Htc Company Profile and Operations Overview

HTC Corporation, also referred to as HTC, is a worldwide company located in Taoyuan, Taiwan. Their primary focus is on researching, developing, and manufacturing smart handheld mobile devices. HTC provides smartphones that operate on both the Android and Windows Phone operating systems. They have operations across the Americas, Europe, and Asia Pacific regions. As of March 31, 2012, HTC employed a total workforce of 16,746 individuals.

In FY2011, the company’s revenues amounted to NT$465,794.8 million ($15,790.4 million), a 67.1% increase compared to FY2010. The operating profit rose by 55.9% to NT$68,787.8 million ($2,331.9 million) in FY2011 and the net profit reached NT$61,975.8 million ($2,101 million), representing a growth of 56.8% from FY2010.

Key facts about HTC Corporation:

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HTC Corporation (HTC or “the company”) concluded the fiscal year with a revenue/turnover of 465,794.8 TWD Mn. Based in Taiwan, HTC maintains a staff of 16,746 employees. It is publicly traded on the Taiwan Stock Exchange under the ticker symbol 2498. HTC specializes in conducting research, development, and manufacturing of smart handheld mobile devices, specifically smartphones that operate on Android and Windows Phone operating systems. With its robust research and development capabilities, HTC remains at the forefront of the market by introducing groundbreaking features and products.

Despite the company’s significant R&D capabilities and strong relationships with industry leaders, intense competition may impact its revenue growth and profitability in the future. However, there are still opportunities in the growing smartphones market and positive trends in the tablets market. Strategic acquisitions also contribute to the company’s strength. On the other hand, weaknesses lie in market share losses and low margins compared to its peers. Furthermore, threats of intense competition and legal investigations pose risks to the company’s reputation, potentially resulting in penalties.

The company has invested NT$15,960.9 million ($541.1 million) and NT$12,940 million ($438.7 million) in R&D in FY2011 and FY2010, respectively. Additionally, the company has invested NT$3,427 million ($116.2 million) in R&D in Q12012, which represents 5.1% of the total revenue. In FY2011, the company’s R&D professionals made up almost 30% of the total headcount, and R&D investments accounted for 3.4% of total revenues. The company’s R&D capabilities are focused on creating value differentiation in products by delivering performance to users.

The HTC innovation center conducts research and development on new technologies, potential future products, and applications. The findings are shared with other R&D departments to advance the company’s capabilities and consistently introduce innovative products. One example is the release of the HTC One series of smartphones at the 2012 Mobile World Congress (MWC). In 2011, HTC launched enhanced services like HTC Watch and Beats Audio to enrich user experience.In 2011, HTC launched the HTC Thunderbolt and HTC Titan II, which were the first LTE Android and LTE Windows Phone smartphones. This occurred at the same time as the emergence of 4G high-speed mobile networks in the market. Before this, HTC had introduced the world’s first Windows Mobile and Android smartphones, as well as the first dual-mode phone with GSM/WiMAX capability, first 3G Android phone, and initial 4G LTE Android phone. Another noteworthy achievement for HTC was the introduction of HTC Sense in 2009 – a groundbreaking development that transformed the mobile phone experience. The company’s consistent release of innovative products has also significantly increased its brand visibility.

The company sets itself apart in the market by providing innovative features, with a particular emphasis on research and development (R&D). HTC has formed valuable partnerships with industry leaders Microsoft, Google, and Qualcomm to collaborate on initiatives related to research, development, and product advancement. This dedication is evident through HTC’s introduction of pioneering smartphones powered by both Windows Mobile and Android operating systems.

HTC has formed alliances to guarantee a smooth and convenient experience by combining hardware, software, and content management systems. Presently, HTC products are extensively accessible in Europe, the Americas, and Asia via popular carriers and retail channels. In the US, Verizon, Sprint, and AT&T all regard HTC mobile phones as their flagship offerings. Similarly in Europe, leading telecommunications service providers such as Vodafone, T-Mobile, and Orange prominently showcase HTC mobile phones at their retail stores.

HTC collaborates closely with Chunghwa Telecom to introduce innovative mobile devices in Taiwan’s telecommunications industry. The company has strong partnerships with top technology companies and service providers, enabling it to effectively meet evolving customer needs.

However, HTC has recently faced a decline in market share amid the highly competitive smartphone market, losing ground to Samsung and Apple. For instance, HTC’s market share decreased from 10.7% in Q2 2011 to 5.0% in Q2 2012, while its smartphone shipments dropped from 11.6 million units in Q2 2011 to 8 million units in Q2 2012. In contrast, Samsung shipped 50.2 million units and Apple shipped 26 million units during the same period, holding market shares of 32.6% and 16.9%, respectively.

The growth of HTC’s smartphones was further hindered by the launch of Apple’s latest iPhone series and Samsung’s Galaxy series. Despite initial success with phone designs like the Evo line for Sprint Nextel in 2010, HTC was unable to sustain its momentum.

In February 2012, Samsung became the top player in the Android market, surpassing HTC Corporation with a 15.3% share. During this period, HTC’s market share decreased from 15% in November 2011 to 13.7%. In contrast, Apple’s iPhone maintained its dominant position with a market share of 30.2%. Furthermore, HTC’s decision to close its production lines in Brazil led to further loss of market share. As a result, during Q1 of 2012, HTC phones accounted for only 0.11% of the market. Consequently, the company has decided to cancel the launch of its HTC One line in Brazil and will exit the Brazilian smartphone market.

The company’s market share in Brazil, a rapidly growing smartphone market, may be further impacted by this move. In 2011, approximately 8.9 million devices were sold in Brazil and it is projected to become the fourth largest smartphone market within the next four years. Consequently, these declines in market share have had adverse effects on investor confidence and the company’s brand image. Moreover, the company has recently witnessed a decrease in profits and margins. For FY2009, FY2010, and FY2011, it reported operating margins of 17%, 15.8%, and 14% respectively. Net profit margins also exhibited a downward trend during those fiscal years with percentages of 15.6%, 14.2%, and 13.3%. In comparison to its competitors, the company’s margins are relatively low; for instance, Apple disclosed operating and net margins of 31.2% and 23.9% respectively for FY2011 while Research In Motion (RIM) registered operating and net margins of 23.3% and 17.1%. Operating and net profit margins serve as indicators that measure a company’s profitability as well as its pricing strategies and cost controls; declining margins suggest management has encountered difficulties generating profits from its assets.These low margins not only place the company at a competitive disadvantage but also negatively impact investor confidence.The smartphones market is experiencing substantial growth.
According to industry estimates, global smartphone shipments experienced a significant surge from 299.7 million units in 2010 to 487.7 million units in 2011, indicating an impressive growth rate of 63% compared to the previous year.

According to industry estimates, smartphone shipments are expected to increase by 35% in 2012, with a projected compound annual growth rate (CAGR) of over 18% from 2012 to 2016. Moreover, the smartphone penetration rate increased from 18.6% in 2010 to 26.6% in 2011. The growing preference for smartphones can be credited to advancements in hardware, enhancements in user interface design, and the wide range of mobile content and services available. Our company specializes in Android OS-based smartphones.

Between 2010 and 2011, shipments of Android-powered devices saw significant year-on-year growth. This led to the Android platform’s market share increasing from 46.5% in 2011 to 51.6% by June 2012. In fact, out of a total of 487.8 million units shipped in 2011, nearly half (48.8%) used the Android OS.

In FY2011, HTC Corporation held a respectable 9.1% share of the global smartphone market and ranked among the top five smartphone manufacturers worldwide as well as featured among the top ten mobile phone manufacturers overall.

HTC specializes in researching, developing, and manufacturing smartphones with advanced features such as GPS functionality, touchscreens, and multimedia capabilities.

With the continuous expansion of the smartphone market and growing demand for personal communication devices like tablets, HTC is positioned favorably to take advantage of positive growth opportunities.

According to industry estimates, the sale of tablets is projected to increase by about 50% between 2011 and 2015. This growth will result in a market value exceeding $100 billion by the end of 2015, with more than 500 million units expected to be sold. Additionally, there is an observed trend of enterprises investing in tablets, and it is predicted that enterprise customers will comprise approximately half of tablet sales by 2015. To enter the tablets market, our company introduced two tablets in 2011: the HTC Flyer, which has a 7-inch size and is branded as the EVO View 4G by Sprint in the US; and the HTC Jetstream, a device exclusively available through AT&T that supports 4G LTE technology and features a screen size of 10 inches.

Additionally, the company plans to enter the expanding tablet market, potentially leading to higher demand for its products. Recently, the company acquired multiple companies such as Beats Electronics, a subsidiary it owns. In July 2012, Beats Electronics purchased certain assets from MOG’s digital music subscription service through its subsidiary Daisy in order to create a comprehensive premium music experience. Moreover, the company also bought a 20% stake in Intertrust’s SyncTV subsidiary which provides a cloud-based video service.

In October 2011, the company acquired Mountain View-based Inquisitive Minds and in August of the same year, Seattle-based Dashwire. These acquisitions align with the company’s dedication to offering personalized mobile experiences for consumers of all ages. Dashwire, the maker of the Dashworks platform, provides mobile and web applications that simplify smartphone setup and customization. It also facilitates seamless access to mobile content across multiple screens and services. Overall, these acquisitions strengthen the company’s HTCSense.com cloud services.

The company’s investments have been growing to incorporate music, gaming, social, and personal applications into HTC’s unique HTC Sense interface. They are also utilizing cloud computing to expand their range of content and services. These strategic acquisitions help the company enhance its product portfolio and long-term revenues. HTC Corporation © MarketLine Page 7 HTC Corporation SWOT Analysis Threats Intense competition The mobile devices market is highly competitive.

Due to the expanding global market, HTC will encounter more competition in the smartphone industry. Key players such as Nokia, Motorola, Sony Ericsson, Samsung Electronics, and LG Electronics dominate this field. HTC faces strong competition from Nokia, Apple, Samsung, and Research In Motion (RIM) who regularly introduce new products to capture a larger market share. Furthermore, HP entered the smartphone market in 2010 through the acquisition of Palm.

Samsung’s larger size and extensive product lineup give it a competitive edge over HTC, leading to lower unit costs. However, Samsung’s growth in the Chinese market may be hampered by the presence of cheaper alternatives. Taiwanese company MediaTek plans to supply advanced chips to smaller unbranded mobile handset manufacturers in China by Q3 2012, aiming to provide better features and applications at a more affordable price for these manufacturers.

This decision may lead to adverse effects on the company’s sales in China, putting its market share at risk. Additionally, competition from Chinese manufacturers like ZTE and Huawei Technologies poses a challenge for the company. These local companies are diversifying their offerings with high-quality phone models, expanding beyond low-end markets. The mobile market is fiercely competitive, resulting in price pressures that forced the company to reduce product prices. As a result, the average selling price (ASP) of its products has decreased in recent years.

The average selling price (ASP) of HTC decreased from $362 to $344 between 2010 and 2011 due to local currency appreciation. In 2012, it is predicted that there will be a 10% decrease in the ASP of HTC’s smartphones compared to the previous year. This decline could negatively impact the company’s future revenue growth and profitability, as competition in the industry is intense. Additionally, HTC’s reputation may suffer and financial penalties could be imposed due to ongoing legal investigations. It is worth noting that the industry HTC operates in aggressively protects and pursues intellectual property (IP) rights, often resulting in lengthy and costly litigation.

In May 2012, Nokia initiated legal proceedings against HTC and ViewSonic in the US International Trade Commission (ITC) and the district court in Delaware. They also took legal action against HTC and RIM in the Regional Court in Dusseldorf. Furthermore, Nokia filed lawsuits against all three companies in the Regional Courts in Mannheim and Munich for infringing on 45 of its patents. Similarly, Eastman Kodak (Kodak) simultaneously filed a patent infringement lawsuit against HTC with both the U.S. International Trade Commission (ITC) and the US District Court of Western District of New York (New York court).

Kodak has requested the ITC and New York court to stop HTC from exporting and selling devices made with Kodak’s patents in the US and seek compensation for damages. The outcome of this legal matter is still pending. Additionally, in 2010, Apple sued HTC for patent infringement in both the US international trade Commission (ITC) and the US District Court in Delaware (Delaware court).

Subsequently, HTC initiated an investigation by the ITC and filed a counterclaim with the Delaware court against Apple for infringing on patents. HTC requested both the ITC and the Delaware court to prevent Apple from selling devices in the US and demanded compensation for damages. In December 2011, HTC lost the suit as the US International Trade Commission discovered HTC’s violation of one of Apple’s patents in regards to data-detection technology. As a consequence, the import of certain HTC smartphones to the US was banned, leading to delays in product shipment and launch. These setbacks ultimately impacted the company’s margins.

The cost of defending against lawsuits, in terms of management time and attention, legal fees and product delays, can be significant. These legal investigations can damage its reputation and lead to substantial penalties. HTC Corporation © MarketLine Page 9 Copyright of HTC Corporation SWOT Analysis is the property of MarketLine, a Datamonitor business and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder’s express written permission. However, users may print, download, or email articles for individual use.