HTC 2014 Annual Report Download - page 22

• Business operations Business operations •
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Business results ____
Market share is one of the Key Performance Indicators (KPI) in the smartphone industry. Jefferies estimates
that HTC had a full year market share of just over 1.6% and was ranked 11th in market share in calendar 2014,
the same position that HTC held in 2013. With 5.2% separating number 3 from number 12 in the category – it is
as fiercely competitive as it is compelling.
As of the close of Q4 2014, HTC has turned an important corner and posted 3 consecutive quarters of
profitability. This trend has continued for Q1 2015. This turnaround began with substantial QoQ revenue
growth for Q2 2014 driven largely by success of the then newly launched flagship HTC One M8. Net Promoter
Scores have reached a high of 56.31 and customers cite design, sound, camera as the top considerations leading
to selecting the One M8. This was followed by continued recovery in Q3 2014, and 14% QoQ revenue growth
and 12% YoY revenue growth for Q4 2014. HTC closed Q4 2014 with gross margins of 20.4% and operating
margins of 0.4%. Overall, annual Consolidated Revenue was $187.9 billion, generating $40.8 billion of Gross
Profit.
Brand strategy ____
2014 marked the start of a significant evolution for the HTC brand with the development of a renewed Brand
Strategy, Visual Identity, Global Brand Management Process and Brand Architecture.
___ Global Purpose
The HTC brand is much more than a logo or campaign. It's a business tool that reflects our purpose, people
and products. Amidst a sea of industry sameness, investing in the HTC brand helps to build emotional
resonance, cultural relevance and competitive differentiation. In 2014, we looked inward to evolve our
brand strategy and break through the clutter. We identified our organizational purpose to bring brilliance
to life – striving everyday to develop innovation that fosters human connectiveness.
HTC has long known that true brilliance lives beyond technology. It lives in the people and passions that
drive us. Inherent in what we do is the desire to better connect the world, break down barriers and bring
people closer together. In 2014, we set the strategy to weave this connective thread through both the
business and the HTC brand – elevating the emotional relationship between our company, culture and
customers.
___ Global Process
A strong purpose is futile without structure in place to help it spread. During 2014, a Global Brand
Management function was created to centralize brand decision-making, improve efficiency and present
HTC's more unified global voice. This restructured brand management process ensures better alignment
of brand and business objectives across regions, while also making more efficient use of marketing
resources and media spend. The new process underpins the development and implementation of global
creative platforms – allowing HTC to differentiate through a cohesive global brand story, with regional
adaptation to suit distinct market needs and nuances.
In parallel with the development of the centralized brand function, a new visual identity was created
to unite marketing efforts across diverse touch points, channels and regions. The new design system
established a distinct style – unmistakably HTC – to ensure consistency and attribution across use cases.
Additionally, as HTC began entering new categories in 2014, it saw the creation of a new brand
architecture to better support plans for innovation beyond mobile devices. While the HTC masterbrand
continued to support device sub-brands such as HTC One and HTC Desire, the introduction of HTC
RE™ sub-brand in fall 2014 introduced a new layer to the organizational ecosystem. HTC RE™ will serve
as a dedicated innovation sub-brand to support our new initiatives within wearable technology and the
broader connectivity landscape. As a high-level framework, this brand architecture will serve to support
diversification while generating a halo effect across products and supporting scalability over time.
___ The Social Shift
Social engagement is embedded in HTC's commitment to fostering human connectiveness. The renewed
brand strategy intentionally sets up HTC for success in a rapidly changing media environment that is
evermore rooted in social. In 2014, elevated emphasis was placed on better utilizing social technologies
and non-traditional marketing channels to create conversation and drive consumer relevance. Whereas
competitors faced off in an arms race for Share of Voice, the HTC brand began its shift toward better
contextual media integration to engage audiences in the right ways at the right times in the right places.
We've launched HTC Community forum in Taiwan and China in 2014, and will later roll it out to India
and the US. The increase of fan engagement improves brand awareness, loyalty, and helps HTC design
products more closer to users' needs. HTC was presented in 369 million feeds across Facebook and
Twitter in 2014, 126 growth compared to 2013. Total engagement was 19.2 million at the October“Double
Exposure”event resulted a significant increase. HTC was the first brand to leverage native Facebook
video prioritization which helped drive more exposure and engagement.
___ Marketing
2014 proved to be a very exciting marketing year for HTC. Building on the success of the HTC One M8
launch in late March, HTC continued to raise the bar and cement its positioning as a leader of innovation
in the category with both standout products and advertising that successfully captured our consumers'
imagination and attention.
To coincide with the launch of the HTC One M8, HTC developed a campaign titled“Ask the Internet”,
starring Gary Oldman, which empowered consumers to look at consumer and product reviews of the new
HTC One M8 online. It was a bold and confident approach to stand behind the numerous excellent reviews
and awards the product has received, while demonstrating our view of our consumers as independent
thinkers who form their own opinions and won't be swayed by traditional marketing. The campaign
ramped up consumer engagement and positive sentiments, increasing advertising awareness among
targeted audience by 40%.
Consistently a global leader in technology innovation and design, in October 2014, HTC heralded a new
era of innovation – and an exciting new direction for the business – with the introduction of a suite of
breakthrough imaging products. Hosting an event on October 8th in New York, aptly named“Double
Exposure”, we launched HTC RE, a remarkable and fashionably designed little handheld camera; the
HTC Desire EYE, a brand new category-shifting phone; the HTC Eye™ Experience enhanced imaging
software; and Zoe™ , a collaborative video editing community. The event was streamed globally and the
media responded positively.