Case Notes/Answers
HTC Corp. in 2012 by David B. Yoffie; Juan Alcacer;
Renee Kim
Discussion Questions:
1. Evaluate HTC’s performance to date. What are its competitive assets and liabilities?
2. Is HTC’s competitive position sustainable? What are the main challenges HTC faces? How do
they affect HTC’s competitive position?
3. Peter Chou and Cher Wang led HTC’s transformation from a small player to a top-five
producer of smartphones. What strategic actions would move HTC into the top three?
Specifically:
a. How can HTC differentiate its products as more handset manufacturers enter the Android
market?
b. Should HTC abandon the tablet market?
c. What should be HTC’s OS strategy?
, 5 - 7 1 2 - 50 2
REV: FEBRUARY 24, 2014
T E AC H I N G N O T E
HTC Corp. 2012
Synopsis
By the end of 2011, HTC had completed a meteoric transition from an unknown OEM
manufacturer of Personal Digital Assistants (PDAs) for leading firms such as Palm, to become a
leader in the global smartphone market. In 2006, HTC’s CEO made the critical decision to launch its
own brand and slowly weaned the company from OEM revenues earned by customizing models
made for operators. HTC had also benefited from being the first adopter of Google’s operating
system (OS), Android, which had become the most popular OS for smartphones by the end of 2010.
As a result, HTC had posted six consecutive quarters of record sales and become second only to
Apple for overall satisfaction in Q3 2011 (Exhibit 10).
Success brought more visibility to HTC and alerted the company’s competitors that it would be a
threat. Competitive pressure on HTC increased as Apple levied patent infringement charges and
Samsung gained market share in the Android market. Equally important, the smartphone market
was moving toward a business model based on a vertical structure, in which firms controlled the
entire experience from the OS to the handset to the app store (e.g. Apple and RIM), instead of a
horizontal business model, in which different companies provided individual components (e.g. HTC
and Motorola). HTC’s strategies to manage complementors—app store—and inputs—the OS—
became more complex with Google’s acquisition of Motorola and Microsoft’s alliance with Nokia.
These events could complicate HTC’s relationship with both OS providers.
HTC had little time to rest on its accomplishments, in any case. Competitive dynamics,
consolidation, and technological changes had the smartphone industry in turmoil. In particular,
Apple’s introduction of the iPad in 2010 had expanded the industry’s scope from mobile phones to
mobile devices. Most players had reacted by entering the tablet market abruptly, and with mostly
poor results, allowing Apple to maintain a considerable lead in market share. HTC CEO Peter Chou
and Chairwoman Cher Wang had crafted the strategy that brought HTC into the major leagues, but
now the company needed a new game. What should HTC do to remain competitive and solidify its
global position?
Teaching Objectives
The case is used in two Harvard Business School (HBS) elective courses, “Competing Globally”
(CG) and “Strategy and Technology” (S&T).
HTC Corp. in 2012 by David B. Yoffie; Juan Alcacer;
Renee Kim
Discussion Questions:
1. Evaluate HTC’s performance to date. What are its competitive assets and liabilities?
2. Is HTC’s competitive position sustainable? What are the main challenges HTC faces? How do
they affect HTC’s competitive position?
3. Peter Chou and Cher Wang led HTC’s transformation from a small player to a top-five
producer of smartphones. What strategic actions would move HTC into the top three?
Specifically:
a. How can HTC differentiate its products as more handset manufacturers enter the Android
market?
b. Should HTC abandon the tablet market?
c. What should be HTC’s OS strategy?
, 5 - 7 1 2 - 50 2
REV: FEBRUARY 24, 2014
T E AC H I N G N O T E
HTC Corp. 2012
Synopsis
By the end of 2011, HTC had completed a meteoric transition from an unknown OEM
manufacturer of Personal Digital Assistants (PDAs) for leading firms such as Palm, to become a
leader in the global smartphone market. In 2006, HTC’s CEO made the critical decision to launch its
own brand and slowly weaned the company from OEM revenues earned by customizing models
made for operators. HTC had also benefited from being the first adopter of Google’s operating
system (OS), Android, which had become the most popular OS for smartphones by the end of 2010.
As a result, HTC had posted six consecutive quarters of record sales and become second only to
Apple for overall satisfaction in Q3 2011 (Exhibit 10).
Success brought more visibility to HTC and alerted the company’s competitors that it would be a
threat. Competitive pressure on HTC increased as Apple levied patent infringement charges and
Samsung gained market share in the Android market. Equally important, the smartphone market
was moving toward a business model based on a vertical structure, in which firms controlled the
entire experience from the OS to the handset to the app store (e.g. Apple and RIM), instead of a
horizontal business model, in which different companies provided individual components (e.g. HTC
and Motorola). HTC’s strategies to manage complementors—app store—and inputs—the OS—
became more complex with Google’s acquisition of Motorola and Microsoft’s alliance with Nokia.
These events could complicate HTC’s relationship with both OS providers.
HTC had little time to rest on its accomplishments, in any case. Competitive dynamics,
consolidation, and technological changes had the smartphone industry in turmoil. In particular,
Apple’s introduction of the iPad in 2010 had expanded the industry’s scope from mobile phones to
mobile devices. Most players had reacted by entering the tablet market abruptly, and with mostly
poor results, allowing Apple to maintain a considerable lead in market share. HTC CEO Peter Chou
and Chairwoman Cher Wang had crafted the strategy that brought HTC into the major leagues, but
now the company needed a new game. What should HTC do to remain competitive and solidify its
global position?
Teaching Objectives
The case is used in two Harvard Business School (HBS) elective courses, “Competing Globally”
(CG) and “Strategy and Technology” (S&T).
