The Chums Consulting present the following recommendations to the board of directors of HTC for your review. Challenge
HTC, while maintaining its current ODM business, will develop a strategy that leverages its core competence as a mobile phone manufacturer to create a premium HTC branded smart phone to achieve a 12% global market share of all end-user smart phones within 3 years. HTC will form strategic partnerships with one or more operating system providers to ensure the design of the smart phone is tailored and optimised to the selected operating system(s). HTC will reach customers and create a sustainable sales channel by developing a dynamic sales model that factors in the unique nature of different national and regional markets. Alternatives
HTC will develop a single high quality smart phone, utilising the Android OS. Utilizing HTC’s core competency in phone manufacturing, an exclusive partnership will be established with Google in order to create a user interface specifically tailored to the Android OS. HTC will continue to be an ODM, while using the experience acquired in this market, to provide a very high quality product for all Mobile Phone markets (i.e. US, Europe, Asia). With the partnership with Google significantly reducing licensing costs, the production cost of the phone will be lowered and the equivalent profit made will be used in creating a strong R&D department, focusing on developing a line of quality products for HTC. In order to reach the customers, a dynamic distribution strategy will be undertaken: HTC will supply its smart phone to a single tier one mobile carrier in the US market, allowing a reduction in the cost of the phone for end users through subsidies. In the EU and Asian markets the smart phone will be supplied to every carrier, without creating any strategic distribution oriented partnership. The main risk of this alternative, is the possibility of achieving a low market penetration, by providing a high quality and relatively high cost product to the market. The future of the Android platform, will be an essential aspect of this smart phone's success.
HTC while maintaining its ODM business, will develop two smart phones which cater to professionals and consumers. The ‘prosumer’ oriented smart phone, will use the Windows Mobile OS, while the consumer oriented will use the Android OS. By creating a development partnership with a UI developer, HTC will provide strong interfaces for both smart phones, especially designed for the type of end user targeted. This double approach offers HTC a stronger opportunity to create brand awareness, while potentially achieving a stronger market penetration. The use of both OS, reduces the risks associated with the potential misfortune of anyone of them. However this strategy generates strong manufacturing costs, associated with the creation of two different manufacturing lines. In order to reduce the costs of the products for the end user, partnerships with Mobile carriers, will be made for each relevant market (e.g. US, Western Europe, UK, China, East Asia). The subsidies provided by the carriers, will partially alleviate the high production costs of the smart phones, while providing broad groups of costumers. Alternative 3.
HTC will develop a series of smart phones that cater to the ‘prosumer’ and consumer with a single HTC branded range. The phones will be segregated based on hardware features with a high-end ‘prosumer’ smart phone having all potential features and the middle and lower end ranges having fewer features. All manufactured smart phones will still use the same component parts, and this means that the lower priced phones will still have the same manufacturing quality as the top of the range model. Therefore, a consumer buying a low-end model will still receive a good quality phone, which will improve upon HTC’s brand image for all potential consumers at different socio-economic levels. HTC will...
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