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What happened to Taiwan’s Acer and HTC?

Two of Taiwan’s most prominent high-tech brands, computer vendor Acer Inc. and smartphone-maker HTC Corp., are feeling the pinch. Both have come off the competitive battlefield worse for wear, reported Commonwealth monthly. With Apple’s growth slowing and Microsoft’s acquisition of Nokia after unsuccessful forays into mobile devices, this winter will definitely bring a reshuffling among these high-tech giants.

Acer, founded 37 years ago, is Taiwan’s standard-bearer of brands, but has suffered two consecutive years of heavy losses and is not showing any signs of recovery.

Sixteen-year-old HTC has lost NT$900 billion (US$10 billion) in market value in just two years and this downward trend has continued in the third quarter of this year. HTC is forecasted to ship about 20 million smartphones this year, barely half the total it shipped at its 2011 peak. And now, it is in danger of being overtaken by Chinese smartphone brand Xiaomi, launched just three years ago.

However, if HTC chairwoman Cher Wang is worried, there were no signs of this during an interview with Commonwealth. “I think smartphones are still in their infancy, with still plenty of opportunities, such as smart cities. There are inevitably ups and downs when building a brand.”

Taiwan’s small home market a disadvantage

Without a big home market, Taiwanese high-tech companies are naturally at a disadvantage in the crucial area of defining standards, such as source codes and basic communications patents. Taiwan is also not interested in adopting the Korean model of pouring the entire country’s resources into forging one big brand, like Samsung.

“A small country has to consolidate its resources. To some extent, it has to have the capitalist spirit,” said Chiu Yi-chia, the dean of National Chengchi University’s Graduate Institute of Technology, Innovation and Intellectual Property Management. Taiwan’s high-tech policies, Chiu said, put too much emphasis on fairness and diversity, making the industry akin to being a sheep (socialism), with a skin of wolf (capitalism). As a consequence, Taiwanese tech brands are inherently at a disadvantaged without a concentration and not enough sustaining strength to take on the global market.

Internationalization is not the only key for growth

From Acer, AsusTek to HTC, everyone is up against the same fundamental challenge. If you want to fight a global battle, you need international talent. “Taiwan does not have a national image or market development advantages to sell, so Taiwanese companies must rely on above average salaries when hiring top international talent,” observed Bei Lien-ti, a professor at National Chengchi University’s Department of Business Administration.

Commonwealth reported that Acer and HTC have paid top salaries to attract an internationalized sales force, but it has not translated into improved results. “Can we really call using a bunch of foreign executives to make a bunch of cross-border acquisitions internationalization?” asked a resentful former HTC manager.

So why are Taiwanese tech companies unable to work with an internationalized team over the long term? “Because Taiwanese do not have boards of directors with strong functions and sound operations,” said Chiu. He notes that the management of Taiwanese tech brands generally depends too much on an all-powerful CEO. “Only if the board mechanism is sound can the company build the strength of its management step by step,” Chiu said.

Understanding the market to cultivate niche

Commonwealth noted another key to brand marketing is in finding an appropriate price point based on the product’s positioning in the market. But because HTC’s customers have largely been telecom operators and Acer’s customers have been distributors, neither has been able to get a firm grasp of the end user, making it more challenging for them to develop insight into consumer needs.

HTC relied on its edge in technology, including producing the first Android smartphone, to become the preferred supplier of telecom operators around the world. But after rising to the height of the industry, HTC neglected the rapid shift in the smartphone market to mid-range and low-cost models.

“Small countries can still outwit bigger rivals, as long as they understand how to focus,” said Liu Shuen-zen, a professor at National Taiwan University. Taiwan can open a new battlefield and cultivate B2B brands, he suggested, pointing to the Swiss model as one worth emulating.

“Switzerland emphasizes precision and focus. Through its sharp concentration and technical proficiency, Switzerland commands 80 percent of the global market for currency ink, and its watches generate high margins,” said Liu, who believes Taiwan could also become a global “hidden champion” in several niche markets.

Acer and HTC both posted losses for the third quarter, and their short-term prospects remain uncertain. But considered over the long haul, the hard road traveled by Taiwan’s high-tech brands remains worth pursuing. After all, success is built on the pillars of failure, noted Commonwealth.

Taiwan’s TXC serves as “pulse” of smartphones

In April, Taiwan’s TXC overtook Japan’s KDS as the third largest quartz crystal component maker in the world, only behind Seiko Epson and NDK. The five top suppliers of quartz crystal components are all Japanese except TXC, Commonwealth monthly reported. TXC’s customers include all the top brands, such as Apple (US), Samsung (South Korea), HTC (Taiwan) and Huawei (China). Strongly competitive, each of the five global players in the seven billion smartphone market uses quartz crystal components from TXC.

Quartz crystals are key components in frequency generation and control devices for signal timing in smartphones. In simpler term, if one were to consider the chip to be a smartphone’s heart, then the quartz crystal component would be the delivery system, which supplies blood to every part of the body.

For a long time, the Japanese dominated with 80 percent of the global market, but by dedicating more resources to R&D and being increasingly competitive, TXC made its way into third place. In 2012, TXC’s combined revenues reached a record high level of NT$10.93 billion (US$364.33 million) with a 10.4 percent growth rate, and continuing its eight years of double digit profits.

In a field where engineers and PhDs litter high-tech companies, Lin Wan-xin, TXC’s president is a rarity. With only a high school education, he built his professional knowledge from the bottom up and broke through Japan’s dominance in this high-tech sector, leaving competitors from Taiwan, Korea and China far behind.

Around the year 2000, the global notebook computer market enjoyed exponential growth, noted Commonwealth. This caused delays from Japanese suppliers of quartz crystal components. Big European and American companies, like Intel and Seagate, sought to diversify their supply sources and TXC was lucky to become one of the suppliers of global notebooks.

In 2005, smaller and more advanced telecom products like smartphones started to proliferate. And TXC entered the supply chain of brand names like Motorola and Nokia. About that time, Apple also started to make iPods. TXC got a chance to present its product at Apple’s headquarters, but was rejected because of the low product quality. Lin was not deterred. He sent his R&D engineers to study quality control and successfully resubmitted his product just in time to become part of Apple’s supply chain.

According to Commonwealth, with more and more customers, TXC expanded its R&D team five times (to 300 engineers) in 10 years, accounting for 20 percent of the workforce at its Pinzheng factory in Taoyuan County (northern Taiwan). His team helped TXC to secure 15 projects a year, averaging one per month.

With abundant innovative energy, TXC made better products, climbing out of the top ten to become No. 3 in the rankings. Lin said, “To keep competiveness, you have to provide better products so that your competitors will not catch up.”

Now TXC accounts for 75 percent of the quartz crystal components of Apple’s mobile devices. Hitching with Apple, TXC climbed to the top. But Apple’s growth has slowed after the death of Steve Jobs, so TXC’s revenues are also down 1 percent compared with last year.

In order to safeguard its future, Lin said, TXC has diversified its customer base. Beside Apple, TXC has added more new companies to its customer list, including Huawei and Zhongxing Telecommunication Equipment Corp., HTC, and Samsung.

Taiwan’s major IT companies face uphill struggle

As a result of reduced shipments of the iPhone 5, Hon Hai Precision Industry Co. (trading as Foxconn), suffered an 8.19 percent drop in its combined annual revenues in 2012. The company is the world’s largest electronics contract manufacturer, when measured in terms of revenue. HTC is another leading manufacturer in Taiwan, but in the last few years it has focused on branding its own line of products. Despite their successes, both companies are facing difficult times ahead.

In 2012, South Korea’s Samsung accounted for over 30 percent of the global smartphone market, well ahead of Apple’s 18.4 percent and HTC’s 4.8 percent. Samsung’s net profits also surpassed those of HTC for the first time (by 1.6 times). As two of Taiwan’s most successful hi-tech companies, Hon Hai and HTC’s success or failure will have a profound impact on the future of high-tech industries in Taiwan.

HTC seeks to upgrade

For Peter Chou, HTC’s CEO and president, 2013 will be a pivotal year, since it will determine whether the company can emerge from the depths of an extremely difficult 2012. Last year, total revenue fell an estimated 37 percent and its global market share fell from 10.7 percent to 4.8 percent. The company’s share price plummeted to a 7.5-year low, and its earnings per share of NT$20.14 (US$0.68) were barely a quarter of the NT$73 (US$2.47) in EPS posted by HTC in 2011, Commonwealth reported.

HTC has refused to succumb to the gloom, instead launching a series of new phones. The company’s “Butterfly” model represents the first weapon in the company’s arsenal to reverse its fortunes. HTC J smart phones, jointly introduced by HTC and KDDI, one of Japan’s largest telecom operators, have sold briskly in Japan. The two firms partnered again to introduce the five-inch screen HTC J Butterfly, which is also doing well in the market. According to KDDI’s hot sales list, the Butterfly even beat Apple’s iPhone 5 in Japan. The Butterfly J has enabled HTC to emerge from a dark valley and into the sunlight again. Additionally, HTC is reviewing its product and marketing strategies in order to remain competitive.

Fighting a David and Goliath battle

Although successful in Japan, another problem facing HTC is that its success in Japan cannot be easily replicated elsewhere. “Japan is an extremely closed market controlled by the major telecom vendors. Even Nokia and the iPhone have been unable to break into Japan,” said Lee Ji-ren, who lectures on business strategy and management at National Taiwan University (NTU). He explained that Japanese-brand smart phones hold a 70-percent share of the market, meaning HTC does not have to directly butt heads with Apple and Samsung, reported Commonwealth.

“Actually, HTC is still a profitable company. It’s just that it has run into the world’s two strongest adversaries,” said Victor Tsan, the vice president and general director of the Market Intelligence & Consulting Institute (MIC).

According to Commonwealth, these two adversaries are the largest competitors for HTC in the global smart phone market. Samsung’s revenue is nine times that of HTC. It has a market value 28 times that of HTC, and R&D spending 15 times that of HTC. Apple’s revenue is seven times greater than that of HTC, with a market value measuring 60 times that of HTC, and it spends four times as much on R&D.

How can HTC compete given such overwhelming odds? In facing Samsung which has 31 percent of the global market share, and Apple, which takes 60 percent of all profits in the smart phone business, HTC clearly understands that it has to fight to protect the company’s turf. HTC realizes it has to be financially fit to take on this monumental challenge. The company will have to find its own niche in defeating the Goliaths of the industry and overcome its inherent limitations.

Taking advantage of markets ignored by Apple  

There are still opportunities and one of them is to cater to China’s middle- and lower-end smart phone market, which has long been ignored by Apple and under-served by Samsung, said Commonwealth. In the third quarter of 2012, HTC sold 2.8 million smart phones in China, giving them a 5.8 percent market share and surpassing Apple’s tally.

“The iPhone’s average selling price is US$600, and that won’t come down. HTC already has strong product development and time-to-market capabilities. It now has to learn how to segment the market at price points below US$600 and take advantage of a market Apple ignores,” Lee suggested. And only time will tell if this market strategy will pay off for HTC.

HTC is determined to continue its focus on R&D and innovation to stay strong in Taiwan. “At least one company is still willing to keep its production line in Taiwan and to make the best products. I am proud to say that I stay in HTC to fight,” a senior HTC R&D official told Commonwealth.

Hon Hai is too big to fall

On January 10, Hon Hai Precision Industry Co. announced its 2012 non-combined revenues had reached NT3.2 trillion (US$107 billion). This broke its own record in monthly, quarterly and annual reports, an unprecedented high among all the private manufacturing businesses among the Chinese communities, Business Weekly reported. A month before this announcement, 62-year-old Terry Gou, chairman and president of Hon Hai, was included – for the first time – in Forbes’ World Most Powerful People list. Hon Hai was also listed as the tenth largest employer in the world by the UK’s BBC with 1.2 million employees in March, 2012. Nine months later, Hon Hai has almost 1.5 million employees.

At present, Hon Hai is a conglomerate “too big to fall,” said Business Weekly. Why? Because Hon Hai controls the supply of over half of the world’s desktop computers, as well as Apple’s iPhones, iPads, Sony’s liquid crystal display television sets, the PlayStation 3, and Nintendo’s Wii gaming machines. The company supports the livelihood of over 10,000 related companies. Not so long ago, Hon Hai contributed 20 percent of total revenues to the integrated industrial cluster of precision machine manufacturing in central Taiwan.

According to a study by the Topology Research Institute, without Hon Hai, the popularity of Apple’s iPhone, iPod, and iPad would have been delayed by two to three years, and the price of entry level desktop computers would be double, reported Business Weekly.

What does Apple’s decline mean for Hon Hai

After Hon Hai’s announcement of record high revenues came a string of bad news from Apple. News quickly spread that Apple intended to introduce a low cost iPhone to grab a share of emerging markets and break its own one-phone-per-year rule. This caused a sharp drop in iPhone 5 sales, the fastest depreciation and with the shortest life span in the history of the iPhone. Then Apple announced its intention to half its order of the iPhone 5. All these measures seriously hurt the company’s stock price. This means that Apple’s supremacy in commanding the highest market value in the world now faces a new challenge. It also casts a shadow over Hon Hai’s future.

Due to declining demand for the iPhone 5, Macquarie Securities believes iPhone 5 shipments will drop 32 percent from 44 million sets in the previous quarter down to below 30 million in the first quarter of 2013. Before the introduction of the iPhone 5 S in June, there will be two quarters of non-active operation, which will definitely affect Hon Hai’s revenue in the first half of 2013.

Gou has betted heavily on Apple in terms of capital and human resources. Almost 40 percent of Hon Hai’s 1.5 million-strong work force in China is reserved for making Apple products. Now the only breakthrough the world is expecting from Apple is iTV.

In 2012, Gou became a shareholder of Sharp’s Sakai Plant, a subsidiary of Sharp, and is planning to join Sharp too. Beside taking over the rights of management of Innolux Corp. (formerly Chimei Innolux Corp.), he has even used a large amount of his Hon Hai stock to borrow NT$20 billion (US$677 million) to bet on the success of Apple’s iTV.

Business Weekly noted that if Apple is not red hot any longer, Hon Hai, a conglomerate with revenues of almost NT$4 trillion (US$135.6 billion), is also bound to lose its luster.

Size a blessing and a curse

The flexible, innovative and fast developing IT industry has helped Taiwan earn the title of “Silicon Island,” playing an important role in the global supply chain over the last two decades. But after a paradigm shift bolstered by Apple and Samsung in recent years, Taiwan’s IT industry (OEM, ODM or key brands), is facing a crucial challenge and transformation.

HTC and Hon Hai definitely face significant challenges ahead. HTC is the world’s third-largest mobile phone brand, after Apple and Samsung, but in a much smaller company. The key for HTC’s survival will depend on its market development and marketing strategy.

Currently Hon Hai is expanding in central and western China by building a factory in Zhengzhou, Henan Province, and enlarging its facilities in Chengdu, Sichuan Province. However, Business Weekly reported, Hon Hai’s huge size is an advantage, but also a burden. Without transforming to increase its added value, will Hon Hai lose its advantage when China ceases to be a source of cheap labor?

And, because of its size, Hon Hai also has huge advantages, with its revenue accounting for 28 percent of Taiwan’s nominal GDP in 2012. The challenges faced by operating such a large operation can be illustrated by considering the company’s ability to feed its workforce at its sprawling factory in Shenzhen, Guangdong Province. On a daily basis the plant’s central kitchen faces the challenge of feeding up to 60,000 people per meal. Similarly, to sustain the firm into the future, Business Weekly asked, “Without Apple’s immense global brand value, who can satisfy Hon Hai’s appetite?”

Taiwan strives to create international brand names

Over the past decade, Taiwanese businesses have actively sought to upgrade themselves by moving from being labor-intensive industries towards technology-intensive and high value-added industries. With this strategy in mind, Taiwan has sought core patent technologies in areas such as solar energy, light emitting diodes (LED) and flat panel displays. The result has been very positive for Taiwan’s ability to create recognizable international brand names.

Recently, Global View monthly focused on almost 40 business areas where  Taiwan has remained within the top three in terms of global market share, covering the pioneering wafer foundry industry, LEDs, smart phones and computer hardware. Taiwan Insights has chosen six core sectors from the magazine’s cover story to review these well-known sectors.

Smart phones

In February of this year, Taiwan’s smart phone maker HTC Corporation won the highest honor in the global mobile communications industry when it was named the “Device Manufacturer of the Year” by the GSM Association. HTC beat two other finalists, Apple and Samsung Electronics, to take the top honor in the device manufacturer category at the 2011 Global Mobile Awards in Barcelona, Spain. Peter Chou, HTC’s CEO and president, attended the ceremony and proudly accepted the award.

According to the information released by market researcher IHS iSuppli in May 2011, HTC ranked 5th in terms of global market share for smart phones, behind Nokia, Apple, RIM and Samsung. Its first quarter growth rate of 6.2 percent only lags behind Apple’s phenomenal 14.9 percent.

Established in 1997, HTC was originally an OEM maker of personal digital assistants (PDA). Later when Google acquired Android mobile operating system in 2005, HTC jumped on the bandwagon to partner with Android with a solid R&D and manufacturing ability. It developed the first Google smart phones based on Android’s platform.

In 2006, HTC made an important decision to promote its own brand name. At the time, most people did not think it was a wise move, but HTC understood that branding was the only way to upgrade its value and services.

Now, most of the global telecommunication giants, like France Telecom’s Orange, the UK’s O2 and Vodafone, and the US’s Verizon, Sprint and AT&T, are all partners of HTC. This kind of cooperative model is astonishing in the vastly competitive mobile device industry.

Solar cells

Occupying about 20 percent of the global market, Taiwan’s solar cell industry is ranked No. 2 by worldwide production value, reaching NT$128.4 billion (US$4.3 billion) in 2010. Taiwan has surpassed Germany and Japan, two leaders in the global solar energy industry, for many years, and only lags behind China. Despite this, Taiwan is technically more advanced than China in solar energy manufacturing.

Taiwan’s Solar Industry has a longer history than China with solar cell makers Motech and E-Ton Solar entering the industry in 1998 and 2001, respectively. Due to the similarity between the manufacturing of semiconductors and solar cells, Taiwan’s businesses have  jumped headlong into this expanding industry and successfully taken a solid chunk of the global market.

In the early 1980s, Taiwan’s Industrial Technology Research Institute (ITRI) entered the solar industry by developing and training many professionals who have continued to be competitive forces in the global solar energy market.

Due to the world’s declining crude oil reserves and concerns about the safety of nuclear energy, the solar industry is expecting healthy growth.

Digital cameras

According to information compiled by the Institute of Information Industry in 2010, Taiwan is the second largest digital camera producer in the world, after Japan. Taiwanese makers such as Altek Corp., Hon Hai Precision, and Canon (Taiwan), are important original design manufacturers (ODM) or original equipment manufacturers (OEM) of digital cameras for brands like Canon, Kodak, and others. Taiwan produced 60 million units in 2010, over half of the world’s supply.

As the first Taiwanese company to enter the R&D of middle to high-end digital cameras and to develop a mega-pixel camera, Altek has been making the core chips for digital cameras for over a decade. Its chips have been used in over 40 million cameras globally. Altek is a long-time partner of well-known brands like Japan’s Fuji and America’ s Kodak, and is the largest ODM maker in the world. It accounts for over 10 percent of the global ODM market share, with annual revenues of NT$28.8 billion (US$990 million) in 2010.

No longer limited to making digital cameras, Altek is combining digital cameras with global positioning systems (GPS), creating its own brand, Altek Leo. On display at the Singapore Telecommunications Show in 2010, it has three times the optical zoom and uses an Android-based mobile operating system.


It is a little-known fact that over 40 percent of the backlighting illuminations for notebook computers, and 40 percent of the LED displays in the world are made in Taiwan.  According to ITRI, Taiwan is the largest LED producer in the world in terms of output, retaining a quarter of the global market share. However, in terms of value, Taiwan comes  second, after Japan, with an annual production value of NT$80 billion (US$2.7 billion).

Epistar is the largest red LED supplier, and one of the three leading blue LED makers in the world. The other two are Japan’s Nichia and the American firm Cree.

The advantage of Taiwan’s LED technology over that of other countries is that ITRI has developed the alternating current LED, which does not need inverters as in a traditional direct current LED, thus requiring less power consumption and a smaller unit size. Also, one of the characteristics of LED is its ability to maintain illumination at a low temperature, making LEDs perfect for medical applications in a sterile and low temperature environment.

Portable navigation devices (PND)

According to the Department of Industrial Technology, the Ministry of Economic Affairs, Taiwan is the largest PND producer in the world, with almost 90 percent of the global market share at a total annual production value of NT$122.2 billion (US$4.2 billion) last year. Major PND makers include Garmin (Asia), Tomtom (founded in Amsterdam), and Mio, ranking No.1, 2 and 3 in the world market, respectively.

Garmin was established in 1989 by Gary Burrel and Taiwan-born Min H. Kao (hence the company named GarMin) to produce global positioning systems (GPS). At the time, the US was engaged in the First Gulf War in the Middle East. Using his experience of developing military GPS applications, Kao led a team of engineers to redesign a huge GPS. Initially, it was so big; it took two people to carry. It was a far cry from something which now fits easily in the palm of your hand.

Today, seven out of every ten GPS devices in the world are made by Garmin. Their GPS devices help American soldiers locate their position in wartime and guide civilian drivers to their destinations. It is the modern re-envisionment of the ancient Chinese compass invented several thousand years ago.

E-Book readers

With the worldwide popularity of e-Books and tablet personal computers, there are many brands to choose from. They range from Apple’s iPad, Amazon’s Kindle to the European 7-inch Flyer by HTC Corp. Buyers can also try the ASUS 12-inch ePad Transformer, if they are willing to wait, since it’s currently out-of-stock due to its popularity.  

Regardless of the brand, 90 percent of these devices are either made in Taiwan or are made by Taiwanese companies. Kindle, which has taken 70 percent of the global e-reader market, are mostly assembled by Hon Hai Precision and the remaining 10 to 20 percent are manufactured by other Taiwanese companies. iPads, which accounted for 90 percent of the global tablet computer market in 2010, are also produced by Hon Hai.

Even though some core components are still controlled by international giants, Taiwanese makers supply many of the important components of e-Book readers, including iPad’s touch screen sensor modules (accounting for 13% of manufacturing costs), battery cells (7%), cases (5%) and printed circuit boards (5%). 

The key to the continued success of Taiwanese manufacturers has much to do with having the shortest lead time coupled with the most competitive prices. These conditions are also fertile ground for generating some of today’s most successful and recognizable electronics  brands.

Acer, Asustek, HTC make Taiwan a smartphone Mecca

Three Taiwanese companies are putting Taiwan’s technological prowess on display in the handheld world of smartphones, reported Taiwan Review. HTC, Asus and Acer, three of Taiwan’s top electronics manufacturers are joining this competitive global market.

According to the International Data Corp., an international market research and analysis firm based in the United States, worldwide smartphone shipments jumped to 54.7 million units in the first quarter of 2010, close to a 52 percent increase from the first quarter of 2009. iSuppli Corp., another US-based market research firm, predicts that the worldwide growth of the segment is likely to continue, expanding 35.5 percent this year

Smartphones are getting more popular because they are not just cellphones, but also offer video viewing, internet browsing, multimedia gaming, e-mailing, calendaring, contacts, and global positioning system (GPS) navigation. With a slew of new models scheduled to hit the market this year, HTC alone is predicted to ship a total of 16.8 million handsets this year, a 44 percent jump from 2009.

HTC – from OEM to a brand name

The Taiwan Review story credited HTC for putting Taiwan’s smartphone industry on the international map. According to US-based industry tracker Gartner Inc., HTC’s global market share in the smartphone sector rose to 6.9 percent in 2009 from 6 percent in 2008, making its devices the world’s fourth most popular behind those of Nokia (Finland), RIM (Canada) and Apple (US), respectively.

HTC began in 1997 by manufacturing personal digital assistants (PDA) on a contract basis for companies like Compaq Computer Corp., Dell Inc. and Hewlett Packard Co. In this respect, HTC shares a common history with Taiwanese computer giants Asustek Computer Inc. and Acer Inc., which started as original equipment manufacturers (OEM) or original design manufacturers (ODM) before going on to develop their own brands.

As early as 1999, HTC began developing and testing touchscreens for smartphones, with the first shipment of touchscreen models as an OEM shipped in 2002. In 2007, HTC changed direction significantly, deciding to launch its own smartphone brand. A more difficult challenge was overhauling its business strategy from satisfying the demands of companies like Compaq or Dell to serving end-use consumers.

According to Taiwan Review, the company made a splash in the smartphone industry by launching sales of the HTC Touch, the first finger-friendly touchscreen smartphone, in the United Kingdom on June 5, 2007. Apple’s iPhone, which many people viewed as the original touchscreen smartphone, actually began selling in the US market on June 29, 2007, some three weeks after the Touch.

Fierce competition and rivalry

In the early years, HTC’s models were solely based on Microsoft’s Windows Mobile OS. In November 2007, when the Open Handset Alliance released its Android OS, HTC grasped the platform’s game-changing potential and launched the sale of its first Android-based smartphone in the US the following October. Since then, HTC has maintained its position as the biggest maker of smartphones running on Android with models like Hero, Legend, Desire, the Droid Incredible and Evo 4G. Next, the company debuted Nexus One, a phone made by HTC bearing its brand and Google’s.

In April, HTC unveiled the first smartphone with a price tag below NT$10,000 (US$313) according to the Taiwan Review. In the spirit of forging ahead, they hope to bring the devices a step closer to the mass market and break the stereotype that smartphones were only affordable for people with deep pockets. Retailing at US$247, the HTC Smart is targeted at emerging markets such as India and China.

HTC’s fast expansion has struck a nerve among some of its rivals. In March 2010, Apple filed a lawsuit in the US District Court in the state of Delaware as well as a complaint with the US International Trade Commission (ITC), accusing HTC of infringing  20 patents related to the “user interface, underlying architecture and hardware” of the iPhone.

In May this year, HTC fired back by filing a counter-complaint against Apple, asking for an injunction on the sales of that company’s popular iPhone, iPad and iPod in the United States. In a complaint lodged with the ITC, HTC requested that the import and sale of Apple gadgets be halted in the US due to infringements of five HTC patents.  

Forging a strong brand identity in a crowded market

While HTC has remained the technology leader in Windows Mobile and Android phones, its weakness in brand awareness and economies of scale could constrain growth. HTC, however, is taking steps to improve its brand awareness with its worldwide “Quietly Brilliant” advertising campaign, the Taiwan Review reported.

In addition to foreign rivals, HTC also faces growing competition at home. Asustek Computer Inc., the inventor of the notebook computer, which has quickly won over consumers with its affordable price tag and easy portability, is increasing its visibility in the smartphone market by emphasizing navigation capabilities.

Furthermore, Asustek joined forces with US-based GPS device maker Garmin Ltd. in February 2009 to make and market smartphones under the joint Garmin-Asus brand. Garmin-Asus introduced just its third model in February this year, but the company says it plans to accelerate its release cycle by launching at least one new smartphone every quarter this year. While shipments for 2009 were “small,” the company aims to ship at least 500,000 smartphones this year, which excludes their sales in China.

In April, Asustek announced that American service provider T-Mobile would begin selling the Garmin-Asus A50 later in the spring. The A50 is an Android-powered smartphone that will deliver a fully integrated Garmin navigation experience.

HTC also faces increasing competition from Acer, which made its first official foray into the smartphone arena early last year after merging with local handheld device maker E-Ten Information Systems Co. in March 2008. Acer refuses to reveal its smartphone shipments for 2009, but says the company aims to ship 2-3 million units this year.

Taiwan has made steep inroads in dominating the information technology industry. Acer has become among the three biggest players in the worldwide personal computer industry, while Asustek has found a spot among the top five notebook makers. With HTC leading the charge, it is easy to see Taiwan becoming one of the world’s most successful producers of branded smartphones as well.

Taiwan aims to develop top brands

The Bureau of Foreign Trade (BOFT) of the Ministry of Economic Affairs recently announced the results of Taiwan’s Global Brand Value Survey. According to the survey, the top five brands valued over US$1 billion included Acer, HTC, Asus, Trend Micro and Master Kong, respectively. The top four belonged to the IT industries while Master Kong belonged to the food industry.
According to BOFT, the survey was intended to encourage Taiwanese entrepreneurs to create their own brands which would then grow into internationally known brands. Taiwan aims to have a local brand in the world’s top 100, with at least a threshold value of US$3 billion, within ten years.