Description
Describing on International Marketing presentation on the global handset giant HTC.
International Marketing Case Presentation
Introduction
• Founded in 1997 by Cher Wang, Chairwoman, HT Cho, Director of the Board & Chairman of HTC Foundation, and Peter Chou, President and CEO, HTC made its name as the company behind many of the most popular operator-branded devices on the market Starting out with PDAs, HTC became the world leading manufacturer in smartphone category In June 2006 HTC made the decision to brand phone under its own label, even though a lot of Taiwanese Manufactures and tried and failed. The HTC brand name has a long way to go…
• •
•
Challenges Ahead
The landscape for phone software is changing dramatically with Apple, RIM, Google etc shocking the world with newer and improved products & also services like app stores. Thus HTC faces the following challenges:
Where should HTC participate in this expanding value chain?
What should be done to make HTC unique amongst all others?
What should they do become a powerful global brand?
Recommendations
• Shift to Android platform • Launch Apps Store with revenue model similar to Apple’s • Technology Focus
– Display Technologies – Mobile Web and Widgets
• • • •
Better deals with service providers Improve Utilization for Cost Reduction Enter the mid-tier segment Focus on Brand Enhancement
HTC History
One of the founders of HTC, Cher Wang had a vision bring the power of mobile computing into the hands of people around the world. Opportunity came in 1997 when Microsoft had developed Windows CE, a new Windows based platform that could operate on smaller PC devices and hence HTC was born
Initial focus was on notebooks due to dearth of engineers skilled enough to make handheld devices.
Peter Chou, a talented engineer with his small team were working on handheld devices and created the world’s smallest PC with Microsoft in 1998 Wang invested additionally in the currently loss-making notebook business on the condition that HTC would exit notebook business and focus on handheld devices
HTC History
2002- manufactured a PDA, the iPAQ for Compaq. HTC was commissioned ODM for Compaq. HTC maintained its relations with Microsoft and released the XDA in 2002. The company recorded it’s first profit that year.
With a new goal of making smartphones and wireless PDAs, HTC partenered with Qualcomm to become the 1st Taiwanese company with a 3G lisence
In 2006, HTC decided to step out from behind the curtain and introduced HTC as a brand. The goal was to deliver an easy to use, holistic smartphone experience by drawing on our knowhow in design and innovation.
In June 2007 HTC Touch was launched— the first finger-friendly touchscreen smartphone. Year after year, breakthrough touchbased smartphones were launched like the Touch Diamond, Hero, HD2, Legend, Desire, Mozart & Trophy.
Business Segments
Original Design Manufacturer(ODM) Business ? Manufactured smartphones for branded handset companies ? Little responsibility for sales, marketing or Inventor Management ? Mobile Operator Business Complementary Business by offering customized phones based on products designed by HTC to service providers such as T-Mobile Increased Costs for HTC – R&D Costs (5% of Total Revenue) – Inventory Costs ? ? ? Operators gained greater control on their Product portfolio Early Success through contract with Vodafone, British Telecom and Orange Made the Treo Smartphone in collaboration with Handspring
?
ODM and Mobile Operator Business resulted in profit margins as high as 20%
Category Analysis
Portable Electronics: Mobile Phones
? Technological convergence became the key trend influencing the mobile phone subsector, which saw the introduction of many new models offering streaming video, advanced camera features, MP3 capabilities and global positioning systems (GPS). Global volume sales reached nearly 886 million units in 2008. ? Consumers' desire to listen to music, watch video, play games and communicate anywhere and anytime is transforming the global mobile phone sector. All-in-one portable communication/ entertainment systems complement to the growing consumer demand to be connected and entertained on-the-go. ? The heightened demand for mobile phones has been stimulated in part by the continuing roll-out of advanced telecommunications infrastructure, such as Wi-Fi and 3G mobile phone technology.
Demand for Mobile Phones
1200
1000
800
600
400
200
0 2003 2004 2005 2006 2007 2008 2009 Millions of Units
Mobile phones are now turned into a handheld computer that can be used as a media player, TV, Internet browser, GPS navigator, planner, digital camera
Nokia E75
?
The success of mobile phones continued to be determined by the availability and accessibility of online content, which in turn depends of the sophistication of the underlying telecommunications infrastructure.
Mobile Phones - Sales
Source: Mobile Devices -The iPhone Is Not The Only Game In Town, 2010, Gartner
Competitor Analysis
Apple
RIM
HTC
PALM
Samsung
Motorol a
Nokia
Buyers • Weak • Consumers market • Corporate market
Suppliers • Strong • Carriers -AT&T … • OS providers Linux, WM… • Hardware makers Intel …
Rivals • Strong • More companies enters… • Strong brands and finance
New Entrants • Threat • Establish mobile manufacture: LG, Samsung • Software giants: Google, MSFT
Substitute Products • Emerged • VoIP Skype… • PDA phone • Palm…
1. Shift To Android Platform
Smartphone OS Competitive Landscape
iPhone OS (Apple) Platform Source Code Pros • Closed • Closed • Early momentum • Data hungry early adopters • Powerful distribution channel • Apple dependant BlackBerry OS (RIM) • Closed • Closed • Strong reach (particularly in US) Window Mobile (Microsoft) • Open • Closed • Manufacturer / carrier agnostic Android (Google) • Open • Open • Manufacturer / carrier agnostic • Open source innovation Symbian (Nokia) • Open • Open • Massive global reach • Open source innovation
Issues
• BB dependent • Distribution • Fewer free apps • BB Application Center being developed for Storm
• Distribution
• Late to market • Uncertain consumer demand • Android Market launched • $3.8M awarded in Developer Challenge • 10’s of thousands apps
• Limited reach in US • Distribution • >10K apps • Claims >90M installs over last 2 years • Nokia OVI store
Application ecosystem
• >3 lakh apps (~20% free) • More than 7 billion download
• >18K apps • Windows marketplace launched
Notes: 1. Artificially low given the wait for the 3G iPhone (5.3% market share in Q1)
12
Worldwide Smartphone Sales to End Users by Operating System in 3Q10 (Thousands of Units)
Company 3Q10 Units 3Q10 Market Share (%) 3Q09 Units 3Q09 Market Share (%)
Symbian
Android iOS Research In Motion Microsoft Windows Mobile Linux Other OS Total
Source: Gartner (November 2010)
29,480.1
20,500.0 13,484.4 11,908.3 2,247.9 1,697.1 1,214.8 80,532.6
36.6
25.5 16.7 14.8 2.8 2.1 1.5 100.0
18,314.8
1,424.5 7,040.4 8,522.7 3,259.9 1,918.5 612.5 41,093.3
44.6
3.5 17.1 20.7 7.9 4.7 1.5 100.0
The market is growing rapidly at nearly 38%, but Android’s sales and share will explode while RIM and Apple will lag Android and the market. Android is expected to match the (current) BlackBerry numbers by 2013.
HTC's Revenue by Product category (Exhibit 9) Year Wireless PDA Microsoft Platform Android Platform ODM 2007 1% 84% 0% 14% 2008 1% 89% 6% 5% 2009 0% 61% 36% 3% 2010 0% 53% 47% 0% 2011 0% 51% 49% 0%
Market Share Growth Rate by Maker Year Wireless PDA 2007 2008 0% 2009 -100% 2010 0% 2011 0%
Microsoft Platform
Android Platform ODM
6%
-31%
500%
-13%
31% -100%
-4%
4% 0%
-64%
-40%
Handset Platforms
Transition to Android - Benefits
• • • • • • •
Smart Phone Sales 2009 = 250m HTC’s share 6% = 15m handsets HTC sold 10m Windows based smart phones License fees to Microsoft= $150 million Switch to Android would save this cost Operating Margin increases from 30% to 46%. Nokia has a margin of 35% and Apple 34%
2. Launch Apps Store with revenue model similar to Apple’s
OEM – Application Stores Comparison
AppStore - Comparison
Apps Store – Increasing Value Chain
•Gartner Prediction for Mobile Applications – Paid up Mobile Applications to reach 90% from current 82% •Mobile advertising down to 10% from current 25% •Application stores becoming the focus for several players in the value chain •More Consumers will experiment with application downloads •Many Free Applications derive Revenue from Advertising •The value chain of application Stores will evolve to find the most profitable business model •Proposed Revenue Sharing model: 70% of revenue goes to developer, 30% to HTC
Mobile Apps Store
35000
30000
25000 20000 15000 10000 5000 0 2009 Downloads (Million) 2010 2013 Total Revenue ($ Million)
Mobile Application Stores
Ecosystems – Apps much more than stores
3. Better deals with service providers
7
9 729
9 500 99+ 720
iPhone 4 $729 $199 27%
Black berry $500 $99 20%
Sony X10 $400 $99 25%
HTC suround $350 $199 57%
4. Enter the mid-tier segment
Should HTC also enter Manufacture of Mid Range Phones?
• Aspirational Brand image to be the BMW of Mobiles • Convergence of mid range phones(feature phones) with smart phones • Gross margin of Nokia 35%, Samsung 26%, HTC 30%
Smart Phones - Forecasts
Source: Mobile Devices -The iPhone Is Not The Only Game In Town, 2010, Gartner
Market Share by Maker (Exhibit 5 b) Year 2007 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 Apple 2.70% 5.30% 2.80% 12.90% 10.70% 10.80% 13.30% Fujitsu na 4.10% 3.30% na na 3.80% 3% HTC 3% 4% 4.10% 4.50% 4.30% 5.40% 6% nokia 49.40% 45.10% 47.40% 42.30% 40.80% 41.20% 45% rim 9.60% 13.30% 17.30% 15.90% 19.50% 19.90% 18.70% samsung na na na 3% 4.20% na na others 35.20% 28.10% 25.10% 21.30% 20.50% 18.80% 13.90% Market Share Growth Rate by Maker Year Apple 2007 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 96.30% -47.17% 360.71% -17.05% 0.93% 23.15% 28.57% 2009 Q3 17.10% na 6.50% 39.30% 20.80% 3.20% 13.10%
HTC
Nokia RIM
33.3%
-8.7% 38.5%
2.5%
5.1% 30.1%
9.8%
-10.8% -8.1%
-4.4%
-3.5% 22.6%
25.6%
1.0% 2.1%
11.1%
9.2% -6.0%
8.3%
-12.7% 11.2%
5. Improve Utilization for Cost Reduction
Peer Comparison and Analysis
COGS/Sales Net Income Margin SG&A/Sales TATR
ROA ROE ROCE
HTC 67.40% 13.4 18.6 1.55 28.83 31.35 32.55
Apple 68.50% 7.9 13 1.15 14.95 16.7 17.5
RIM 46.20% 15.6 15.5 0.64 9.92 12.1 17.9
Palm Inc 66.50% 7.2 12 1.23 14.76 17.2 18.6
Nokia Samsung 65.20% 77.20% 10.9 11.5 1.51 17.365 19.9 19.6 9 14 1.1 15.4 17.8 18.8
TATR suggest that there efficiency is good compared to peers however internal operating efficiency has fallen over the years. This probably can be attributed to FA investments.
HTC's TATR Over the year Year TATR CA/TA 2004 1.6146 0.8608 2005 1.8230 0.9177 2006 1.5884 0.9368 2007 1.3757 0.9197 2008 1.3259 0.8788 2009 0.2796 0.8653 Average 0.896493
Industry average of global telecom providers (i.e 5 companies considered) is in the range of 67% -80% suggesting that it is well above the industry standards which could be due to the high inventory reducing the operating efficiency. (Note: Data for competitors taken from their balance sheet)
TATR
2.0000 1.8000 1.6000 1.4000 1.2000 1.0000 0.8000 0.6000 0.4000 0.2000 0.0000 2003 2004 2005 2006 2007 2008 2009 2010
TATR
6. Focus on High-End Technology
Technologies HTC should focus on
Touch Screens will Dominate
7. Brand Enhancement
The Road to Brand
? 2006 - Peter Chou was appointed as the new CEO
? Planned to enter the Brandwagon
? Risks associated were: – Competition with the client – Scale and budget not available for Marketing
– History of Failures of Taiwanese players
– Strong Competitors like Nokia and Samsung ? 2007 – Started its own brand operations by acquiring Dopod ? Focused high end of "prosumer" market ? Target – "Build a reputation of making the BMW of phones"
HTC – Current Strategy
Brand Strategy
•Focus on Smartphone Markets • Build up brand value through innovative products and friendly user interface •Fast Response to Market Change • Deliver Product Diversification to the Market • •
Strategies
Focus on Cusomer Service – HTC Customers complaints about their high-end models like HTC EVO 4G but they are majorly ignored Quality – HTC is known for its innovative and expertise hardware designing but with the increase in Number of phones per annum, quality is suffering badly Focus on Customer Needs – Customer’s find HTC Phones to be complex and difficult to use. Hence, focus should be done on enhancing user satisfaction
•
Brand Positioning
•
•
Using innovation to create a phone that fulfills the customer's needs Slogan “You don’t need to get a phone. You need a phone that gets you.”
36
Branding Strategies
‘You are Different from you’ Campaign
HTC Sense
A quietly brilliant story Tom Tom & HTC Best of Class Navigation Experience
HTC e Club, Providing value to Customers
HTC – Tech Brand of the year (‘10)
Promoting strategies
DESIGN COMPETITIONS: Creating a strong brand community involving them in designing of applications. Such activities will help achieve two main benefits: 1. it will reinforce HTC’s strong connection to the brand community by hooking up youngsters early on to the brand to create brand excitement. 2. HTC can reinforces its brand image of always being on the forefront of innovation and design. THINK GLOBAL, ACT LOCAL: A holistic approach to developing several strategies for different regions, but guided by one unified HTC brand image building strategy. Like sponsoring events most popular in that region such that they are in tune with HTC’s branding strategy based on “YOU”
PRE-LAUNCH STRATEGY TO BUILD ANTICIPATION AND GENERATE AWARENESS: Devices like smartphones sell mostly through the hype that they create before launch so much so that it is an event in itself. Premium prices can be used at the outset to maximise profits and communicate exclusivity, and then later as the reference price to discount in order to drive sales from less involved market segments. But most importantly, nothing creates better publicity than running out of product long before the initial launch ends.
Can Taiwan ever be synonymous with HTC? Is HTC on the right path?
•
Taiwan
– one of the most vibrant and dynamic economies in Asia. – known around the world for its leadership in hightechnology- ranked 2nd on The Economist’s “2008 IT industry competitiveness index” – home to globally recognized technology brands including Acer, HTC and AsusTek
Asus: – Multinational computer product manufacturer – Business Week's "InfoTech 100" and "Asia’s Top 10 IT Companies" rankings. – It led the IT Hardware category of the 2008 Taiwan Top 10 Global Brands survey with a total brand value of US$1.324 billion
Acer:
– multinational computer technology and electronics corporation that manufactures desktop and laptop, PDAs, servers, storage devices, displays, and peripherals. Acer provides e-business services for business, government, education, and home users. – Topping the 2010 Top Taiwan Global Brands list for last 2 years – World’s 2nd largest computer vendor, left behind HP
HTC’s comparative position HTC
– Relatively new on the market as a brand – Only into PDA and smartphone manufacturing as against Acer & Asus who are established players in wider markets as well + Experience of selling high quality unbranded phones for years + The only Taiwanese high-tech vendor to have a license for using Microsoft products + HTC’s Magic has been powered by Google’s Android + In 2010 Top Taiwan Global Brands, HTC climbed from #4 to #2 closely behind Acer
Currently Acer & Asus seem to have an upper hand over HTC in terms of brand value but with Android coming in the picture, HTC has suddenly emerged a closer runner in the list of top Taiwanese global brands. Though it might take some time Taiwan becoming synonymous with HTC doesn’t look like a far-fetched idea at all.
References HTC
http://www.htc.com/history/ http://www.phonearena.com/news/Microsoft-trying-to-prevent-Acer-and-Asus-from-adopting-Android-throughroyalty-fees_id14177
http://www.fastcompany.com/1615647/htc-continues-to-assess-making-their-own-smartphone-os-or-buying-onefrom-palm
http://www.brandingstrategyinsider.com/2010/07/marketing-lessons-continue-to-flow-from-apple.html http://moconews.net/article/419-htc-launches-multi-million-dollar-ad-campaign-about-you-to-become-house/ http://www.marketingminds.com.au/branding/apple_branding_strategy.html http://buysample.taiwantrade.com.tw/ORG/accessibility/news.do?Method=news_detial&informationId=30061 http://blog.gsmarena.com/htc-makes-a-switch-in-brand-identity/ http://blog.dk.sg/2009/10/30/htc-unveils-new-brand-positioning-and-htc-tattoo/
http://reviews.cnet.com/smartphones/htc-droid-incredible-verizon/4852-6452_7-34064029.html
http://www.htc.com/www/product.aspx?type=1#navigation http://www.xda-developers.com/feature/the-htc-aria-or-how-htcs-marketing-strategy-is-changing/
THANK YOU…
doc_309302807.pptx
Describing on International Marketing presentation on the global handset giant HTC.
International Marketing Case Presentation
Introduction
• Founded in 1997 by Cher Wang, Chairwoman, HT Cho, Director of the Board & Chairman of HTC Foundation, and Peter Chou, President and CEO, HTC made its name as the company behind many of the most popular operator-branded devices on the market Starting out with PDAs, HTC became the world leading manufacturer in smartphone category In June 2006 HTC made the decision to brand phone under its own label, even though a lot of Taiwanese Manufactures and tried and failed. The HTC brand name has a long way to go…
• •
•
Challenges Ahead
The landscape for phone software is changing dramatically with Apple, RIM, Google etc shocking the world with newer and improved products & also services like app stores. Thus HTC faces the following challenges:
Where should HTC participate in this expanding value chain?
What should be done to make HTC unique amongst all others?
What should they do become a powerful global brand?
Recommendations
• Shift to Android platform • Launch Apps Store with revenue model similar to Apple’s • Technology Focus
– Display Technologies – Mobile Web and Widgets
• • • •
Better deals with service providers Improve Utilization for Cost Reduction Enter the mid-tier segment Focus on Brand Enhancement
HTC History
One of the founders of HTC, Cher Wang had a vision bring the power of mobile computing into the hands of people around the world. Opportunity came in 1997 when Microsoft had developed Windows CE, a new Windows based platform that could operate on smaller PC devices and hence HTC was born
Initial focus was on notebooks due to dearth of engineers skilled enough to make handheld devices.
Peter Chou, a talented engineer with his small team were working on handheld devices and created the world’s smallest PC with Microsoft in 1998 Wang invested additionally in the currently loss-making notebook business on the condition that HTC would exit notebook business and focus on handheld devices
HTC History
2002- manufactured a PDA, the iPAQ for Compaq. HTC was commissioned ODM for Compaq. HTC maintained its relations with Microsoft and released the XDA in 2002. The company recorded it’s first profit that year.
With a new goal of making smartphones and wireless PDAs, HTC partenered with Qualcomm to become the 1st Taiwanese company with a 3G lisence
In 2006, HTC decided to step out from behind the curtain and introduced HTC as a brand. The goal was to deliver an easy to use, holistic smartphone experience by drawing on our knowhow in design and innovation.
In June 2007 HTC Touch was launched— the first finger-friendly touchscreen smartphone. Year after year, breakthrough touchbased smartphones were launched like the Touch Diamond, Hero, HD2, Legend, Desire, Mozart & Trophy.
Business Segments
Original Design Manufacturer(ODM) Business ? Manufactured smartphones for branded handset companies ? Little responsibility for sales, marketing or Inventor Management ? Mobile Operator Business Complementary Business by offering customized phones based on products designed by HTC to service providers such as T-Mobile Increased Costs for HTC – R&D Costs (5% of Total Revenue) – Inventory Costs ? ? ? Operators gained greater control on their Product portfolio Early Success through contract with Vodafone, British Telecom and Orange Made the Treo Smartphone in collaboration with Handspring
?
ODM and Mobile Operator Business resulted in profit margins as high as 20%
Category Analysis
Portable Electronics: Mobile Phones
? Technological convergence became the key trend influencing the mobile phone subsector, which saw the introduction of many new models offering streaming video, advanced camera features, MP3 capabilities and global positioning systems (GPS). Global volume sales reached nearly 886 million units in 2008. ? Consumers' desire to listen to music, watch video, play games and communicate anywhere and anytime is transforming the global mobile phone sector. All-in-one portable communication/ entertainment systems complement to the growing consumer demand to be connected and entertained on-the-go. ? The heightened demand for mobile phones has been stimulated in part by the continuing roll-out of advanced telecommunications infrastructure, such as Wi-Fi and 3G mobile phone technology.
Demand for Mobile Phones
1200
1000
800
600
400
200
0 2003 2004 2005 2006 2007 2008 2009 Millions of Units
Mobile phones are now turned into a handheld computer that can be used as a media player, TV, Internet browser, GPS navigator, planner, digital camera
Nokia E75
?
The success of mobile phones continued to be determined by the availability and accessibility of online content, which in turn depends of the sophistication of the underlying telecommunications infrastructure.
Mobile Phones - Sales
Source: Mobile Devices -The iPhone Is Not The Only Game In Town, 2010, Gartner
Competitor Analysis
Apple
RIM
HTC
PALM
Samsung
Motorol a
Nokia
Buyers • Weak • Consumers market • Corporate market
Suppliers • Strong • Carriers -AT&T … • OS providers Linux, WM… • Hardware makers Intel …
Rivals • Strong • More companies enters… • Strong brands and finance
New Entrants • Threat • Establish mobile manufacture: LG, Samsung • Software giants: Google, MSFT
Substitute Products • Emerged • VoIP Skype… • PDA phone • Palm…
1. Shift To Android Platform
Smartphone OS Competitive Landscape
iPhone OS (Apple) Platform Source Code Pros • Closed • Closed • Early momentum • Data hungry early adopters • Powerful distribution channel • Apple dependant BlackBerry OS (RIM) • Closed • Closed • Strong reach (particularly in US) Window Mobile (Microsoft) • Open • Closed • Manufacturer / carrier agnostic Android (Google) • Open • Open • Manufacturer / carrier agnostic • Open source innovation Symbian (Nokia) • Open • Open • Massive global reach • Open source innovation
Issues
• BB dependent • Distribution • Fewer free apps • BB Application Center being developed for Storm
• Distribution
• Late to market • Uncertain consumer demand • Android Market launched • $3.8M awarded in Developer Challenge • 10’s of thousands apps
• Limited reach in US • Distribution • >10K apps • Claims >90M installs over last 2 years • Nokia OVI store
Application ecosystem
• >3 lakh apps (~20% free) • More than 7 billion download
• >18K apps • Windows marketplace launched
Notes: 1. Artificially low given the wait for the 3G iPhone (5.3% market share in Q1)
12
Worldwide Smartphone Sales to End Users by Operating System in 3Q10 (Thousands of Units)
Company 3Q10 Units 3Q10 Market Share (%) 3Q09 Units 3Q09 Market Share (%)
Symbian
Android iOS Research In Motion Microsoft Windows Mobile Linux Other OS Total
Source: Gartner (November 2010)
29,480.1
20,500.0 13,484.4 11,908.3 2,247.9 1,697.1 1,214.8 80,532.6
36.6
25.5 16.7 14.8 2.8 2.1 1.5 100.0
18,314.8
1,424.5 7,040.4 8,522.7 3,259.9 1,918.5 612.5 41,093.3
44.6
3.5 17.1 20.7 7.9 4.7 1.5 100.0
The market is growing rapidly at nearly 38%, but Android’s sales and share will explode while RIM and Apple will lag Android and the market. Android is expected to match the (current) BlackBerry numbers by 2013.
HTC's Revenue by Product category (Exhibit 9) Year Wireless PDA Microsoft Platform Android Platform ODM 2007 1% 84% 0% 14% 2008 1% 89% 6% 5% 2009 0% 61% 36% 3% 2010 0% 53% 47% 0% 2011 0% 51% 49% 0%
Market Share Growth Rate by Maker Year Wireless PDA 2007 2008 0% 2009 -100% 2010 0% 2011 0%
Microsoft Platform
Android Platform ODM
6%
-31%
500%
-13%
31% -100%
-4%
4% 0%
-64%
-40%
Handset Platforms
Transition to Android - Benefits
• • • • • • •
Smart Phone Sales 2009 = 250m HTC’s share 6% = 15m handsets HTC sold 10m Windows based smart phones License fees to Microsoft= $150 million Switch to Android would save this cost Operating Margin increases from 30% to 46%. Nokia has a margin of 35% and Apple 34%
2. Launch Apps Store with revenue model similar to Apple’s
OEM – Application Stores Comparison
AppStore - Comparison
Apps Store – Increasing Value Chain
•Gartner Prediction for Mobile Applications – Paid up Mobile Applications to reach 90% from current 82% •Mobile advertising down to 10% from current 25% •Application stores becoming the focus for several players in the value chain •More Consumers will experiment with application downloads •Many Free Applications derive Revenue from Advertising •The value chain of application Stores will evolve to find the most profitable business model •Proposed Revenue Sharing model: 70% of revenue goes to developer, 30% to HTC
Mobile Apps Store
35000
30000
25000 20000 15000 10000 5000 0 2009 Downloads (Million) 2010 2013 Total Revenue ($ Million)
Mobile Application Stores
Ecosystems – Apps much more than stores
3. Better deals with service providers
7
9 729
9 500 99+ 720
iPhone 4 $729 $199 27%
Black berry $500 $99 20%
Sony X10 $400 $99 25%
HTC suround $350 $199 57%
4. Enter the mid-tier segment
Should HTC also enter Manufacture of Mid Range Phones?
• Aspirational Brand image to be the BMW of Mobiles • Convergence of mid range phones(feature phones) with smart phones • Gross margin of Nokia 35%, Samsung 26%, HTC 30%
Smart Phones - Forecasts
Source: Mobile Devices -The iPhone Is Not The Only Game In Town, 2010, Gartner
Market Share by Maker (Exhibit 5 b) Year 2007 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 Apple 2.70% 5.30% 2.80% 12.90% 10.70% 10.80% 13.30% Fujitsu na 4.10% 3.30% na na 3.80% 3% HTC 3% 4% 4.10% 4.50% 4.30% 5.40% 6% nokia 49.40% 45.10% 47.40% 42.30% 40.80% 41.20% 45% rim 9.60% 13.30% 17.30% 15.90% 19.50% 19.90% 18.70% samsung na na na 3% 4.20% na na others 35.20% 28.10% 25.10% 21.30% 20.50% 18.80% 13.90% Market Share Growth Rate by Maker Year Apple 2007 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 96.30% -47.17% 360.71% -17.05% 0.93% 23.15% 28.57% 2009 Q3 17.10% na 6.50% 39.30% 20.80% 3.20% 13.10%
HTC
Nokia RIM
33.3%
-8.7% 38.5%
2.5%
5.1% 30.1%
9.8%
-10.8% -8.1%
-4.4%
-3.5% 22.6%
25.6%
1.0% 2.1%
11.1%
9.2% -6.0%
8.3%
-12.7% 11.2%
5. Improve Utilization for Cost Reduction
Peer Comparison and Analysis
COGS/Sales Net Income Margin SG&A/Sales TATR
ROA ROE ROCE
HTC 67.40% 13.4 18.6 1.55 28.83 31.35 32.55
Apple 68.50% 7.9 13 1.15 14.95 16.7 17.5
RIM 46.20% 15.6 15.5 0.64 9.92 12.1 17.9
Palm Inc 66.50% 7.2 12 1.23 14.76 17.2 18.6
Nokia Samsung 65.20% 77.20% 10.9 11.5 1.51 17.365 19.9 19.6 9 14 1.1 15.4 17.8 18.8
TATR suggest that there efficiency is good compared to peers however internal operating efficiency has fallen over the years. This probably can be attributed to FA investments.
HTC's TATR Over the year Year TATR CA/TA 2004 1.6146 0.8608 2005 1.8230 0.9177 2006 1.5884 0.9368 2007 1.3757 0.9197 2008 1.3259 0.8788 2009 0.2796 0.8653 Average 0.896493
Industry average of global telecom providers (i.e 5 companies considered) is in the range of 67% -80% suggesting that it is well above the industry standards which could be due to the high inventory reducing the operating efficiency. (Note: Data for competitors taken from their balance sheet)
TATR
2.0000 1.8000 1.6000 1.4000 1.2000 1.0000 0.8000 0.6000 0.4000 0.2000 0.0000 2003 2004 2005 2006 2007 2008 2009 2010
TATR
6. Focus on High-End Technology
Technologies HTC should focus on
Touch Screens will Dominate
7. Brand Enhancement
The Road to Brand
? 2006 - Peter Chou was appointed as the new CEO
? Planned to enter the Brandwagon
? Risks associated were: – Competition with the client – Scale and budget not available for Marketing
– History of Failures of Taiwanese players
– Strong Competitors like Nokia and Samsung ? 2007 – Started its own brand operations by acquiring Dopod ? Focused high end of "prosumer" market ? Target – "Build a reputation of making the BMW of phones"
HTC – Current Strategy
Brand Strategy
•Focus on Smartphone Markets • Build up brand value through innovative products and friendly user interface •Fast Response to Market Change • Deliver Product Diversification to the Market • •
Strategies
Focus on Cusomer Service – HTC Customers complaints about their high-end models like HTC EVO 4G but they are majorly ignored Quality – HTC is known for its innovative and expertise hardware designing but with the increase in Number of phones per annum, quality is suffering badly Focus on Customer Needs – Customer’s find HTC Phones to be complex and difficult to use. Hence, focus should be done on enhancing user satisfaction
•
Brand Positioning
•
•
Using innovation to create a phone that fulfills the customer's needs Slogan “You don’t need to get a phone. You need a phone that gets you.”
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Branding Strategies
‘You are Different from you’ Campaign
HTC Sense
A quietly brilliant story Tom Tom & HTC Best of Class Navigation Experience
HTC e Club, Providing value to Customers
HTC – Tech Brand of the year (‘10)
Promoting strategies
DESIGN COMPETITIONS: Creating a strong brand community involving them in designing of applications. Such activities will help achieve two main benefits: 1. it will reinforce HTC’s strong connection to the brand community by hooking up youngsters early on to the brand to create brand excitement. 2. HTC can reinforces its brand image of always being on the forefront of innovation and design. THINK GLOBAL, ACT LOCAL: A holistic approach to developing several strategies for different regions, but guided by one unified HTC brand image building strategy. Like sponsoring events most popular in that region such that they are in tune with HTC’s branding strategy based on “YOU”
PRE-LAUNCH STRATEGY TO BUILD ANTICIPATION AND GENERATE AWARENESS: Devices like smartphones sell mostly through the hype that they create before launch so much so that it is an event in itself. Premium prices can be used at the outset to maximise profits and communicate exclusivity, and then later as the reference price to discount in order to drive sales from less involved market segments. But most importantly, nothing creates better publicity than running out of product long before the initial launch ends.
Can Taiwan ever be synonymous with HTC? Is HTC on the right path?
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Taiwan
– one of the most vibrant and dynamic economies in Asia. – known around the world for its leadership in hightechnology- ranked 2nd on The Economist’s “2008 IT industry competitiveness index” – home to globally recognized technology brands including Acer, HTC and AsusTek
Asus: – Multinational computer product manufacturer – Business Week's "InfoTech 100" and "Asia’s Top 10 IT Companies" rankings. – It led the IT Hardware category of the 2008 Taiwan Top 10 Global Brands survey with a total brand value of US$1.324 billion
Acer:
– multinational computer technology and electronics corporation that manufactures desktop and laptop, PDAs, servers, storage devices, displays, and peripherals. Acer provides e-business services for business, government, education, and home users. – Topping the 2010 Top Taiwan Global Brands list for last 2 years – World’s 2nd largest computer vendor, left behind HP
HTC’s comparative position HTC
– Relatively new on the market as a brand – Only into PDA and smartphone manufacturing as against Acer & Asus who are established players in wider markets as well + Experience of selling high quality unbranded phones for years + The only Taiwanese high-tech vendor to have a license for using Microsoft products + HTC’s Magic has been powered by Google’s Android + In 2010 Top Taiwan Global Brands, HTC climbed from #4 to #2 closely behind Acer
Currently Acer & Asus seem to have an upper hand over HTC in terms of brand value but with Android coming in the picture, HTC has suddenly emerged a closer runner in the list of top Taiwanese global brands. Though it might take some time Taiwan becoming synonymous with HTC doesn’t look like a far-fetched idea at all.
References HTC
http://www.htc.com/history/ http://www.phonearena.com/news/Microsoft-trying-to-prevent-Acer-and-Asus-from-adopting-Android-throughroyalty-fees_id14177
http://www.fastcompany.com/1615647/htc-continues-to-assess-making-their-own-smartphone-os-or-buying-onefrom-palm
http://www.brandingstrategyinsider.com/2010/07/marketing-lessons-continue-to-flow-from-apple.html http://moconews.net/article/419-htc-launches-multi-million-dollar-ad-campaign-about-you-to-become-house/ http://www.marketingminds.com.au/branding/apple_branding_strategy.html http://buysample.taiwantrade.com.tw/ORG/accessibility/news.do?Method=news_detial&informationId=30061 http://blog.gsmarena.com/htc-makes-a-switch-in-brand-identity/ http://blog.dk.sg/2009/10/30/htc-unveils-new-brand-positioning-and-htc-tattoo/
http://reviews.cnet.com/smartphones/htc-droid-incredible-verizon/4852-6452_7-34064029.html
http://www.htc.com/www/product.aspx?type=1#navigation http://www.xda-developers.com/feature/the-htc-aria-or-how-htcs-marketing-strategy-is-changing/
THANK YOU…
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