HTC Corporation

Moving from an Unknown Phone

Maker to a Differentiated Cost Leader
Compelling Situations
–Shifting needs of target customers Recommendations
–Un-captured values in value chain
–Lack of economies of scale
1
Customer Centric Strategy

HTC Forward Integration

Industry Forces Core Competencies Portfolio Rationalization

–High growth, high-margin –Innovative ODM
–Intense competition –Unknown Brand
–Competitors hogging value –Premium Priced Phone
chain Maker
Differentiated Cost Leader
Position

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 Customer Centric Strategy
 Buyer power influences the
Market Trend
Buyer Power
( High )
Product Variety
Easily accessible information/products


New Entrants Existing Competitors Substitutes ( Moderate )

( Low ) ( High ) Undifferentiated Products
Capital Intensive Intense Rivalry Service providers control switching
Brand Awareness Complements differ -entiate product
 


Supplier Power ( Moderate )

Multiple software/hardware providers

Demand forecast confirms
our belief

Buyer power influences the Market

Trend
Customer Segmentation

Apple ØHTC operates mainly in

Prosume the higher end of the
rs ‘Prosumer’ segment

HTC
ØProduct features and
core capabilities best
suited for entire
Prosumer segment

Two pronged growth

approach
1.Widen base to entire
prosumer segment.
Matches capabilities
+ remains
Samsung, LG, Nokia RIM differentiated
2.Increase size of
segment over time
Customer Centric Strategy
enables HTC to become a
differentiated brand

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 Limited Forward
Integration Strategy
 Smart phone Industry
Overview
Buyer Power
( High )
Product Variety
Easily accessible information/products


New Entrants Existing Competitors Substitutes ( Moderate )

( Low ) ( High ) Undifferentiated Products
Capital Intensive Intense Rivalry Service providers control switching
Brand Awareness Complements differ -entiate product
 


Supplier Power ( Moderate )

Multiple software/hardware providers

 Competitive Landscape

Apple X X X X
Nokia X X X Planned
Rim X X X X
Palm X X
Samsung X X
HTC X X
Google X X X
LG, Sony, X X
Motorola
Forward Integration to capture
more value
A s - Is To - B e
Capability matching: OS
Collaboration
Collaborate Build Acquire

Costs Low High Med

Time to market Low High Med

Latest features High Low High

Fit with strengths High Med Low

 Strengthen ties to attain closer coupling of handset and OS



Partners concentrate on developing and improving the OS. HTC concentrates on

improving the UI


 Leverage partners’ brand

Diversify OS portfolio

Support only Android Both Windows and Android

PR Save on licensing fee

 Provide choice of OS to customers
Promote competition to speed-up
OS
innovation in OS

CO Lose customers
 Continue paying licensing fees to


NS Nothing to fall back on Microsoft


Point of differentiation: App
Store

Continue with Microsoft and Develop an exclusive App store

Google App Stores

PR Popular among developers Control

Avoid risks Selection

OS Customized Apps
competitive advantage
Sticky asset

CO  Lack of control  New capability

NS
Forward Integration enables
HTC to achieve Cost Leadership
and capture Value

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Di gh Appl
e
ff RIM

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g
o Low High

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Portfolio Rationalization

 Smart Phone Industry
Overview
Buyer Power
( High )
Product Variety
Easily accessible information/products


New Entrants Existing Competitors Substitutes ( Moderate )

( Low ) ( High ) Undifferentiated Products
Capital Intensive Intense Rivalry Service providers control switching
Brand Awareness
 Complements differ -entiate product



Supplier Power ( Moderate )

Multiple software/hardware providers

Portfolio Rationalization -
The engine to finance growth
§ Problem: HTC ships too many SKU’s
§ 400 SKU’s for HTC Touch
§
§ Target segment does not require such variety
§ US : Apple/Blackberry operate with 3 SKU’s
§ Asia/Europe: Variety exists for casual users; NOT
our target segment

Reduce costs by achieving Economies of

Scale
§SKU ’ s consolidation to reduce
manufacturing costs
§Focus on flagship products . Quality not
Focus on high margin products has
paid dividends despite low brand
recognition

Leader in our target market segment

Portfolio Rationalization enables
HTC achieve Cost Leadership

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Di gh Appl
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g
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L e a d e rsh ip
Going Ahead

Implementation Blueprint
Strong implementation plan will help
mitigate risks

High

1 Li
ke
2 li
ho
od
3

Low
Low Impact High
Value Proposition of
Proposed Strategy

OS providers Promotion for their OS

NetworkAccess
operators
to HERO product which is not e

Access to a premium product

Customers Complete solution
Not tied to a single network operato
Success Sequence: Moving from an
Unknown Brand to Differentiated Cost
Leader
HTC : Future
Hi
Position
Di gh Limited Forward
Integration
ff Product
Portfolio
er Integration

e
Lo Customer - Centric Strategy
nt w

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HTC : Current
ti Position
o Low High

n C o st
L e a d e rsh ip
What should HTC stand for?

• Apple = Simplicity
•
• FedEx = Speed
• H TC =
“ myPhone ”
• RIM = Mobile E-Mail

•
 Appendix
HTC share performance
HTC brand recognition
 HTC performance

Mi
ll

Percentage
io
n
US
D
Smartphone Product Cycle
 SWOT Analysis – HTC

STRENGTHS WEAKNESSES
y : Innovation , Hardware
§Low design
brand awareness
and Manufacturing
trong products §Royalty Payments
relationships §Low economies of scale to drive costs down ( compa
§

OPPORTUNITIES THREATS
ring a greater part of the value
§Financial
chain Risk . Growing company
e strategic partnerships §Change from price setter to price gett
in industry §Shift in industry