and 15% in full production cost by moving manufacturing to mainland China The Economic Cooperation Framework Agreement (abbreviated ECFA) is a preferential trade agreement between the governments of the People's Republic of China (mainland China) and the Republic of China (Taiwan) that aims to reduce tariffs and commercial barriers between the two sides. [...]


[...] Thus HTC has a large potential to attract this segment of the market on account of its innovative technology, and a slightly lower selling price resulting from the economies of scale achieved in Europe. China: Through the acquisition of Dopod HTC started to sell its own-brand products in China, a promising market that recently opened its 3G networks and offered great potential [22]. HTC should penetrate this high-growth market at the same time as its expansion in Europe, given its existing production facility in Shanghai (meaning lower production and transportation cost and its political advantage (ECFA US: Planning to return later to the U.S. [...]

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