HTC 2014 Annual Report Download - page 21

• Business operations Business operations •
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HTC sees an opportunity to create a compelling VR headset that delivers a market leading experience and created
the HTC Vive™ that was launched at Mobile World Congress and Game Developer Conference in March 2015.
Awarded best new product at MWC 2015, it was broadly covered by media including Engadget's“HTC's Vive
made me believe in VR” and Business Insider's“most mind-blowing virtual reality experience ever”.
These new devices are part of HTC's diversification strategy, that began with HTC RE ™ lifestyle camera, to
extend the mobile lifestyle and broaden HTC's consumer reach.
Market analysis ____
Turning to look at the top 2 vendors in this Smartphone market, Apple and Samsung, there has been an
interesting development in Q4 2014, with Apple making a very strong comeback with the iPhone 6 and 6 Plus.
Estimates from Gartner and Strategy Analytics show that Apple managed to displace Samsung for phone
shipments for the first time in Q4 2014. In March 2015, Samsung responded by launching their Galaxy S6 and
S6 Edge, which emulate HTC One's aluminum unibody and design emphasis.
The other pressure for smartphone vendors comes from the other direction. Mainland Chinese vendors are
taking share in both China and overseas markets, and especially in the mid to low end. The same is happening
in India where Micromax has displaced Samsung to top Indian smartphone shipments.
As the battle rages on, focus continues to shift from mere hardware specifications to polished experiences for key
areas such as audio and camera, as well as enterprise security, navigation, gaming, etc. While this battle is primarily
between the OS vendors, Apple and Google, leading Android device vendors including HTC have invested significant
amounts of R&D to develop proprietary experiences that enhance and differentiate their devices.
The lines between smartwatches and fitness bands are merging too, with bands now keeping time and providing
phone notifications, while smartwatches have started tracking activity and sleep as well, in some cases via
apps built by leading fitness band vendors themselves, such as Misfit's app on Pebble. It would seem that bands
and other fitness tracking wearables will remain important for as long as there are such requirements not
addressed by the watches a consumer wears.
One of the trends here would be the development of deeper capabilities for particular use cases. The HTC
Grip™ band announced in March 2015 is developed with popular sports apparel brand Under Armour® with
this exact goal in mind. This collaboration will bring leading edge integrated smart apparel use cases. Similarly,
Garmin is focusing on pushing the envelope with navigation and outdoor fitness, Razer with social capabilities
between bands, Kairos with a fashionable real mechanical watch merged with a transparent OLED display, and
several vendors bringing smartwatches with built in cellular capabilities and full blown Android.
From a smartwatch OS platform perspective, the battle in 2015 will be largely between the new Apple's Watch
OS, Pebble OS for Pebble Time, Google's Android Wear, Samsung's Tizen, the LG Wearables Platform, and a
variety of proprietary implementations. It appears that vendors in the Android camp are eager to have more
control and ownership over the software platform of their smartwatches.
Business scope ____
In the short-term, 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 our own HTC eStores in
Taiwan and China, as well as the top e-commerce channels for example in India and China.
In order to differentiate our Android devices, HTC invests significantly in building an improved user
experience on HTC devices, whether generally as is the case with our HTC Sense™ user experience, or for
particular experiences such as camera and audio. In many cases, a superior user experience is provided not
just by software but also hardware, for example, HTC Ultrapixel™ , Duo Camera, HTC BoomSound™ , HTC
Connect™ .
Our recent foray into new consumer lifestyle products, beginning with HTC RE™ camera, HTC Grip band and
HTC Vive™ virtual reality headset represent new growth opportunities beyond the smartphone and tablet.
Some of these new devices further enhance the HTC smartphone and tablet experience.
HTC also has a HTC Pro™ program for enterprise capabilities on our devices, and is working with Google and
other partners for mobile payment capabilities.
Longer term, HTC will continue to challenge the status quo by introducing groundbreaking products that are
innovative and bring delightful user experiences. We'll also invest significant resources into global marketing
and cultivate the brand value via more focus on brand and loyalty to grow our business and live up to our brand
promise to both consumers and shareholders. We firmly believe our determination and expertise will continue
to help us meet future challenges and make HTC the first choice among smart device brands.