Even in the US, where the carriers' brands are paramount, manufacturers are starting to bypass them and sell highly branded products through retail outlets or through alternative service providers (Nokia's increasing investment in selling phones through its own stores or other channels was one factor, no doubt, in its new success at AT&T, which would rather tame the dragon than compete with it.)
And a succession of 'big hit' handsets have strengthened the vendors' brands and showed that the handset makers still understand device marketing as the operators do not. As well as undertaking clever handset launches, such as that of the iconic Motorola RAZR, the phonemakers are increasingly harnessing the power of more generic consumer brands - the hugely successful use by Sony Ericsson of Sony brands such as Walkman and CyberShot; the extension of the Apple iPod phenomenon to the iPhone; and so on.
The renewed strength of handset players seems to be luring HTC to seize some of that power for itself, propelling itself into the higher margins that well branded smartphones carry compared to white label products, and aiming for greater bargaining power with carriers. It recently announced its first true own-branded smartphone and is to acquire its nine Dopod International subsidiaries to strengthen its presence in Asian markets and unify the logos.
Peter Chou, HTC's CEO, commented: "Well performing brands enjoy strong awareness amongst consumers so it is extremely important for HTC to enhance brand recognition by communicating a consistent global brand image. In the future, HTC will provide consumers with consistent global marketing services under the HTC brand name."
Yet HTC is in serious danger of overreaching itself here, and reducing its dependence on Microsoft too abruptly. With $2bn in total annual revenues, it is relatively small in the handset market, though it dominates Windows Mobile, and seems not to have noticed that phone sales are increasingly concentrated on just five majors - Nokia, Motorola, Samsung, Sony Ericsson and LG - whose overall share is rising as other rivals give way to the weight of price pressures and consolidation. Alcatel and Siemens are just two former top 10 players that have quit the game, recognizing that they lacked the scale to play a major role.
And the main reason why HTC has punched so far above its weight, particularly in the US and Europe, has been because of its decision to provide well designed and priced Windows smartphones with only the operator brand, appealing to carriers and making itself indispensable to Microsoft.
While it may have some success in pushing its own products in Asia - though it will face competition from a welter of struggling second tier players such as NEC, Fujitsu and Sanyo - it would be very rash to change its strategy too quickly in the US. It has 80 per cent of the global Windows Mobile market, and this platform is strongest in the US, where Nokia-dominated Symbian holds less sway than in Europe. Linux will start to make inroads, but not in the short term - indeed, the US market is still growing for HTC, which predicts it will account for 30 per cent of its sales in 2007, the same as Asia, while Europe will drop from 60 per cent to 40 per cent.
In the US, all four top cellcos sell HTC Windows products under their own names - most recently, the Cingular 3125 was launched, offering a small $150 smartphone with an alphanumeric keyboard.
The HTC flagship is a PocketPC with a sliding keyboard, which sells as the Cingular 8125, the T-Mobile MDA, the Sprint Nextel PPC 6700 and the Verizon XV 6700. The company points to this device as a "design breakthrough" at a strong price point, and is understandably resentful that it gains no brand credit for that. But being unthreatening to the cellcos has huge advantages in a world where very few phonemakers will be able to survive on a large scale, and while HTC may be able to score some points over the giants in terms of converged devices and performance, those will certainly not be enough to take on the might of Nokia and Motorola in branding terms.
And while it may be smart to spread its wings to more platforms than Windows, it should not discount too quickly the huge benefits of having Microsoft, even in the unfriendly mobile world, on its side and in its debt.
Copyright © 2007, Faultline
Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.
Widening their options
I think this is a good move by HTC as the MS smartphone market is too small for a fast growing company like it. Linux is growing faster than Windows mobile worldwide and the company should have the option of exploiting that market too.
In addition, I do a lot of pervasive Java development (including mobile) using Java ME and I could care less what the OS is since most mobile OS (Linux/Symbian/Windows/Blackberry, etc) can run Java apps, but in the desktop and server world, MS is hostile to Java and so I tend to be hostile towards it in the mobile world too.
HTC is not dropping Windows, but just looking around... and found Google looking around for a phone manufacturer...
So wait and see...
I just bought an HTC
I just bought an htc device, the P3600 to be exact. It is already branded as htc, as I bought it sim free.
I used to have a Palm PDA, but that had no phone capability, and after reading the various reviews of the Treo 650 etc. I didn't feel like taking the chance. I'm glad I didn't - - -
This P3600 is lovely. Ok, it's running WM5 but I never programmed for my Sony Ericsson phone, so why bother for this one (I run linux machines mainly).
It has 3G, video calling capability, WiFi, Bluetooth 2, GPRS, and GPS, with TomTom6 software included. It also charges in less than 5 hours from flat.
The main reason I was in the market, was for mobile web access, and frankly the smart phones don't cut it. I also need to use the phone as a modem for the laptop, and so it was worth going 3G. It's a pleasure to use this device on the net, with the screen in landscape, and connected via WiFi.
And did I mention it looks lovely ? Ok, it's not the smallest device on the market, but to get the screen size, you need a certain minimum area. In fact it feels smaller than it looks from the pictures, around the same height as a Sony Ericsson K800i, thinner than the Sony, and about 1.33 x the width.
(BTW the htc logo is more subtle in the flesh, and the rear camera is dark graphite coloured not shiny as in the pictures)
Ok, advert over, have a look at the pictures and see what I mean. This is a PDA with phone capability, not a toy ^H^H^H smartphone !
(and I've not had to "reboot" at all Morely Dotes)
Go HTC, more choice can only be good, and this was a good choice.