Htc Business Model

Topics: Mobile phone, Smartphone, 3G Pages: 11 (3093 words) Published: January 15, 2013
Executive summary

Using Google's Andriod platform has given HTC a boost, but now the Taiwanese handset maker are vulnerable to underwhelming sales in America and Europe. Their hope? China.

HTC only entered China in early 2010, much later than its established peers. It is playing catching up with international premium brands, such as Apple, Samsung and LG, where HTC is currently aiming to get a slice of the pie. However, the company is also facing stiff competition from local brands who operate at the lower price market.

In this Global Marketing proposal, we propose several initiatives for HTC to grow its current 1% marketshare in the China mobile phone market, including new products for HTC to tap into the lower price market as well as localized promotion campaigns to sell phones in rural areas.

It is time for HTC to sway away from satisfied with being 'quietly brilliant'.

Context analysis

Company Background
HTC Corporate, founded in 1997, was a relatively obscure Taiwanese original design manufacturer (ODM). Incorporated as High Technology Computer, HTC focused on manufacturing of computer notebooks. The company created the world's first pocket size PC in collaboration with Microsoft in 1998[1]; it later developed the iPAQ, one of the earliest PDA for Compaq in 2000.

HTC's close tie with Microsoft led them to develop XDA[2] in 2002, first ever smartphone operated on Windows. The company remained true to ODM principles when it produced smartphones by efficiently catering for carriers' specifications and requests. HTC's ODM smartphones continued to generate profit margin as high as 20% compared to industry average of 5%[3]. According to Harvard Business Review, HTC shipped more than 70% of the world's Windows smartphones in 2006 at its peak.

HTC won a reputation for excellent smartphones. But it wanted more, and began to invest more in innovation before eventually creating its own brand in 2007. HTC set up a unit called Magic Labs[4], where engineers from various disciplines come up with lots of ideas, even if most were quickly discarded. From this unit bred several ground breaking ideas, including HTC touch, a touch screen device that appeared few weeks before Apple's first iPhone; and first ever Android phone in collaboration with Google.

Reaping from the Android's high penetration rate, the company experienced unprecedented growth from 2008 onwards and became the top seller of smartphones in America in 3Q of 2011, according to Canalys Research. HTC has recently eclipsed Nokia in market capacity and has climbed up to the no.3 spot for smartphones sold worldwide, behind Apple and Samsung. In terms of brand equity, the company has invested heavily in developing its own brand and broke into Interbrand's top 100 Brands 2011[5] (no. 98) .

China: Macro-environmental Factors


China remained a single party directed country since the founding of People's Republic of China in October 1949. Putting political ideologies differences aside, efficient decision-making is widely seen as a characteristic of China's political system. The profound changes that have taken place in various fields of this nation: from Deng Xiaping's Special Economic Zone in the 80s to the economic leaps in the turn of the century.

Inefficiencies in the political system such as corruption still exist today, but China's communist party has taken bold steps for reform. The party has embraced market socialist economy to lead China out of poverty and soar to one of the most powerful nations in the world.


Despite China has mounted new heights in her economy, outshining Japan as the second largest economy in the world, the slowdown in economic growth has not abated. The housing boom in the past decade is now over, implying that growth now weigh on heavy industry and local consumption. In the past, China has offered massive infrastructure stimulus, as it did to prop up growth following SARS and the global...
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