An­droid op­er­at­ing sys­tem is help­ing Tai­wan-based HTC build a name for it­self in the smart-phone mar­ket

Austin American-Statesman - - TECHMONDAY - By Kris­tena Hansen

Big in Korea

(and else­where)

Af­ter mulling over which smart phone to buy for months, Seth Chap­man de­cided against jump­ing on the iPhone, Black­Berry or Droid X band­wag­ons and in­stead went with the HTC Evo 4G.

He liked the Evo’s built-in fea­tures, such as voice nav­i­ga­tion, and he wanted to be among the first to use the su­per­fast 4G net­work.

The name of the com­pany that made the phone — HTC Corp. — was in­ci­den­tal. “I have some friends who are Korean,” Chap­man said while shop­ping for Evo ac­ces­sories at a Sprint store in down­town Los An­ge­les. “I guess it’s big in Korea.”

And in much of the rest of the world. HTC, based in Tai­wan, has qui­etly grown to the point where it has joined the ranks of the largest smart-phone mak­ers. It cur­rently ranks fourth in the world, ac­cord­ing to mar­ket re­search firm Gart­ner Inc. In North Amer­ica, nearly 10 per­cent of peo­ple who bought smart phones in the first quar­ter of this year chose mod­els made by HTC.

The com­pany re­cently re­ported sec­ond-quar­ter sales of $1.9 bil­lion, up more than 58 per­cent from the same time pe­riod last year.

In North Amer­ica, HTC ranks in sales be­hind Re­search in Mo­tion Ltd. (maker of the Black­Berry line), Ap­ple Inc. (iPhones) and Mo­torola Inc. (Droid X and oth­ers). It has edged ahead of Sam­sung

Con­tin­ued from B Elec­tron­ics Co., Nokia Corp. and Palm Inc.

“It’s the fastest-grow­ing hand­set com­pany in his­tory,” said Richard Doherty, an an­a­lyst with En­vi­sioneer­ing Group. “HTC is the model of the new Asia. They’re very quick and very re­spon­sive.”

With the Evo, HTC be­came the first phone maker in the U.S. to come out with a hand­set that could ac­cess the 4G net­work. In fact, 4G is so new that it still isn’t avail­able in many parts of the coun­try.

The Evo is pow­ered, like many HTC phones, with Google Inc.’s An­droid op­er­at­ing sys­tem. In 2008, HTC pro­duced the first phone to use the An­droid sys­tem. That phone was called the T-Mo­bile G1 in this coun­try, and the HTC Dream in other parts of the world.

An­droid, which has been com­pared by some crit­ics to Ap­ple’s op­er­at­ing sys­tem, has proven so pop­u­lar that in the first quar­ter, phones equipped with the op­er­at­ing sys­tem out­sold iPhones for the first time.

HTC isn’t the only phone man­u­fac­turer to put out phones pow­ered by An­droid, but its strong as­so­ci­a­tion with the op­er­at­ing sys­tem cer­tainly hasn’t hurt.

When the first HTC-branded phones ar­rived in the U.S. in 2007, the com­pany al­ready had a stealth­like op­er­a­tion here. It had spent sev­eral years mak­ing pri­vate-la­bel phones that sported the names of wire­less car­ri­ers, mo­bile op­er­at­ing sys­tems and oth­ers.

The com­pany was started in 1997 by Cher Wang, a Uni­ver­sity of Cal­i­for­nia-Berkeley grad­u­ate and daugh­ter of one of Tai­wan’s wealth­i­est busi­ness­men, Wang Yung-Ching.

By the time HTC went pub­lic in 2002, it had ex­panded to North Amer­ica.

Ja­son Macken­zie, now vice pres­i­dent of HTC North Amer­ica, as­sem­bled his own desk when he started at the Seat­tle of­fice. “We went from five or six em­ploy­ees at the end of 2005 to 50 by the end of 2006,” he said.

Putting its own name on prod­ucts was a ma­jor step for the com­pany. But at first, Doherty said, HTC was dogged by qual­ity is­sues.

Then came the G1, equipped with An­droid. “An­droid helped pull them out,” Doherty said.

HTC is ex­pected to bring out more new mod­els this year that will use the An­droid op­er­at­ing sys­tem.

Get­ting con­nected

The suc­cess of HTC, which makes phones that use Google and Mi­crosoft op­er­at­ing sys­tems, is in­ten­si­fy­ing the com­pe­ti­tion in the smart-phone mar­ket. North Amer­ica smart-phone mar­ket share, first quar­ter

“Their growth is very tied to Google,” Doherty said. “They need to ex­e­cute An­droid bet­ter than any­one else.”

Mi­crosoft’s Win­dows Mo­bile sys­tem, which HTC also puts in phones, has not been a hit. But Mi­crosoft plans to in­tro­duce a com­pletely re­tooled ver­sion of its mo­bile op­er­at­ing sys­tem in the fall with a new name: Win­dows Mo­bile 7.

There could be prob­lems ahead for HTC. In March, Ap­ple sued the com­pany, claim­ing that HTC had in­fringed on 20 Ap­ple-held pa­tents pro­tect­ing touch screens and other tech­nolo­gies.

And while some an­a­lysts say that HTC is on a path of con­tin­ued growth, Joee Chang of Jih Sun Fi­nan­cial Hold­ings in Tai­wan urged cau­tion.

“We an­tic­i­pate the mar­ket for HTC will be cruel in the sec­ond half,” Chang said. “HTC will need to strug­gle against se­vere com­pe­ti­tion” from other man­u­fac­tur­ers’ new prod­ucts.

But how­ever the com­pany fares, its per­for­mance will be based on prod­ucts that carry its own name. For bet­ter or worse, HTC has stepped out of the shadow of oth­ers.

“A brand is the way that a per­son iden­ti­fies with your prod­uct and ser­vices,” said HTC spokesman Keith Nowak. “The only way to grow was to build loyal cus­tomers. The only way to get them to re­turn is to give them a way to iden­tify with you.”

Francine orr

Seth Chap­man checked out ac­ces­sories for his new HTC Evo smart phone at a Sprint store in Los An­ge­les last month. HTC has sur­passed Nokia and Sam­sung for smart-phone sales in North Amer­ica, but the com­pany faces a le­gal fight with Ap­ple over pa­tents.

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