HTC drives brand, but takes its own route

2014-08-21 09:38 - Duncan Alfreds, Fin24
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HTC is determined to catch up to the market share of rival by building its brand. (Duncan Alfreds, Fin24)

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Cape Town - Smartphone manufacturer HTC is intent on building its brand - but taking a different strategy from competitors.

Despite marketing missteps over the last couple of years, the company has launched a number of feature-rich smartphones, including the One.

"Unlike companies like Huawei, we as HTC don't have alternative revenue sources that can cross subsidise our handset business," Douglas Jewson, country manager for HTC told Fin24.

Chinese manufacturers Huawei, ZTE and others have built build a significant brand presence through selling lower cost smartphones as well as white labelled devices through operator networks.

The result for Huawei has been that the company recorded a massive 62% jump in shipments to 34 million smartphones in the second quarter of 2014 alone.

Windows-powered smartphone

"Their strategy globally is that they're going to cross-subsidise devices with their networks margin because they want to establish their handset brand," Jewson said.

The Huawei Ascend P7 has a 1.8GHz quad core processor, comes with Gorilla Glass and features an industry leading 8 megapixel secondary camera. The device is also priced at R6 6 99, significantly below rival devices in the premium category.

"What you're doing there is you're buying market share, you're building the brand by making it very affordable. When you pass that phase, what happens?" Jewson said.

"Your prices balloon up; you start selling more affordable devices with lower specs and it takes away the 'premium-ness' of your brand."




The Mini version of the HTC One is part of a strategy to target flagship models at lower price brackets. (Duncan Alfreds, Fin24)

HTC on Wednesday announced the One M8 Windows-powered smartphone. The device should be a boost for Microsoft which is trying to increase market share for its Windows Phone operating system.

The Windows-powered One features many of the same features of the Android version, marking the first time a manufacturer has launched virtually identical hardware on different software platforms.

Pressure

Jewson said that a large part of the HTC strategy was to follow the flagship model.

"If you look at other brands - other leading brands like Korean brands, Japanese brands, or the Finnnish brands - you'll notice they'll launch with a very expensive product and as the life cycle of that device matures, so it starts sliding down the scale and hits different segments."

In addition, many manufacturers use the flagship device branding to produce other smartphones at lower price points. Samsung, for example, has a number of Galaxy branded devices, starting as low as R899.

In SA and elsewhere HTC is under pressure to deliver increasing market share and Jewson said that the Taiwanese company was focused on delivering value.

"We have to have a single-minded strategy that is efficient, simple and doable and we have to maintain that."


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