Why does HTC Bother with ODM?

Articleimages 2007 L-Q Picture-10

This little tidbit from DigiTimes is interesting:

Smartphone handset vendors, including Mobile and Wireless Group (MWG) (ex-O2 Asia Pacific), i-mate and Palm, have recently switched their smartphone orders back to High Tech Computer (HTC), with the shifting of orders to push the ratio of ODM revenues at HTC to over 10% in the first quarter of this year, according to a Chinese-language Commercial Times report.

So, HTC, I am curious: You make about 10% of your revenue by manufacturing phones for companies that are essentially your competitors. Now Palm, one of these competitors, tried to move away from you a bit, but now they're coming back -- probably because you're better at making those darn Treos than anybody else. So, basically, a whole bunch of your competitors are depending on you to manufacture quality products for them. Seems a bit weird, no?

Here's my question: If you refused to be the ODM for these competitors, isn't it at least possible you'd make up that 10% loss in revenue with increased growth of your own brand and product?

Seems like it might be. We at WMExperts have long been telling you you're not the David in the world of Goliaths you sometimes pretend to be. You're a giant, HTC, and you have a giant heart for continuing to help out these little guys as their ODM. It's sweet, really... just a little strange.

I'm sure HTC did not plan for it to be 10%. They tried to have their cake and eat it but the OEM's left when they made their brand ambitions public. Fortunately for HTC and their investors they managed to recover quite well from the huge dent in their revenue and growth this caused, and, because they are still the best at what they do they managed to get some of that business back.

Regarding why they ODM for their brand competitors, thats pretty normal for taiwanese ODM's, and probably means their competitors cover a different market than them e.g. Palm may sell to enterprise buyers and have a better infrastructure to support business users, whereas the HTC brand probably does not mean much to a CTO.

Surur

Posted by surur | January 17, 2008 1:46 PM

10% of something is better than 0! And, they get to see what their competitors are doing well before the public does. Not that they would take advantage of such information. No, no, certainly not!

Posted by bubbatex | January 17, 2008 1:48 PM

And, they get to see what their competitors are doing well before the public does. Not that they would take advantage of such information. No, no, certainly not!

I think they are legally prevented from doing so, e.g. there are no Treo-like HTC devices at all.

Surur

Posted by surur | January 17, 2008 2:24 PM

a profit is a profit no matter where it comes from and HTC will have shareholders to keep happy...in addition, HTC might be the big giants now but that could change in 5 years time and hence they would not wish to burn their boats/bridges etc as they may need a favour or two later on.

Posted by murrayalex | January 17, 2008 3:11 PM

Post a new comment