Taiwanese HTC moves towards becoming a handset vendor

High Tech Computer, HTC, is a famous Taiwanese ODM (original design manufacturer). ODM means that they do research, design and manufacturing by themself and sell handsets to vendors world-wide who put their own brand on them. For example Qtek in Sweden, O2 i UK, T-mobile and Orange all but their name and logo on the smartphones. Despite this HTC’s brand has grown and in Sweden most customers are well aware that HTC manufactures Qtek’s smartphones.

I looked into this business a few years back while I studied in Taiwan and I became amazed by the Taiwanese manufacturers and how good they are when it comes to manufacturing. I also found a problem Taiwanese manufacturers have, and that is to build their own brand. Looking at Taiwanese manufacturers development you can see how they have moved from being OEMs to ODMs, and the next step is probably vendors with their own brand, just like BENQ has managed to do. To give a quick explanation and comparison between OEM and ODM (lot of definitions exist but I prefer this):
An OEM (original equipment manufacturer) are given a standard hardware reference design board and add value by lowering manufacturing and procurement costs. With lower margins most moved to become ODM (original design manufacturers). An ODM manufactures and develop products based on its own design for other companies that use their own brand-name. ODMs can design the system which affords even greater potential cost savings through sourcing of lower cost components and better system integration.

BENQ started out as an OEM, became an ODM and while learning the business they could move into selling own-branded handsets. They aquired Siemens mobile business about one year ago that really got them into the own-branded handset business.

HTC spun of Dopodo a few years ago which sells own-branded handsets. And today I read an article at Mobil.se how HTC is starting to sell own-branded accessories such as bluetooth handsfree.

Operators have also realised the need of a brand and now you can even find their own stores with own-branded handsets, mainly from Sony Ericsson, Motorola and LG.

Remembering that most larger handsets vendors outsource most of their manufacturing, what remains is their brand and distribution channels.The brand and distribution channel was mainly what Benq got when they bought Siemens. I am confident we will see more chinese brands in Europe as they grow in China, and maybe even some mergers just like the one between Siemens and Benq.

~ by Andreas Sigurdsson on July 30, 2006.

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