HTC 2012 Annual Report Download - page 21

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Market Analysis
As devices get more sophisticated and multi-functional, the strength
and flexibility of the Operating System has become more apparent to
consumers. The Android OS remains dominant with over 50% share
throughout 2012 and increasing to 69.7% share in Q4, 2012 (Gartner).
Gartner also suggested that 2013 would see some increased competition for
the third most significant OS in the market – with BlackBerry OS (updating
to BlackBerry 10 in March 2013) and Windows 8 holding 3.5% and 3.0%
shares, respectively, in Q4 2012. Microsoft did see its share rise by 1.2% in
Q4 2012 after an injection of new products, primarily from HTC and Nokia
. A myriad of new players are also poised to emerge in 2013 – Tizen from
Samsung, Ubuntu, Jolla and Firefox all featured strongly at the Consumer
Electronics Show in January 2013 and hope to demonstrate a new profitable
platform for device makers and developers alike.
Ingredient brands also had more effect within the market in the minds of the
highest engaged consumers and retail salespeople. Qualcomm and Corning
Glass stood out in defining quality and performance within the smartphone
arena. Both are deeply associated with HTC's reputation for using the highest
quality components and suppliers. These long standing partnerships serve to
maximize the speed, craftsmanship and durability of the smartphone. Longer
consumer contracts and more interaction with the product everyday make it
a much tougher environment for smartphones. Consumers value build quality
and robustness very highly when choosing their ideal device.
Samsung and Apple dominated the league tables of sales of smartphones
and now account for 52% of worldwide sales (Gartner). The huge brand
investment of Apple and Samsung exercises a relentless duopolistic force
across the world. Interestingly, the rapid growth of the Chinese market
and its influence on overall global shares brought brands like Lenovo,
ZTE, Hauwei and Yulong into the top 10 manufacturers by Q4. Only 2.7%
of market share separated the number three from the number twelve
smartphone manufacturer in Q4, indicating the highly competitive nature
of the market. HTC's market share in 2012 was 4% and remained the fastest
growing international brand in China throughout 2012.
Business Scope
HTC has retained its focus on premium smartphones and continues to offer
the consumer choice of both Android and Windows OS in a stunning array
of designs. We sell devices in the affordable, mid-tier and super-phone
categories and have extended our channel distribution beyond telecom
operators and mobile retail channels into consumer electronics stores and other
broader technology outlets as our brand awareness has grown. This includes
e-commerce based channels like Amazon and Ebay, which are now becoming
increasingly significant in shipping new smartphones in unsubsidized markets.
We were the fastest growing international brand throughout most of 2012 in
China (Canalys) and have seen increases in our distribution footprint into more
stores in key cities across this market (Sino). India, Russia, Eastern Europe and
SE Asia have also presented opportunities for us to expand our retail presence
in these emerging markets. Localization has figured very strongly in our
emerging market success, notably in India and China where we have researched
and developed bespoke content, user interface innovations and application
based offerings to really cater to local custom and practice. This will continue
as we leverage our exceptionally fast time to market and our desire to make
an HTC phone an extremely personal and relevant experience. In the fiercely
competitive North American and European markets, we have used stand out
design and rich experiences to differentiate our products. With the HTC One
family, our award winning HTC 8X Windows phone and our top-selling HTC
Butterfly range all receiving recognition for their beautiful appearance and fine
craftsmanship, we continue to extend our lead in this area into 2013.
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