HTC CEO Sounds Off on Shift, Eee PC, and iPhone

So far 2008 has been a slow year for leading smart phone maker HTC—with the exception of an EV-DO Rev. A upgrade for the Mogul—but things are about to pick up in a big way. Soon the Shift will be available in the U.S., the company’s first mobile computer. And devices based on Windows Mobile 6.1 are on the horizon, which borrows somewhat from HTC’s own innovations to the OS. HTC is also hard at work on developing its first handsets based on Google’s Android platform, which should make their debut by the end of the year. Oh, and it is also rumored that on the side HTC will be manufacturing the highly anticipated Xperia X1 phone for Sony Ericsson. We recently had the opportunity to speak with HTC CEO Peter Chou, who has been with the company since its inception in 1997, and asked him about everything from the above topics to the iPhone and the Eee PC. Enjoy.

Several smart phone makers, like Palm and Motorola, are struggling right now. How can HTC continue to thrive in an increasingly tough market?
I have to say it is our strategy. We work very hard to make sure our quality won’t be a problem. In this telecom market, a lot of people have great ideas, but can’t deliver those ideas into a mature product. One good thing about HTC is the talent we have accumulated and we have continued to grow. Our turnover rate is very low – this is very important. We make mistakes, we screw up sometimes, but we are lucky that we have been able to improve ourselves.

In the past HTC has been solely focused on the Windows Mobile platform. Do you think the company will be able to divide its time between Windows Mobile and Android and still churn out quality products?
2008 is going to be a very exciting year for HTC. During the last two years, we have built brand focus in Europe, Asia, and the U.S. In the US, we are more focused on building brand through brand operators. More than two years ago, we found that we had to innovate the user interface. The Windows Mobile platform has a lot of good stuff inside, but the user interface has not been easy. It is very techy and not intuitive. HTC decided to innovate on the user experience, so we launched the HTC Touch and it was a great success. This year, we are coming out with even more exciting new product innovations, and we are more focused on the mobile Internet experience. Mobile Internet is going to be key in terms of making the experience more successful. We want to ensure that consumers experience that on our devices. We don’t see Windows Mobile and Android as a challenge – we just want to expand our product category.

What is it about Android that is more consumer friendly?
Google is an Internet company so they are very good at the Internet experience. We have been working with Google for almost three years. Even before Google bought Android, we had conversations with Andy Rubin. We think the mobile Internet experience is horrible now in devices and we can now try innovating in this area. We are excited for the opportunity to work with Google since they have an in-depth knowledge of the Internet.

Do you think you can differentiate your Android-powered devices, like you have with Windows Mobile?
We will do it differently. Our strategy is that we think differentiation is very important. The hardware is one of the icons that people have an affiliation to.

So, do you think it will be the industrial design that will help do that?
Yes, industrial design and the user experience will be part of that.

What is the timing for your Android device?
We are still looking at the end of this year. We haven’t changed our target date.

Were you surprised when it was recently announced that iPhone accumulated more market share than all Windows Mobile phones combined in the U.S.?
The iPhone has a good design and is quite innovative. Apple is also very strong at marketing. Having said that, HTC has a different strength and I think we can be a strong competitor to Apple.

Based on what we know about Windows Mobile 6.1, it seems to borrow from some of the ideas you have brought to devices like the HTC Shadow. Do you believe that Microsoft is stealing your thunder a little bit?
I try to be open minded when people see an idea and try to copy it and do similar things. To be too protective has not been useful in my more than 20 years of experience. What is important is that you continue to innovate and deliver something that consumers appreciate. Over time, you will be appreciated and people will trust your brand and your capability.

The UMPC market hasn’t exactly taken off. Can HTC bring innovation to this segment with the Shift?
The Shift is an experiment. Mobile operators have this challenge. They invest a lot in a network but the devices aren’t that capable. If we can design a mobile device that fits well for mobile operators and they can push it then it can be successful. We tried to integrate Windows seamlessly on this wireless experience. It is an area that HTC will continue to push. However, we don’t want to compete with pure IT companies, like HP or Dell. Our idea is to be more focused on mobile experience and mobile technologies. We think these devices going forward will have an effect in the emerging markets. It is unrealistic for countries to have fixed broadband and we think mobile broadband will play a greater role going forward.

Asus’ Eee PC really seems to be the first commercially successful UMPC. Do you see them as a competitor, or are you different?
I don’t consider them as a competitor. We don’t want to compete with them as we are in a different segment. We are primarily looking at the prosumer or mobile professionals. Our strategy is to align more with the mobile operators.

Do you envision devices coming to market from HTC that leverage Mobile WiMAX?
We are always looking into new mobile technologies. It’s just a matter of making the decision. We are always talking to our mobile operator partners and what they are going to do. We don’t exclude any of those – it’s just the strategy of how we position ourselves with our mobile operating partners. We see HTC as a partner of mobile operators and closely work with them.

There was a lot of buzz at 3GSMA about Sony Ericsson’s XPERIA X1, which HTC is manufacturing. Is the ODM business something you will continue to focus on, or is this project unique?
Our strength is to do business with flexibility. We want to push our brand, and learn from that process. HTC can sell some of our knowledge to a high-value customer like Sony Ericsson. We would like to work with a few, very selective high-value customers so our business can be bigger.