Feeds

HTC takes a gamble with new brand and OS strategy

Sidelines Microsoft

Internet Security Threat Report 2014

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.

Business security measures using SSL

More from The Register

next story
Brit telcos warn Scots that voting Yes could lead to HEFTY bills
BT and Co: Independence vote likely to mean 'increased costs'
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
New 'Cosmos' browser surfs the net by TXT alone
No data plan? No WiFi? No worries ... except sluggish download speed
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Blockbuster book lays out the first 20 years of the Smartphone Wars
Symbian's David Wood bares all. Not for the faint hearted
Bonking with Apple has POUNDED mobe operators' wallets
... into submission. Weve squeals, ditches payment plans
This flashlight app requires: Your contacts list, identity, access to your camera...
Who us, dodgy? Vast majority of mobile apps fail privacy test
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.