MEX

HTC, the Taiwanese handset vendor, is best known for the Windows Mobile devices it manufacturers on behalf of network operators, including Vodafone, O2, Orange and many of the world’s largest service provider brands. Indeed, HTC has become synomonous with Microsoft’s operator-centric approach to mobile devices and a key component of the software platform provider’s overall strategy in the telecoms industry.

Perhaps because of its willingness to play second-fiddle to operator brands and its reliance on the Microsoft connection, there has always been a perception that HTC’s chief asset was its low-cost manufacturing base and competitive pricing. HTC benefits from both of these characteristics, but it also has a significant in-house research and development capability, employing about 25 percent of its 4000 staff.

The company develops most of its hardware platforms in-house. At a recent meeting in London, HTC’s President Peter Chou was keen to stress the competitive advantage this provides, enabling HTC to control the cost of its manufacturing operations much more closely than ‘assembly line’ manufacturers who merely bolt together components supplied by other companies.

Chou was in London to launch two new handsets and the company’s new global brand identity: ‘HTC – Smart Mobility’. The manufacturer which built its business on supplying white label devices to network operators is coming full circle and investing in its own brand for devices. Of course, it will continue to work with its existing partners to supply models such as the Orange SPV and O2 XDA, but Chou believes there is also a role for the HTC brand as a standalone entity.

The focus will be on high-end handsets for professional users, building on HTC’s existing expertise in delivering Windows Mobile devices with integrated QWERTY keyboards, small form-factor smartphones and Wi-Fi connectivity.

The first devices to fall under this re-branding are the HTC MTeoR smartphone and TyTN communicator. Both demonstrate impressive build quality. The MTeoR feels particularly good in the hand, with a combination of slim form-factor and weight balance.

The design of these devices is obviously important. Consumers still have a natural affinity for the tangible elements of the mobile user experience – i.e. the device they hold in their hand – rather than difficult-to-define concepts such as the virtual service brand. It is merely a factor of human nature that we relate better to something physical and therefore chose to have our primary brand relationship with the hardware rather than the service experience.

However, HTC has also recognised there is another important element to this. It will provide a tailored package of distribution, service and support as part of its own-brand devices. This is particularly attractive to smaller network operators who don’t want or don’t have the resources to support these handsets themselves. While the likes or O2, Orange and Vodafone can afford to invest in dedicated teams to manage these deployments throughout their lifecycle, tier two and tier three operators simply don’t have that capability.

HTC hired an Italian design agency to create its brand image. This combination of Western marketing skills and Far Eastern technical expertise is something major handset manufacturers have feared for a long time. HTC’s products today are as technically capable, better priced and – increasingly – as well designed as those offered by their tier one competitors.

Marketing is an area where it still lags. Despite the involvement of external agencies, the HTC brand does little to convey the value of the company’s impressive technology. The nomenclature employed for the latest models will also mean little to its customers – selectively removing vowels from product names may have worked for Motorola, but HTC’s jumbled combination of mis-spelt letters merely serves to confuse.

However, for a first step into the world of branded products, HTC’s efforts are impressive. The likes of Nokia, Motorola and Sony Ericsson spent the early 00s fearing the combination of operator brand and low-cost manufacturers. HTC’s strategy is an indicator of a new competitive threat – manufacturers which combine close operator relationships with a willingess to support their own brands in a niche areas, such as high-end buisness users and younger customers.