"Taiwan Tech"-HTC
Friday, February 22, 2008SUZANNE PRATT: Cell phones are morphing into mini-computers, known as smart phones. Apple's iPhone is the most prominent example. But, as Lucy Craft reports in our series "Taiwan Tech," there's a little known, Taipei-based handset maker that's hot on Apple's heels.
LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: The unsung and anonymous suppliers to the global tech business for over a decade, Taiwan's IT industry lately is changing its tune. Taiwanese companies these days are vying to become brands in their own right. With margins dwindling on commodity devices, acquiring brand cachet is becoming an economic imperative for this nation of 23 million people. Peter Chou helped found one of the tech island's most aggressive startups, HTC. Its premium phones, built under contract to Sprint, Vodafone and T-Mobile, have become standard executive gear in the U.S. and around the globe. But now the Taiwan handset manufacturer has vowed to make itself as much a household name in prestige cell phones as Apple.
PETER CHOU, CEO & PRESIDENT, HTC CORPORATION: We think if we can do a really good job to combine the Internet computer and wireless experience all together, we can provide a device which can really deliver productivity, both for your work and your personal life and organize your life much better.
CRAFT: Its touch-activated handsets are Microsoft-based, but the firm has joined an alliance to adopt Google's android platform.
JOHN C. WANG, CHIEF INNOVATION WIZARD, HTC CORPORATION: The only way for a company like this to succeed is to become the BMW of the mobile phone industry.
CRAFT: John Wang, another executive, says the company is focused solely on cutting-edge, high-end products, like the German luxury car maker.
WANG: BMW is not the biggest, but it actually is the leader and earned the reputation of being one of the leaders of the industry. And HTC is not the biggest, but it needs to be an industry-leading innovator for it to succeed.
CRAFT: Ming-Kai Cheng of the brokerage CLSA is betting that HTC already the world's leading producer of smart phones, will hang on to its early-mover advantage.
MING-KAI CHENG, HEAD OF TECHNOLOGY RESEARCH, CLSA: The headline is always about iPhones. But HTC has been very, very successful, both pushing their own brand as well as maintaining a relationship with the telcos.
CRAFT: But most observers reckon HTC will hit brand gold mainly in emerging countries. As for the more competitive American market says Citigroup's Peter Kurz, HTC will be compelled to team up with U.S. partners in co- branding arrangements.
PETER KURZ, MANAGING DIR., HEAD TAIWAN COUNTRY RESEARCH, CITIGROUP GLOBAL MARKETS: We are seeing a number of handsets penetrating the U.S. through the carriers themselves, the telecom service providers themselves, who are either co- branding or simply distributing the Taiwanese brands into the U.S. market. So that may be one channel where we start seeing some brands again in the handset sector.
CRAFT: Smart phones are still in their infancy. But in a few years, they could end up accounting for a quarter of all handset sales. Smart phones, in other words, are where the smart money is nowadays, a situation the Taiwanese are well-situated to exploit. Lucy Craft, NIGHTLY BUSINESS REPORT, Taipei.
