HTC 2013 Annual Report Download - page 21

BUSINESS OPERATIONS BUSINESS OPERATIONS
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This is also true of video capture which now populates the newly popular social networks of Tumblr, Vine
and of course the multi-purpose You Tube platform, which is used as a go-to search engine for younger
consumers who want to see, not read. Sound is also becoming more prominent in the consideration set
– not just for music but for video capture and watching, gaming, voice applications and the increasingly
present “car mode＂.
HTC has built its reputation for designing the world's best smartphones during 2013. At Mobile World
Congress in Barcelona in February 2013, HTC One was awarded Best Smartphone of the Show, which was
the first in a vast array of smartphone awards across the globe and throughout the year. Widely rated as
the world's best smartphone by the experts and consumers alike, HTC One was crowned once again as
Best Smartphone of the Year at the Mobile World 2014 Congress achieving the top award in the opinion of
175 of the world's top journalists and analysts. It was a strong testimonial for our truly innovative flagship
model which offered unique experiences previously unseen on any smartphone – all metal unibody design,
BlinkFeed live screen, BoomSound Dual Front Facing Speakers and Zoe Camera. HTC One as a franchise
grew to over 70% awareness amongst our target audience during 2013 (Hall & Partners Brand Tracker 2014),
consolidated by addition of other family members through the summer and Autumn with HTC One Mini and
HTC One Max. Collectively, it was HTC's fastest selling product family as well as the world's most awarded
smartphone of 2013.
Mobile phone shipment worldwide is expected a continuing growth in 2014 which may lead to tight supplies
of upstream components. HTC will continue to demand adequate capacity commitments from all suppliers
to ensure on-time delivery of their products. HTC is committed to working closely with suppliers to raise
production efficiencies as well as to lower the production costs to enhance mutual competitiveness. In
addition, HTC will manage the product life cycle jointly with the downstream smartphone agencies and
retailer to enhance a robust and healthy industrial ecosystem.
Smartphone Industry Relationship Chart:
Market Analysis
2013 provided another intriguing year in the smartphone category and one where there were business
challenges of differing degrees for every manufacturer in the market. Low tier phones represented the
fastest growth globally for both mature markets where these are being purchased by the late majority and
laggard adopters and also emergent markets which have low penetration so the fastest CAGR. Android
continued its dominance as an Operating System – having 78.9% market share for 2013 (Strategy Analytics)
leaving iOS 15.5% and Microsoft 3.6%. New OS providers continue to show confidence within the trade -
Tizen from Samsung, Ubuntu, FireFox amongst others - but none have managed to break out yet. With
considerable barriers to entry, the fledgling OS companies need to attract developers and monetization
platforms in order to get established and therefore attracting device manufacturers.
Collaboration remains the cornerstone of device componentry and smartphone manufacture. Qualcomm
remains supreme in terms of the go-to partner for processors for the premium smartphone segment
– heralded by its flagship processer brand, Snapdragon. 48% of consumers say that the processor is
something they consider when buying a phone (Netfluential 2013). They consider Clockspeed and multi-
tasking capability to be the prime requirements of a good processor. Snapdragon is the fastest growing
smartphone processor brand in terms of consumer awareness – built on their consumer marketing
campaigns throughout 2013. Mediatek has also been the winner in the low tier market – enjoying very
strong growth mostly in emerging markets in 2013.
Samsung stretched its market leadership in 2013 with a full year market share of 31.6%, dampened by a
weaker fourth quarter where they dipped below 30% after a Q3 high of 33.9%. Apple had 15.5% market
share for the year – with strong quarters in Q1 and Q4 where there were new iPhones in the market –
reaching a high of 17.6% in Q4 based on the iPhone 5S and 5C. Hauwei. LG and Lenovo all jockeyed for
3rd, 4th and 5th position, all ranging mostly between 4.5 and 5.0% throughout the year. Chinese domestic
manufacturers also came to prominence as the China market accounted for a bigger share of the global
market. The standout story of 2013 was Xiaomi – widely lauded across the business magazines and best
newcomer lists for innovation in their business model to facilitate rapid online sales and capture the
imagination of the young, adventurous Chinese consumers who relish the new and different. Market share
is one of the Key Performance Indicators (KPI) in the smartphone industry. HTC had a full year market share
of 2.0% and was ranked 11th in market throughout the year. With 3.3% separating number 3 from number
12 in the category – it is as fiercely competitive as it is compelling. Amidst the challenging and competitive
smartphone market, in addition to our outstanding R&D and innovative capabilities, HTC has established
long-term strategic partnerships with industry leaders and major telecom service providers to promote the
growth of the smartphone industry. With our relentless commitment to innovations, we will continue to offer
a comprehensive product portfolio to satisfy the diverse consumer needs.
Business Scope
With a global sales network, 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. In the long-term strategic
partnership with Microsoft, Google and Qualcomm, HTC launched flagship products for each generation
of the Windows Phones, and the world's first Android smartphone. Also ahead of the competition, HTC
was the first company to launch 3G, 4G WiMAX and LTE smartphone devices in the world. In short-term
business development, 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
Smartphone
Manufacturers
Smartphone Compnents /
Parts Suppliers Telecom Service Providers
Smartphone Operating
System Manufacturers Smartphone Retailers