HTC 2009 Annual Report Download - page 19

36 37
influence that mobile internet services have over the smart phone sector.
Trends instigated and promoted by mobile application markets do impact
upon smart phone sector direction and development.
HTC has laid a solid foundation of experience and accomplishment in the
smart phone sector. In addition to exceptional in-house R&D / innovation
capabilities and superior track records for business and sales, we have nour-
ished and now maintain strong long-term partnerships with technology
industry leaders, including Microsoft, Google and Qualcomm, that are
focused on influencing the future development and vision of mobile telecom-
munications. We also enjoy close partner relationships with telecommunica-
tion service providers throughout our major markets - helping HTC better
anticipate and address consumer needs both now and in the future. Shipping
about 11.71 million units in 2009, HTC accounted for some 7% of total glob-
al smart phone units in 2009. In the years ahead, HTC will continue to draw
on its exceptional innovation capabilities to ensure product line comprehen-
siveness, meet consumer demand for greater diversity and personalization in
mobile telecommunications, and raise HTC brand recognition and market
share.
Business Scope
The main focus of HTC's business is on the handheld smart phone sector.
Reflecting quickly maturing wireless communication technologies, 3G mod-
els at now account for better than 95% of all HTC products shipped. Also,
HTC launched new models featuring HTC Sense, which helped push overall
sales to new highs. Verizon, Sprint and T-Mobile, the three largest telecom-
munications service providers in the United States, all designate HTC mobile
phones as flagship offerings in their respective product lineups. In Europe,
HTC mobile phones are featured prominently at sales outlets of leading
telecommunications service providers such as Vodafone, T-Mobile and
Orange. HTC products are currently sold through major telecommunication
service providers and channel retailers in major markets in Europe, the
Americas and Asia. The company is also gradually penetrating smart phone
markets in emerging markets in the Middle East, Central and South America
and Russia.
In-house R&D capabilities nurtured at HTC since its inception have produced
leading edge innovations in mobile phone technology and design. Strategic
alliances with Microsoft, Google and Qualcomm help HTC get first to market
with new generation products and innovations, work with telecom service
providers to raise average revenues per user (ARPU) and realize a worldwide
sales and service network able to deliver on promises of innovation and qual-
ity made to customers.
Business Objectives
HTC will grow to become the world's leading smart phone brand. Following
on high-visibility brand promotion activities during 2009 such as Tour de
France team sponsorship, rollout of "Quietly Brilliant" brand positioning, and
launch worldwide of the YOU campaign, HTC will do even more in terms of
brand promotion during 2010, which, coupled with a competitive pricing
strategy and diverse product range, will work to increase HTC market penetra-
tion and give even more users the opportunity to experience the HTC differ-
ence.
While working aggressively to increase market share in order to achieve sus-
tained sales growth and competitiveness, HTC will work diligently to neither
sacrifice fair profits nor instigate predatory price cutting strategies. Instead, we
will continue to adjust our overall business model to expand HTC's market
share and win a growing number of HTC product users while keeping corpo-
rate fundamentals intact. Such should strongly and positively enhance HTC
brand awareness, enhance operational effectiveness, and raise profitability
over the long term.
HTC's globe market penetration is growing significantly, and HTC believes the
time is ripe for increasing operating scale. HTC is confident about its current
strategy of promoting HTC's brand-recognition and products, and will definite-
ly continue to implement and invest such strategy to maintain its competitive-
ness. Seizing the right opportunity to invest the rightstuff is HTC's commit-
ment to all the long-term investors.
In terms of investments in China market, HTC is engaged in cooperative initia-
tives related to the all 3G standards in that market as well as in building part-
nerships with major Chinese telecommunication service providers. In August
2009, we signed a memorandum of understanding covering "substantive
cooperation on TD-SCDMA" with China Mobile, Ltd. The MOU establishes a
long-term, in-depth cooperative partnership between the two parties in the
realms of technology and product R&D, market research and customer service.
While 3G infrastructure in China market remains in its infancy, its manifest
potential for rapid growth is expected to be an engine of forward momentum
for HTC in the future. The HTC-China Mobile provides a solid platform for
future HTC growth in the China mobile phone market.
European and North American markets remained the focus of HTC business
expansion in 2009. North America and Europe accounted for 48.8% and
30.4%, respectively, of HTC sales worldwide. Asia and other regions account-
ed for the remainder (20.8%). HTC business in North America market strongly
grew 28.6% in 2009 compared to other regions. HTC will continue to launch
new, institutive mobile phone products to win even more consumers as HTC
users.
2009 HTC Revenue by Region:
Analysis of Business Results
2009 was a year of rapid and remarkable change for HTC. In addition to
growing challenges in the economics environment as well as from develop-
ments among various mobile phone operating systems, 2009 marked a
redoubling of efforts to manage and extend the HTC brand.
In 2009, we promoted aggressively our Android-based product line - the
first model of which was launched in 2008 as the world's first Android OS
mobile phone - to telecommunication service providers in Europe and the
Americas. Our goal was to turn this line quickly into a strong engine of HTC
business growth. However, consumer acceptance of Android, while relative-
ly strong in our American markets, lagged in Europe and Asia. Thus, our
management team chose to work on raising market awareness of the HTC
brand. As the number of major mobile phone makers marketing Android-
based products increased, consumers would have an inbuilt knowledge of
and preference for HTC's Android offering. While sales volumes did end up
eroding by 2.6% in 2009 (to 11.71 million units), HTC leadership in the
Android OS is gradually being understood and recognized by consumers.
Looking at our products in terms of average selling price (ASP), HTC has
beefed up its product offering considerably. HTC's flagship high-end
model, HTC HD2, is joined by mid-price range offerings in HTC Tattoo and
HTC Touch2 models. All are competitively priced for their market segment.
HTC's ASP in 2009 was NT$11,661 - a 3.5% drop from 2008. The NT$144.9
billion earned in revenue for 2009 represented a drop of 5.0% from 2008 rev-
enues.
48.8% 30.4%
20.8%
Europe
NT$44.0 billion
North American
NT$70.7 billion
Asia & Other
NT$30.2 billion
2008 2009
12,027 12,085
11,711
11,661
BUSINESS OPERATIONS