Synergy or focus

Cheming Yang

In business and in many other things of this world, when there is no synergy, you need to have focus. If you cannot focus or your focus fails, you are doomed. That is what is happening to HTC and to a whole bunch of world renowned enterprises. Just look around at the major mobile devices makers. Nokia used to be the best and largest cellular phone maker. It is in a lot of trouble because it missed out the chance to get a head start in smart phones. How about Blackberry? It is supposed to be the smart phone leader. But now it is treading water.

HTC Corp. (2498.TW) shares fell to their lowest level since November 2005 recently as investors dumped the troubled Taiwanese smartphone maker’s shares, after its preliminary Q2 earnings figures disappointed the market. HTC’s stock price woes also reflect a general bearishness in the market about the outlook for high-end smartphones. With low-end devices driving industry growth, makers of smartphones are facing harsher competition among themselves. Even Apple and Samsung have seen their stock prices hit in recent months over fears that market growth is slowing. Besides several major U.S. carriers have extended the length of their contract recently, which means slower replacement for high-end smartphones. The slower turnover will hurt makers of high-end smartphones. This will hurt HTC as well since it is not very strong in the low and medium end markets.

With that being said, there is also a paradox widely regarded as another reality for HTC. Is HTC really specializes in the high end market? An analyst once said that HTC’s problem is that HTC thought it is a high end player, but in reality it is not.

HTC has its good time. It was once a market leader among smartphone makers without doubt. Back then, it got technical edges that even Apple and Samsung feared. Right now, HCT is clearly no match for the biggest two. However, even the once downtrodden SONY is back on it feet and overtaking HTC on many fronts.

Compared to Apple, Samsung, even SONY, HTC only make smartphones. Unlike its major competitors, they all have comprehensive product profiles. Apple has iMAC, iTune, iPod, iPAd in addition to iPhone. Samsung and SONY even have more products, from TVs to smartphones. For them, all the marketing efforts have synergy in brandings. For instance, one might think SONY got better built in cameras since it also has a series of SLR cameras that are deemed to have good quality. That is to say, HTC has less synergy from its product lines. So it is difficult for it to have multiplier effects in its marketing efforts.

Judging from the trend, synergy is never a strong suit for HTC. On the other hand, obviously, it does not have the technical edges to lead the pack like a couple of years back, either. Maybe it’s time for HTC to rethink about its focus in strategy. It used to be a high end maker all right. But is it still so? It might be tolerable to be a medium end or low end makers so long as it is profitable and beneficial for the organization’s long term survival. When you lose your focus, you can always refocus.

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