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Source: Forbes.com Forbes.com

HTC CEO On Android, Verizon, Microsoft

Published: 28 Oct 2009 22:19:17 PST

TAOYUAN, TAIWAN -- For more than six months, HTC enjoyed the privilege of being the only cellphone maker to have a handset running on Google's mobile platform, Android.

Several manufacturers, including Samsung, Motorola ( MOT - news - people ) and LG have since crowded in. Motorola, which announced a new Android phone with Verizon ( VZ - news - people ) Wireless on Oct. 28, is forging particularly close ties with Google ( GOOG - news - people ).

Peter Chou, HTC's chief executive and president, takes a measured view of the competition. "You cannot expect you are the only player in town. … You need other players to come and make the ecosystem stronger," he told Forbes in an interview at HTC's Taiwanese headquarters.

HTC is strengthening partnerships too. The company will introduce an Android phone on Verizon later this year, Chou confirmed. He says the handset, which will likely debut in the first week of November, is a sign of HTC's growing rapport with Verizon, the largest U.S. wireless operator. "We've worked with Verizon for several years, but this is the first time we've been elevated to the role of core supplier," he says. "We are very excited about that opportunity."

Chou declined to comment on his negotiations with AT&T ( T - news - people ), the one major U.S. carrier that has yet to carry HTC's Android phones. Instead, he hinted that HTC would do less customization work for some of its carrier customers. "In the past, we perhaps made too many phone models," says Chou. "Now we're putting more effort into seeing how we can sell more volume per model."

In the cutthroat smart phone market, even winning favored status with operators can't guarantee strong sales. That's one reason why Chou recently approved HTC's first global advertising campaign. The ads, which play on the word "you" as a sign of the company's commitment to its customers, will roll out across 20 countries in coming weeks.

The multimillion-dollar campaign represents a second phase of brand development for HTC, says Chou. Between 2006 and early 2009, HTC was transitioning from being a contract manufacturer to a company that emphasized its own brand. Now, the company feels prepared to push toward a "premium, top-tier brand" that can take on household names like Apple ( AAPL - news - people ) and Nokia ( NOK - news - people ), says Chou.

The fact that HTC's newest products, such as its Hero and Tattoo phones, all clearly feature the company's name and logo should bolster the campaign, he adds. (Chou says he's not concerned that the ads have drawn comparisons to Yahoo!'s ( YHOO - news - people ) new "It's You" marketing campaign. The Internet giant occupies a different market, he points out.)

"Whether we can compete with [companies like Nokia] on scale is a different subject, but our profile needs to be viewed as first tier," says Chou. "It's very hard to use a second-tier brand to compete with these companies."

HTC may be updating its brand, but it's sticking by its longtime partner, Microsoft ( MSFT - news - people ). Though other handset makers such as Motorola have dropped Microsoft's Windows Mobile operating system in favor of Android, Chou says HTC has no plans to follow. That doesn't mean he's not frustrated with the software. "Windows Mobile innovation has been a little slow and interest in Windows Mobile phones has been declining," he admits.

HTC's solution is the HD2, a wafer-thin handset that combines a 4.3-inch touchscreen with a high-end processor for snappy downloads and fast Web browsing. The phone, which was unveiled earlier this month, runs the latest version of Windows Mobile (6.5) as well as some flashy HTC software. "We're working hard on these kinds of products to get excitement about Windows Mobile back," says Chou.

Gadget fans have been clamoring for an Android version of the HD2, but Chou hints that the handset will stay as is. "Technically, we could make the HD2 an Android phone, but I have to take care of Windows Mobile," says Chou.

HTC's loyalty also extends to Google, even amid reports that the search giant is developing its own Android handset. "Google tries to do things differently from the rest of the industry," Chou notes. While some of Google's actions can be "destructive," Chou says, HTC still values the partnership. "We've worked with Microsoft for 13 years … I also believe we can work with Google for a long time," he adds.

As more gadgets tap mobile data networks, phone makers have started producing netbooks, e-readers and tablet computers. Chou says HTC will buck the trend. "There is a lot of pressure to do these things, but we are a relatively small company and need to be very picky," he says.

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