From ODM to an Own Brand HTC

The Beginning

Cher WangH.T.Cho Using Location-Specific Advantage to recover hard time. The first invetion of HTC The Beginning

From PDAs to Wireless Devices The mobile’s product life cycle is short HTC knew they had to go ahead competitions HTC saw the potential of Wireless Devices Collaboration with Microsoft(Relating and supporting industries of Porter’s Diamond) The Beginning The first smartphone by HTC

The ODM Business

ODM vs OEM ODM stands for original Design Manufacturing, and OEM refers t o Original Equipment Manufacturing. Original Equipment Manufacturing companies are just contract manufacturers, whereas Original Design Manufacturing compani es make their own designs. ODM is a company that is responsible for designing and building a product according to their specifications, and then sells the pro duct to another company or firm, which is responsible for its distr ibution. OEM is a company or firm that is responsible for designing and b uilding a product as per another company’s specifications. HTC worked usually as an ODM, but for some partners worked a s a OEM. The ODM Business

Innovation First Microsoft powered Smartphone (2002 ) First Tri-band UMTS PDA First intuitive tou ch screen to allow finger tip navigation (20 07) First color palm-size PC (1999) First Microsoft Pocket PC (2000) First tri-band UMTS 3G device on the Micr osoft Windows Mobile platform (2006) First Microsoft Windows 5.0 Smartphone (2 006) Innovation has become the signature of HTC. The ODM Business

Entering the Market

The Korean Market Korea is one of the most important strategic location in the market of smart phone -Smart phone market in Korea is rapidly growing : % → % -Korean customers give very strict and high quality evaluations about Smart Phone To prevent growing of iPhone4 and GalaxyS in Asia market - for checking Apple and Samsung Lower the barrier to entry when iPhone was introduced in Korea - data payment system, subsidy, government regulations Entering the Market

Competitive Advantage HTC enjoys the dominant position in the market of Android Smart phone in the world. -HTC has a 53% worldwide market share in Android Smart phone’s market on May 2010 HTC develops important technology of Smart phone. -Big 2.8” TFT touch screen LCD display -Realize finger touch on the screen Partnership -HTC use 운영체제 made by Google, SFR or MS. So it attracts a great deal of business and publicity to HTC. Entering the Market

The problem of HTC in Korea Bland awareness is weak - HTC is not famous as much as Apple or Samsung in Korea Poor Technique - It is difficult to show Korean alphabet on the screen Rival is very strong - Samsung, Apple, LG Entering the Market

The solution of HTC Emphasize Product instead of company for overcoming low Bland awareness -(Ex) Diamond phone, Desire Phone Improve technical problems for getting competitive in Korea market -To solve the problem of Korean alphabet breaking status -Large and bright 4.3-inch screen -Fast Web browser with Flash support -8-megapixel camera -Speed up booting Entering the Market

HTC Last revenue was not as good as what HTC expected. -HTC felt that SK pushed up only Galaxy S. KT KT need competitive product for strengthening the line of Smart phone -KT didn’t have Android Phone -KT and Samsung’s relationship is unfriendly because of iPhone Change a partner from SK to KT : win-win strategic Entering the Market VS.

The Google Deal

Google HTC cooperated with Google to improve their window mobile interface. there was no licence cost to use Android platform. So HTC could reduce their cost. HTC could have a connectivity effect through selling 1 million smart phones with QWERTY keyboard,Google map, G-mail. The Google Deal

The Road to Brand

HTC must get a brand identity and capture the value of innovation by using own brand strategy so that HTC could have a significant market share. Differentiation strategy HTC is choosing a high ASP strategy to be attractive to their customers in U.S The Road to Brand

Merge & Acquisition of Dopod, in Chinese Taipei Focused on he attractive design an function to broaden their market to U.S The Road to Brand

Examples of failure of ODM 1. BenQ 2. Acer Acquired Siemens unit but Failed to revive it so they refocused on the contract manufacturing Tried a multibusiness approach by doing both ODM and own brand sales at the same time but loss ODM orders. The Road to Brand

Competitors 1. Nokia 2. Samsung 3. LG 4. Motorora The Road to Brand

A result of own brand strategy Other competitors tend to run on a six quarter cycle. Warranty coverage expenses rose to 4% of revenue. HTC Maintained PLC a three quarter cycle. So they could react to market trends and customer recognition. Own brand strategy changed structure of HTC’s financial model as well. The Road to Brand