Cher Wang’s vision was to develop a hand-held computer like device and HTC eventually developed its first PDA, the iPAQ in 2000. HTC has always been behind the scenes by just selling high-quality, unbranded phones to cell phone manufacturers and wireless network operators. Eventually, HTC was commissioned to be an original design manufacturer (ODM), which means that HTC only had little responsibility for sales, marketing, or inventory management as HTC manufactured smartphones for branded handset companies and it designed phones for service providers such as T-Mobile and Vodafone and it supported operators by helping them build unique value propositions and optimize their services. This helped them differentiate from other ODMs and the mobile phone operator business provided better profit margins. Then HTC took the plunge and started its own brand operations by designing phones, which would be sold with the brand name of HTC. They wanted to differentiate it from competitors and have greater control over the company’s future. They focused on high-end ‘prosumer’ (the overlap of professionals and consumers) market. Revenue had soared from $1.1 billion to $4.6 billion in a span of 4 years and the gross profit jumped from a mere $212 million to a staggering $1.5 billion dollars in the same time with sales in more than 70 countries. In 2009, the global recession threatened to slow down consumer spending but since HTC had a diverse customer base and focused on a high-growth market it expected to remain sales growth. Because price expectancies from a customer point of view were quite low, HTC had to lower its average sales price. It had to increase the share of common components to deliver significant improvements in terms of economies of scale. They tried to do it by using lower ASP, which could help reduce its dependency on operators. They also lowered production cost by opening... [continues]
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