Cost Leadership & Differentiation of HTC

Cost Leadership & Differentiation

HTC

INTRODUCTION

HTC Corporation, formerly High Tech Computer Corporation is a Taiwanese manufacturer of Smartphone and tablets. Its core business is the development, production and manufacturing of electronic devices that combines the attributes of a mobile telephone device and handheld computer. Chairman and co-founder of HTC since 1997 is Cher Wang. HTC then developed the world’s first handheld personal data assistant (PDA) using Windows CE.  The company initially made Smartphone based mostly on Microsoft’s and Windows mobile operating system (OS) software, but in 2009 it began to shift its core focus away from Windows Mobile devices to devices based on Android OS, and in 2010 to Windows Phone OS as well.

HTC is also a member of the open handset alliance, a group of handset manufacturers and mobile network operators dedicated to the advancement of the Android mobile device platform. The HTC Dream, marketed by T-Mobile in many countries as the T-Mobile G1 or Era G1 in Poland, was the first phone on the market to use the Android mobile device platform.

STRATEGIES FOR POSITIONING

            Porter (1980) prescribed organizational requirements for the pure strategies of overall cost leadership or differentiation. Porter recognized that differentiation and cost leadership advantages are not mutually exclusive. The task associated with cost strategy variables focus on internal operation of the business whereas differentiation strategy incorporates variables dealing principally with business’s environment.

HTC is working on purely differentiation strategy targeting Niche marketing. HTC brought the mobile device industry to a new level by combining environment, video and personal assistant functions and embedded it into a device with high resolution, brilliant colors and multiple connectivity features. These features attract only specific class of people who know actually what they are taking. They hit those people who really know what he is taking.

  

Hambrick’s (1983) suggests cost strategies are more effective in benign environments with stable prices whereas differentiation strategies are more successful in turbulent environment. HTC faces many competitors in the market but becomes successful above all of them due to its highly differentiated strategies. HTC is typically product focused company and got largest market share in terms of market share. Today, HTC is an important player in telecommunications, having major impact on the entire industry. Earning the “device manufacturer of the year” award in 2010 by T3 magazine and “Tech brand of the year” award in 2011 by Mobile world congress.

HTC differentiation strategies are based on product designing, developing instinctive user interfaces and software implications and developing its own operating system. HTC fulfills all requirements of the customers with increasing innovations in technology. The pursuit of innovation is reflected in the regularly updated product lineup.  HTC gives whatever customers want. HTC is following the policy “Be the first one, get the maximum out of it” (Mr. Naeem Tabish, Country head of Brightex’s Pakistan). As differentiation is related to uniqueness perceived by the customer. Customers will pay a premium price for a meaningful, perceived difference in the product/service (Levitt, 1980)

According to Chen (2001), a company can differentiate by enhancing product attributes in a way that adds value for the customer. It can achieve this differentiation through technology, brand usage, additional features or special services. Through the best product option, companies create bonds with customers through the intrinsic superiority of their product/service (Chen, 2001). Any successful differential strategy must be based on element that is difficult for competitors to initiate (Kim, 2000; Porter, 2001). HTC major strength is Research & development due to which it keeps on innovating new technologies with respect to its competitors. It is considered as most reliable brand by creating good image in consumer’s mind.

HTC raised its recognition by releasing the new user interface HTC sense in 2009, which distinguishes itself through a much more intuitive user experience, and by introducing its new advertising campaigns “quietly brilliant” and “YOU”. "The YOU campaign is the perfect embodiment of 'quietly brilliant' and is core to HTC as a company, innovator and partner." The YOU campaign is focused on driving broad, global visibility and understanding of HTC's unique brand promise “ that it's all about YOU, the consumer, and in fact not the device. The YOU campaign features the tagline “You don’t need to get a phone. You need a phone that gets you”. This represents HTC’s commitment to focus on people, their needs and how they work and live to ensure that HTC devices suit them.

 HTC is currently using Android operating system, recently launched 15 Android Smartphone in 2011.  Analysis conducted by HTC shows that Android technology is getting more popularity among customers and gets market share up to 53% till 2014.