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THOUGHT: What's Next for HTC?
Posted by Alfredo Padilla - on Monday, 16.10.06 - 00:49:48 CET under 09 - Thoughts - Viewed 18461x
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(HTC) has positioned itself as the largest manufacturer of Windows Mobile devices in the world. It has seen incredible growth this past year, and has made moves to sell directly to customers. After the incredible success that HTC has experienced this past year, what’s next for them? Here are some suggestions from yours truly.

HTC is growing rapidly, but except for the highly politicized purchase of Dopod has not made a move to improve its position with strategic partnerships or mergers. There are 2 areas in which I believe that HTC can make strategic moves that will significantly improve its position: first in the area of mobile cameras and second in the area of branding.

Better Cameras Please

HTC has traditionally been noted for the poor quality of the cameras that you find in their devices. Especially compared to competitors like Nokia and Sony that are pushing the limits of what a camera in a mobile-device can do, HTC has lagged behind. This has improved slightly with their latest generation of devices sporting a halfway serviceable 2 megapixel camera, however there is still a lot of improvement that can occur in this area.

I would suggest that HTC seek a strategic partnership with a traditional camera manufacturer. One that comes to mind is Kodak, but there are others. Camera manufacturers must realize that converged devices are eventually going to take over the majority of their market. Stand-alone cameras will be relegated to professionals and enthusiasts within the next 10 years, with everyone else using the camera that comes with their mobile phone.

By forging a strategic partnership with such a camera manufacturer, HTC position themselves to produce better camera hardware and get a name that consumers will recognize, much as Nokia has done with the Carl Zeiss branded smartphones. This will be an important consideration as HTC seeks to move beyond the enterprise market and really penetrate the consumer market, where a nice camera on your phone is worth a lot more.

Buy Palm

As I mentioned in a previous article, I believe that Palm is on the ropes. Not just the operating system, which I think is dead, but also the hardware manufacturer. Palm is now tied to a one-trick pony with few, if any, opportunities to provide value adds that other manufacturers cannot. Let’s face it, dialing from your today screen is nice, but is it really the stuff you build a product line around? The only real value that Palm has is in its name, and this might be worth a lot to the right party.

You may have already heard rumors that Palm is looking for a buyer; some people have suggested that Apple might snap them up as part of their plan to put out an iPhone. I think that idea is monumentally stupid. Apple doesn’t need Palm’s name brand; Apple already has one of the most recognizable brands on the planet. HTC on the other hand, does not have a recognizable brand, and may benefit handsomely if they purchase Palm.

By purchasing Palm HTC helps themselves in several ways. First, they add the Treo to their product lineup. Of course HTC has been manufacturing the Treo for years, and by purchasing Palm HTC makes a natural move to bring a very successful product that they already build into their stable.

HTC would also be able to re-brand all of their devices using the very recognizable and trusted Palm name. For a company that has been trying to move to a more direct sales model, especially in Europe and Asia, this would be a boon. Someone is much more likely to buy a Palm Tytn than an HTC Tytn.

Most importantly though, is that Palm’s name would give HTC a stronger hand in negotiations with mobile operators. Like Palm, many mobile operators around the world have been re-branding HTC products for the past several years. By purchasing a trademark as compelling as Palm, HTC would put themselves in good position to have their branding on every handset sold by these operators, thus improving their long-term position in the mobile market.

The mobile hardware market is changing rapidly. Despite HTC’s growth, we are just in the infancy of the converged mobile device market, and unless it makes smart moves to strengthen their positioning HTC could be off the map in 10 years. Partnering with a camera manufacturer and purchasing Palm are exactly the types of moves that would add real value to HTC and ensure that they continue their success.

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