Is HTC on track to challenge Apple?

So I saw the coverage of the Nexus one Google phone by HTC today, and it got me thinking, is HTC going to be the company to challenge Apple design (at least for phones)? I recently got the Droid Eris by HTC and I love it, partly because of Android but also because of how well designed it is. From the looks of the Nexus One HTC’s phones are only getting better. If they got into making other consumer electronics could they be a real contender for a top spot? I realize too, that much of Apple’s success also comes from the systems they have designed for their products as well as the product interactions, and this seems to be the part most competitors forget.

Note: I wanted the iphone originally but couldn’t bring myself to switch to AT&T, and I didn’t get the Moto Droid since I first picked it up and thought to myself “FAIL” in regards to the design.

I would attempt to answer that by giving my consumer opinion:

I am a die hard fan of Apple design and philosophy - I played around with the IPhone allot even though I never owned one; I’m waiting until i move to switzerland to get it…or maybe not. There’s a pollution of IPhones around me and to hear that google realeased a phone that is similar to the Iphone is a good news for me. I can finaly get the next little gadget that noone has, yet!

I think that people that like to try different things, or that love being up in the latest tech trends will consider doing the switch.

I will get it now that the design is much more elegant than the G1

I’m going to say that HTC will become the dominant phone developer. Simply because I don’t think Apple will make another “Phone”. Sure, they may refresh the iPhone a few more times, but do you see them making a simple handset with a slide out keyboard? No. HTC makes many models, to fit many preferences. As they said yesterday in the press release, it’s about giving the consumer options. I think HTC will begin to challenge the other major players Nokia, Motorola and Samsung pretty closely this year.

On a side note, remember when everyone lusted after the Motorola RAZR? When was the last time anyone said “I’ve got to get that regular non-smartphone!” Probably just before the iPhone came out.

I think I am more excited by the Android system than anything else. Apple has tons of apps but they are only allowed to operate in whatever freedom Apple gives them. Having an open-source system excites me because I don’t know what is possible. The G1 had a metal detector app that used the magnet within the phone to detect ferrous metal. Absolutely useless to me, but cool application of the existing tech. I think that is the exciting part, creative freedom for the developers.

As a phone maker I think they will be a major player. I don’t think they will as a brand, seeing how they just started commercials a few months ago, and their phones don’t seem to have a consistent design language to create a brand, really.

Nothing a well paid consultant can’t fix. :wink:

On an international level, HTC is taking a page out of the early Motorola book and sponsoring a ProTour cycling team, Team Columbia. That will get them a LOT of exposure, especially with Cavendish winning just about every bunch sprint during the cycling season.

That said, how do you create a VBL when 90% of the design of a smartphone is a gigantic black screen? It’s for this reason alone that I’m not really that awful impressed with any of Apple’s "i"everything products. Big flat rectangle with a radius on every corner.

I hear what you’re saying 6ix, I used to argue with my professors all the time when they would bring up Apple as great design. I agree that much of their success has come from their clean design language, but much of it has also come from content and marketing.

What they have managed to achieve however are designs that put the user first, their products have what you need and nothing you don’t. In my opinion it is less about how great Apple’s designs are and more about how bad most others are. Sure, most smart phones are just big rectangles, but there are some really bad ones out there.

yes, but restraint is the most difficult thing to do, and they’ve got it down. There is also a fine line between minimalism and boring-ism and Apple has that too. All that plus, consistency and I still put them head and shoulders above the heaps of random overstyling and brands that have no identity whatsoever. HTC is in that book, IMHO.


Let’s change the discussion, will HTC be able to have the profit margin of Apple? No way will they build that kind of brand recognition and competitive advantages of Apple. That being said, they probably will sell far more units.

Another point: look at the iPod roll-out. First gen was iPod only. Then came iPod 2 and the cheaper nano. Then came iPod 3, nano 2 and shuffle. Then came iPod 4, nano 3, shuffle 2 and iPod touch. They worked their way down market slowly over time and also spun off new products (touch). I don’t see any reason they can’t or won’t do this with the iPhone. I fully expect them to come out with a cheaper phone that integrates the key advantages of the iPhone in a great looking package.

Lastly, has anyone ever read an Apple annual report? You’ll find this in everyone:

[Apple creates] affordable systems that are simple to set up and maintain, with peripherals that actually work when they’re plugged in, and with award-winning industrial design.

Those have been the competitive advantage behind every Apple product since the 1977 Apple II. I recommend every company have such a concise message behind their products.

When you say challenge do you mean in the ID arena or the free market capitalist arena?

Will HTC trump them with ID in the mobile market and by known for it? Probably not. They’ll do it by providing a multitude of different styles and products to suit a broader audience as will their OS and aps. They give up complete control for a wider customer base and understand that open source will allow them a bigger opportunity to do that. I’m really surprised to see so much emphasis on the physical aesthetics on a design forum in 2010. The HTC/Google vs. ATTple battle will be won by who gains the largest share of the market by marrying amazing “magical” OS capability with a very intuitive interface on a network that doesn’t let you down or nickel and dime the customer. Apple filters a tightly controlled OS and ap store, development of aps is an exercise in hoop jumping for developers to satisfy Apple’s standards, that’s great, and it might ensure a higher quality for their customers, but thinking like a developer i’d say screw that and go somewhere my ap can get on the free market with less hassle and maybe make me a couple bucks. This is why Nintendo has so few 3rd party publishers and a smaller market share and Sony is kicking their ass. This is why Microsoft trounced Apple back in the day and I see it happening again in the mobile OS arena. None of this has anything to do with hardware aesthetics, or “industrial design”, this is design strategy.

Played with the Nexus One briefly today.

Quick first impressions, very nice build quality. Seemed even better than my Iphone 3GS which has some tolerance mismatches (had them from day 1) so that I have almost a knife edge around the bezel. I work with a few people and it seems like the 3GS quality isn’t as high as the original iphone.

Design is nice, so is the feel in the hand. Screen is goregous and the overall system response seems much snappier than the Droid. Touch sensitivity is surprisingly good and the predictive text feature is very nice. Rather than just predict the 1 word it THINKS you want (F you Iphone!) it will display as many words as it can above the keyboard that fit across the screen. Very nice and it automatically adds words you’ve typed like your name, etc.

T-mobile isn’t the most promising carrier, but it definately seems like a very potent device with the other android lineups, and I think the ID is much classier and cleaner than the Droid/Iphone without feeling like a complete knockoff. Go G2 continuity! :laughing:

And in design do you mean challenge as in make products that look like Apple imitations (as with your example) or be a market leader in design? Hard to be a market leader when you are play another man’s game.

A good example of doing it right is what Puma did to Nike in the early 2000’s. For years all the athletic brands tried to out Nike the Nike, then Puma basically has enough of it and remolds itself as this fusion of fashion and sport style, something all the other brands were ignoring, and they boomed.

Could HTC do it? Yes, so could LG, Samsung, Sony or any other well equipped CE company. But they need to jump away from the fray and do their own thing, make their own game… this is exactly what Apple did. They need to imitated the method, not the result.

great analysis Yo. In my books, Samsung is the the only one in the fray stepping it up. Just check a few recent products from them-

solid, consistent in formal language, and some great features. Not apple, but perhaps what Sony used to be, in a good way…


PS. that last pic, the remote is pretty stunning. TV remote with full controls and wifi and you can even watch another TV channel on it different than the channel on the screen!

I’m down with Samsung in general, even though their esthetics are a little all over the place. They went from making ok stuff, to making well made product that competed on price, not design, to making nicely designed items. The next step is to bring it all together in one sweeping brand DNA language (I’d love it if it was like those cameras you posted… as you said R, so 80’s/ early 90’s Sony… in the good way!)

I thought that the Sony Ericsson with the transparent screen was an interesting innovation in the mobile field - Sony Ericsson announces first mobile with transparent screen | TechRadar

It’s nice to see some innovation being carried out that breaks from the current obsessive trend of the touch-screen, even if I’m not wild about the overall design itself. Kind of Star Trek-esque. I’d love to see new ways in which this technology could be applied in the future.

good article, makes me even shift my predictions for HTc given the acquisition of an ID firm and recognition of the importance of branding… could get interesting…

Taiwanese smartphone maker HTC is on a tear. This year alone, the company has released five Android handsets. Its next phone, the HTC Nexus One, aka the Googlephone, is among the most anticipated devices of 2010.

Just about a decade old, HTC looks like it is poised to pull ahead of much older and larger rivals such as Samsung and LG in worldwide phone market share. While the older companies’ strength lies in now-declining “feature phones,” or inexpensive, less-capable handsets, HTC’s bet on the booming smartphone business is giving it a major boost. It has also acquired a powerful godfather in Google, the Goliath whose attention is now captivated by the mobile phone business and whose chosen partner is HTC.

“We have covered a distance in the last three years that many other companies haven’t in ten,” says John Wang, chief marketing officer for HTC.

About one in six smartphones in the United States in 2008 was a HTC phone, according to Nielsen Mobile. And with a slew of new handsets and a clever bet on Android, HTC is now the fourth biggest smartphone maker, after Nokia, Research In Motion and Apple. HTC’s Android portfolio now includes the original G1 and MyTouch on T-Mobile, the Hero on Sprint, and the Tattoo and Droid Eris on Verizon. And while Nokia is struggling to get a grip on the U.S. market, HTC is gaining ground.

“HTC got into bed very, very early with Google and that has helped them,” says Avi Greengart, research director for mobile devices at Current Analysis.

HTC has risen to prominence rapidly because it is young, ambitious and unencumbered by the legacy technology and old business that slow down its peers. Founded in 1997, HTC has always focused on designing and manufacturing smartphones — multifunctional devices with powerful processors — rather than inexpensive flip phones.

Its first product in 2000 was the the Compaq iPaq, a PDA that ran Microsoft’s Windows CE operating system. PDAs were a hot product then, but HTC CEO Peter Chou realized mobile phones would be a bigger market. Chou started courting telecom operators in Europe with an offer to create customized handsets for them. By 2002, HTC had two phones out, for O2 in the UK and Orange in France. Soon HTC was cranking out handsets for T-Mobile and other European carriers.

Placing the right bets
But it’s Android, the Google-designed open source operating system, that turned HTC from a boutique OEM (original equipment manufacturer, or contract manufacturer) into a mobile powerhouse. Over the last decade, HTC’s CEO Peter Chou has quietly networked to build a fat Rolodex and strong relationships with some of the most powerful names in the industry. Android creator Andy Rubin was one of them. Rubin’s company Danger had created the Sidekick, an extremely popular phone on the T-Mobile network. Chou’s HTC would later produce a similar phone called the MDA for T-Mobile.

In 2003, Rubin founded Android, a stealth startup whose mission was little known beyond the fact that it would create software for mobile phones. But Chou and Rubin were already talking. In 2005, Google acquired Android. As the new operating system began to take shape, HTC seemed like a good partner for the hardware.

HTC at a Glance
Employees: 9,353 (at the end of 2008, up 45.5 percent from previous year)

Headquarters: Taiwan

Founder and chairman: Cher Wang

CEO: Peter Chou

Revenue: $1.05 billion at the end of the third quarter 2009, a 10 percent decline from a year ago. Revenue grew 28.7 percent in 2008 to $4.2 billion.

R&D Expenses: $643 million (2009)

“Google’s OS required a pretty sophisticated handset and HTC knows how to do that,” says a former HTC executive who worked with the company for two years but didn’t want to be identified because he still works in the wireless industry. “HTC is aggressive and they have the speed of development to get a product to market early.”

For HTC it was an interesting opportunity, though not without its risks.

“When we started to work with Google, we had no visibility at all,” says Wang. “The (Android) platform probably would not even materialize and even if it did, it could be just another one in the market. But we shared the excitement.”

So for three years before the first Android phone would hit the market, HTC poured engineers and researchers into a project aimed to create a phone that would run a brand-new operating system.

“We made the first Google phone that Google engineers used to develop Android,” says Wang. “We had about 50 HTC people roaming around Google campus then, wearing the Google badge and eating the wonderful Google food. That was how deeply the two companies collaborated.”

It also speaks to HTC’s business model, says Greengart. “HTC likes to let someone else build the underpinnings for the phone and for them to work on higher-level stuff,” says Greengart.

Focus on design
Unlike Nokia, HTC has been quick to adapt to fast-changing consumer tastes in mobile phones. When slider phones were all the rage, HTC created the MDA for T-Mobile. Slim phones, touchscreens, Android devices — HTC has them all.

HTC’s ambitious expansion continues. Last year, HTC acquired One & Co., a San Francisco-based industrial design firm that has created products for Nike, Apple and Dell, among others. Over the next three years, it will spend $1 billion to create a new R&D facility near a Taipei suburb.

“We are the second or the third best design house in the world when it comes to mobile phones,” says Horace Luke, chief innovation officer at HTC. “The trick of design is it is not just styling but also great engineering.”

HTC has also been quick to understand that when it comes to mobile phones, looks alone don’t cut it.

“They have done a lot of innovation on software in terms of the user interface,” says Greengart. “HTC shipped a touch phone with a 3-D cube interface before most other handset makers.”

In June, HTC announced Sense, a UI skin that would sit on top of the Android OS. Sense offers widgets for adding new features, brings together contacts from different sources, and allows users to set different profiles for work and home.

“With a lot of smartphones out there you have to go to four different locations — your Gmail, Flickr, Facebook or Twitter — to find what’s up with one person,” says Luke. “But content is content. It doesn’t matter where its comes from.”

Personalization will be another big trend, says Luke. “I firmly believe that the phone you have should never look like the phone I have,” he says.”If you love stocks and financial news that’s what your phone should show. But if I am interested in Hello Kitty and manga then my phone should reflect that.”

It’s an idea Palm first offered up with the Pre. But since HTC’s announcement, a Sense-like interface has become an important part of new smartphones such as rival Motorola’s Cliq.

Creating a brand
Apple’s iPhone or Research In Motion’s BlackBerry have become cultural icons. But when was the last time you heard someone say they wanted a “HTC phone?”

Even when the first Android phone was launched last October, it was called the ‘Googlephone’ or T-Mobile G1; the new Googlephone is called the Nexus One. Most customers forget the HTC brand in that context.

That’s what Wang says he wants to change next.

“For many years, HTC has been the company behind the scenes,” he says. “In the earlier days, we did not post our brand on the phones. But three years ago we made a decision within the company to build the HTC brand.”

It’s not just vanity. Smartphones are an intensely competitive market. At the top, Apple and Research In Motion both have strong brand recognition and a growing base of users. In the middle, producers such as Samsung and LG own a huge share of the feature-phone market, but are hungry to sell more smartphones. And at the bottom, contract manufacturers such as Acer and Asus are looking to crawl up the chain. For now, HTC still occupies the lower tiers of brand recognition. A stronger brand would translate to more clout, fatter margins and bigger revenues.

Branding is even more important in the smartphone world, where consumer tastes can shift quickly, crowning new winners and losers every few months. Having a powerful brand can shield a handset maker against some of these shifting winds.

“In my time at HTC, they went from $200 million in revenue to $1 billion,” says the former HTC executive. “But you can’t continue that unless you have a brand.”

“It was becoming harder to innovate from one generation to another without a brand,” admits Wang. “If you create a phone that sells well on one carrier it’s not enough. The next version resets everything.”

But, so far, HTC has not shown its commitment by allocating a hefty marketing budget for branding, says the former HTC executive.

Throwing money around won’t help, says Wang.

“Brand value is like respect, you have to earn it,” he says. “You can’t buy respect. You can spend all the money you want to build the recognition but that doesn’t mean anything. I want the HTC brand to stand for a great experience.”

Creating a global culture
HTC doesn’t want to be just another Taiwanese handset manufacturer. Despite its strong Asian roots, the company has tried to build an international business culture. Almost all of HTC’s senior management is of Asian origin. The company has its headquarters in Taiwan and is listed only on the Taiwanese stock exchange.

Yet the company’s primary language is English. User documentation, technical papers and even all e-mails and staff meetings at HTC’s office in Taiwan are done in English.

“When Peter started at this company, he demanded everyone take an English test before they come in,” says Luke. “He always had a vision that the company would go global.”

Many of HTC’s executives, including company founder Cher Wang, went to graduate school in the United States. But Wang, who belongs to one of Taiwan’s richest families (her father, a plastics tycoon, was named the second-richest man in Taiwan by Forbes magazine last year), rarely grants media interviews.

HTC has also imbibed one of the greatest ideas of American business: It’s okay to fail. HTC’s R&D division has a “target failure rate” of 95 percent, says Luke. “A research lab has to come up with enough ideas that fail fast and fail early so you can learn and harvest the right ones,” he says. “That’s very different from the culture at Taiwan, where you have to be successful all the time.”

While HTC is unmistakably aligning its future with Android, the company isn’t willing to give up on Windows Mobile — at least publicly.

“Our commitment to Windows Mobile platform is unwavering,” says Wang. “Both platforms are important. They match different people.”

For HTC, the last 10 years have been a rocket-like rise. But the battle to stay ahead of the game has just begun.

“It’s no longer a mystery what it takes to create a differentiated handset,” says Greengart. Handset makers can either build their own operating system and hardware to control the user experience completely, as Apple and Palm have done. Or they can build on top of someone else’s operating system, such as Windows Mobile, Symbian or Android. The danger with the second path is that if you can do it, others can too.

“As LG and Samsung create phones over and over again, they will soon come up with something that can beat HTC’s,” Greengart says. “When you are building on top of someone else’s OS, other people can do that too.”

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Wow, great article. I like the direction HTC is going. But, your Samsung post, Richard, was very insightful. Those cameras are headed in the right direction, if that direction is Leica (if so, you can’t go wrong).

Time will tell I guess. Apple isn’t going away any time soon, but I still think that they’re going to keep evolving more and more, and begin to define new areas of communication perhaps away from phones altogether. I don’t see HTC doing that, so in terms of phones, HTC and Samsung are going to be your leaders in 5 years. You heard it here first.