In 2007, Apple and its iPhone was the major market player in the smartphone industry. But in 2012, the company that has the highest smartphone market share in the US is HTC.
Founded in Taiwan in 1997, HTC was an “unlikely leader” in the smartphone industry, according to Bloomberg Business week. The firm originally designed and manufactured gadgets for other companies without a brand name of its own. It toiled for a long time in obscurity as an original design manufacturer, designing and making high-end smartphones for leading Western mobile operators such as Verizon and Orange. HTC’s first big contract came when Microsoft asked it make smartphones. HTC quickly became the world’s top producer of Window phones. It set up its US headquarters in Bellevue, Washington. In an attempt to create an identity of its own and not remain a brandless firm forever, the company decided to launch its own brand to command higher margins and more respect.
However, the firm had to face a number of hurdles because of its Asian origins—a lack of capabilities in innovation and branding, and the loss of clients, which did not want to do business with an emerging rival. But HTC overcome these challenges to emerge as winners.
The three reasons attributed to HTC’s success are: HTC had developed world-class design and innovation capabilities; had successful collaboration with larger firms; and was a “born global” firm (all its communications were made in English).
The open culture of HTC made it an attractive employer for Western talents. In fact, most of its top management level employees are not Taiwanese. In 2006, the company started to develop its own brand. By 2008 when the first Android phone was marketed, it was branded as “HTC.” In 2011, it was named “Device Manufacturer of the Year” by the Mobile World Congress. Also, its market value surpassed that of Nokia to become the third largest smartphone maker in the world (by market value), behind only Apple and Samsung.
Apple took HTC’s challenge very seriously. In addition to vigorously competing on the product dimension, Apple sued HTC for 20 counts of patent violations in 2010. As HTC’s fight with Apple spilled over from product markets to courts, HTC, the clear underdog, claimed that it had sufficient patents to deal with Apple.
1. From a resource-based view, what are HTC’s unique resources and capabilities?
2. From an institution-based view, what are the lessons you can draw from the patent lawsuits between HTC and Apple?
3. What are the lessons that ambitious firms in Asia and other emerging economies can draw when they aspire to upgrade their capabilities, become more innovative, and command more respect as OBMs?