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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 17740x
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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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Posted by ed on 16.10.06 - 01:02:36

One thing that they should keep in mind a successful product needs a great customer support. As a company they still haven't gotten into the US market and are still seeing the sales of their products through the service providers. That leaves an early adaptor pretty much without any customer support because they do not have any sevice centers in the US.

Posted by Heinz Burkart on 16.10.06 - 09:55:23


Yes you are right. Customer support is very important. And until HTC (ro others) establish his own, you always have websites like  big_smile

Gday Heinz

Posted by jacques on 16.10.06 - 18:19:55

That's what you would like to see as a consumer, but I think HTC executives would be scared by your suggestions.
Why should HTC team up with Kodak that would then ask for a fat premium for using its brand name? Especially when most digital cameras nowadays are manufactured (including Kodak cameras) in Taiwan. Premier Image and Altek are some of the Taiwanese companies doing a fine job.
And why should HTC buy Palm? The market share of the Palm operating software is declining compared to Windows or Linux. Plus, it would take a lot of money, and restructuring efforts to integrate Palm into HTC's global strategy. I'm not sure they would be tempted after BenQ's awful failure with Siemens.
Never forget that HTC is successful because of its high margins (and low-key but sound management). Your two suggestions would cut into their profits.

Posted by Alfredo Padilla on 16.10.06 - 18:54:29


Thank you for your comments, I think your criticisms are legitimate, however just to clarify something. I don't think HTC should buy the software company that is trying to produce the next version of Palm OS, rather I think they should buy the Palm hardware company that produces the Treo.

I think you may be right about the camera partnership, it may be more expensive than it is worth. But I strongly feel that a move to purchase Palm would be a very smart move on the part of HTC. Yes, purchases are messy, but in the long term the value of tying a brand as recognizeable as Palm to HTC's manufacturing prowress creates a stronger company.

Posted by J-Young on 18.10.06 - 03:49:00

Great post  -

But...Palm OS is dead. Palm's hardware is made by HTC. A lot of consumers and re-branders know this. Why ruin a good new, fresh companies name with a tired, washed-up name like 'Palm'? They may gain some recognition but I think HTC's inovated ideas and new approach out weighs the need to purchase someone. If HTC does decide to purchase Palm, hopefully they will get them for a good price. In my opinion, I would position the company to be directly linked to the wireless carriers throughout the globe. (As you already stated) but, not connected to Palm.


Posted by kelake on 03.11.06 - 14:32:16

I can't agree with your kodak idea. HTC doesn't view the camera as a hardware problem at all. You will certainly see improvements over time but most of the dramatic changes will come from software. This is where they are continuing to put most of their emphasis and they don't need kodak for that. They have an excellent team working on these very issues.

Posted by khaled on 11.11.06 - 21:47:39

Palm now got more than one supplier, HTC is not importrent anymore, Palm is expanding globally (90%) they used to focus on the USA Market which is only 10%, R&D center in Europe, another one in China next year, a 2nd ODM this year another one in China 2007.

New products 4 smartphones this year, another 4 next year(new form factor when needed)

New Secret business on the making "Mobil computing" space probably next year.

Great carriers relationship across the globe, more launches anytime (Treo 680 on 20 carrier by june 2007)

Palm OS treo 680 will be the value phone, great relationship with Microsoft with the new Treo series for the high end phones.

Great Engineering Palm talents most softawre, more been hired and posted on their site.

Palm smartphones works with leading Push e-mail technologies, Microsoft exchange, Black berry connect, GOOD, VISTO.

Great Master and secondery Brands (Palm and Treo)

Great consumer followers in the USA, more will come across the globe, see how many launches in the last 3 months.

Great looking Palm Smartphones and PDAs (more to come)

it is  a transitnonal time for palm to be the leader in the Mobil computing space, simply more smartphones, more carriers, new mobil gadgets = rsults

Palm on the move just give it some time.

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