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How HTC Became a Smartphone Hero

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The last few years have been brutal for some of the best-known companies in the handset business. Nokia (s nok) has watched its dominance erode, Motorola (s mot) failed to maintain the momentum it created with the Razr, and Sony Ericsson’s prospects look bleaker by the day. But while some venerable phone makers struggle to remain relevant, Taiwan’s HTC — a relative newcomer in an increasingly crowded field — has become a dominant force, reports Wired News. Here’s why:

  • Smart about smartphones: HTC was early to recognize a shift in mobile toward a more PC-like model, centered on standard chipsets and operating systems and focused on the Internet. The company initially aligned itself with Microsoft and now is solidly in the camp of Google (s goog) Android. Meanwhile, Motorola, Sony Ericsson and others dragged their feet. Lesson: See the future clearly.
  • In Google we trust: HTC (GigaOM Pro profile) recognized that Android — not Windows Mobile — was likely to emerge as a winner, and then it moved quickly. The company is a founding member of the Open Handset Alliance, a Google-led consortium of mobile players centered on the Android operating system. It produced Android’s first handset — T-Mobile USA’s G1 — and has continued to churn out Android phones as the OS picks up traction around the world. Wisely, it plans to ramp up its Android efforts and focus less on Windows Mobile, which is becoming less relevant by the day even as the smartphone space heats up. Lesson: Bet on deep-pocketed winners less hampered by their past.
  • Touchscreen crazy. Apple (GigaOM Pro profile) was the first to gain traction with a touchscreen superphone, allowing users to eschew bulky QWERTY keyboards in favor of a more intuitive user interface. HTC saw that touchscreen technology would be the interface of the future long before bigger rivals like Nokia and Sony Ericsson realized it and joined the bandwagon. It has effectively drafted on Cupertino’s momentum with the G1 and, more recently, the Droid Eris from Verizon Wireless. And demand for touchscreen technology will only ratchet up as consumers increasingly demand higher tech in smaller form factors. Lesson: If you can’t invent first, then be a super-fast follower.
  • Sense user interface. HTC introduced its new UI earlier this year with the debut of the HTC Hero, which received rave reviews for its software. The Sense UI continues to garner praise and looks to play an increasingly larger role as the company expands its smartphone portfolio. Lesson: Be unique and make your software stand out.
  • Effective brand-building. Once happy to churn out handsets that sported carrier brands, HTC has stepped out of the shadows by building its own brand. The company ramped up those efforts in the last few months with its “You” campaign, which touts the personalized features of its handsets. The move not only allows HTC to market a phone as a must-have feature “that gets you,” it also prevents carriers from co-opting its phones with their own marketing campaigns — like Verizon Wireless (s vz) has done with its Droid initiative. That marketing will be crucial if HTC is continue to grow its mind share among consumers. Lesson: Use marketing to help get people to love your products.

HTC still faces stiff competition in the cutthroat smartphone space, of course. The momentum of Apple’s (s aapl) iPhone continues to grow; Research In Motion (s rimm) has only gained traction in recent months; and a host of other manufacturers are joining the Android bandwagon.

But HTC has impressively built out its worldwide footprint in the last two years, and its ad campaigns are helping the company morph from a simple hardware manufacturer into a major consumer-electronics player. So while some mobile dinosaurs are fighting for their survival, the new kid on the block continues to pick up steam.

13 Responses to “How HTC Became a Smartphone Hero”

  1. I’ve come the praise Caesar, not bury him…

    I can’t be too critical of HTC since my last four phones, including the HD2 sitting on my desk right now, were made by the company. They tend to get a few things wrong like putting the HD2’s audio jack on the bottom of the phone and leaving it out altogether on the Diamond2, but they get a lot right. (A common joke is “HTC: we commit to getting it 98% right 100% of the time!) Fortunately the Nexus One moves the audio port back where it should be; unfortunately it inherits the HD2’s odd camera bump out.

    Their strategy of adopting a platform, recently the Qualcomm MSM72xx chipsets and now moving to Snapdragon, and then building it out into every conceivable configuration has paid off. A small complaint though, HTC needs to move more quickly into new technologies like Snapdragon.

    The Sense UI was a very smart move by HTC. It allows them to pick and chose the underlying OS without upsetting anyone except the hardcore fanboys. At some point HTC could simple shutoff Wimdows Mobile in favor of Andriod or even a different OS without effecting the look-and-feel of their product line.

    The only thing I really disagree with in Colin Gibbs editorial is the “Effective Brand-building” comments. Most on-contract carrier customers wouldn’t have any idea what they meant. HTC simply isn’t in the league of an Apple, Palm, or even a Motorola, doesn’t have the same pull with the carriers, and as yet hasn’t had a break-out success with a “branded” phone. Of course, a lot of this has to do with the unholy trinity in the US: locked phones, subsidies, and ETF’s.

  2. My problem with HTC as well as other Android phones is their software update. I got the iPhone 2G almost 30 months back and if Apple releases a new software update I get it without any issues. Most android phones are tied down to certain OS versions and as an end user you have no idea when the update will happen. Once Nexus one and next generation android phones comes, will HTC take any effort to update the older models. The answer is probably NO.

    • Actually, HTC is working hard to keep their handsets up to date. The Hero and Eris are going to get 2.1 in the near future. Probably same with Magic/MyTouch, though, G1 is doubtful due to hardware limitations. They seem to plan to keep their phones up to date, especially their sense phones. I think they will emerge as the most prominent Android manufacturer in the long run. I really think they have an edge in build quality. Loved my G1 and love my Hero even more.

  3. I wonder how much this impression that HTC suddenly burst onto the scene with Andriod is coloured by the fact that prior to Andriod they were relatively unknown in the US.

    I remember being surprised when Dopod’s OEM bought them out and started marketing under their own HTC brand in 2006. Dopod WiMo handsets were on the shelves for at least a couple of years before that.

    I doubt Dopod ever marketed their own product in the US, although I’m sure some carrier sold their handsets. And until recently you could say the same about HTC.

    But to get to the point, from here in Asia there is nothing sudden about where HTC are today.

    • Allen

      I am not sure about others, but I have been aware of HTC for a long time and was a big proponent of their approach back in 2005 when working for Business 2.0.

      One of my colleagues did an awesome piece on them and finally the world at large is catching up with their story.

      One of the reason I was always impressed with them — they knew how to play the angles to get an edge. Here is a bit from that article to elaborate what I am saying:

      HTC’s masterstroke was its decision to pursue wireless operators as its primary customers. Instead of selling its services primarily to device makers (as contract manufacturers Flextronics and Compal Electronics do for Motorola and others), HTC anticipated that carriers would want to nurture their existing relationships with consumers. Though it costs HTC as much as $10 million to design and build a new phone, the company encourages providers like Vodafone and T-Mobile to put their own brands front and center. Operators get to choose everything from the color of their phones to the user interface to the logo that appears on the screen. “Everything from the hardware to the software tells users that they’re holding a unique phone,” says HTC co-founder and president Peter Chou.

      Founded in 1997, HTC has 3,400 employees, nearly a third of whom now work on research and development. Many were recruited from companies like Texas Instruments, and most of HTC’s senior management team came from microcomputing pioneer Digital Equipment. They’re established players with ample consumer-electronics expertise, adding up to decades of experience working with Intel, Microsoft, and other computing giants to perfect software development and integration techniques. Indeed, HTC’s software talent is one of its strongest selling points.

  4. HTC has been building WinMo smartphones for much much longer than it has been building Android phones. Just because the Android phones have become successful recently does not mean they did not heavily bet on WinMo. In fact, I would say that their success with Android has been due to their association with Microsoft. I would say that not working on WinMo platforms is a negative rather than a positive for HTC.

    From a technical perspective, Microsoft’s development platform for Windows Mobile apps (with Visual Studio) is years ahead of many other platforms. Discounting Microsoft’s mobile platform is like discounting Bing’s web platform. It is much more advanced than you think it is even though there isn’t much of a developer backing or an apps infrastructure.

    PS I’m not a Microsoft fanboy – I would love to pick on them.

  5. HTC can hold their own with any of them now. I think that Google getting fullscale into the handset business is a bit of a stretch, but if they did….

    A substantial partnership/alliance with HTC would make a lot of sense. One of the talking points against Google making phones was alienating their “hardware partners”. I don’t see that – SE is a non-starter, Samsung’s Android phone is just one of many, many phones, but Motorola is the question mark. A phone with the Nexus One specs with wide carrier availability (CDMA and GSM models) would likely blow the Droid out of the water.

  6. Some disagreements:
    1) HTC overhedged its bets and last quarter it had to pay. In fact it put significant money behind its winmo ui efforts at a time when winmo was sinking. Look at the number of windows mobile handsets it released this year compared to Android to know that HTC was not exactly thinking “In Google we trust”
    2) HTC was in touchscreen phones way way before Apple. Atleast 3 years before Apple. It did not join any band wagon.

    Overall HTC has come a long way and is a force to be reckoned with. Now that it has lost the burdens of Windows Mobile, it should seriously take people on.

    But the real question is how will it avoid being a commodity. HTC does not do its own sofware, so it is not a RIM or an Apple. How will it take on these 2 giants if it is effectively coupled with a large number of manufacturers churning out Android devices like Samsung, Moto etc etc

    What is the differentiation ? Sense ? The problem with Sense is that fragments Android and more importantly prevents users from getting Google’s latest and greatest … Aren’t sense handsets still stuck in Android 1.5 when the droid (and the G1) is on Android 2.0? That is going to be the key question.

  7. HTC will soon be breaking out of the “other” category and with their recent discovery of the miracle of branding will soon be a far more widely known name. Their devices are hit and miss but are usually cool or interesting in some way and recently have been more hit than miss.

    While some European smartphone leaders are putting people up in 1000gbp per night hotel rooms in London for meetings, HTC is so cheap that employees don’t even get discounted devices.

    As usual, the generic HTC variants are better than operator branded variants, but this is well known. I just wish that they would default to quad-band GSM/tri-band 3G radios instead of Euro-spec radios for the initial launch versions of their HTC branded handsets. Their failure to do so means that AT&T customers in the US can certainly buy and use freshly launched devices but usually don’t get 3G data unless and until HTC does the NAM model, usually later and often encrapified.