Jim Armitage: Next stop China for HTC phone whiz on the long road from Mandalay?
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Saturday 05 October 2013
There’s a very good reason not to write off the mobiles group HTC. His name is Peter Chou. The 56-year-old, dubbed Mr Detail by Forbes magazine, is a driven tech geek in the mould of the late Steve Jobs but with the added workaholic ambition of the immigrant entrepreneur.
Mr Chou was born and raised in Burma, where he studied and worked fixing radios and TV sets for a living before emigrating to Taiwan. He has described how, in his youth, he would go a week without sleep tinkering with amplifiers and TV tubes, which he thought of as being a sort of “magic”. He arrived in Taiwan more than 30 years ago, followed soon after by his parents and sisters, for whom he toiled as the sole breadwinner.
It has been a long road from his home town of Mandalay. That early passion for engineering drove HTC, which he co-founded as High Tech Computer Corp in the late 1990s, to extraordinary heights. It started off creating phones for other brands to use, then built its own high-spec, low-cost models. The move to build a serious brand in 2006, taking on the mighty Nokia and BlackBerry as well as Apple, was a risk – local rival BenQ had done the same with the takeover of Siemens’ mobile business only to spiral down into catastrophe. But the Chou-driven design power of HTC made it thrive.
As Ben Wood, an analyst at CCS Insight, says, its kit is second to none – its stylish HTC One, with the full metal jacket, yesterday won Phone of the Year at the T3 awards in London. But fighting against the huge marketing and R&D muscle of Samsung and Apple has left it struggling, and yesterday it posted its first-ever quarterly loss – albeit a relatively modest £62m.
A series of blunders hasn’t helped.It spent time, money and effort backing Microsoft’s Windows Phone before wisely opting for Google’s Android instead. Its answer to all that Apple-Samsung marketing clout was to launch a flop of a campaign with Robert Downey Jr. Didn’t catch it? Me neither. It also launched too many different models.
Now analysts are queuing up to toll the bell. But Mr Chou still has options. He can strike an alliance with other manufacturers who would be keen on his tech – Google, Amazon? (please not Microsoft). He could go back to doing upmarket “white label” products under other people’s brands (a retrograde step, surely) or, most appealingly perhaps, he could aim all his fire at the vast China market.
Political relations between Taipei and Beijing are thawing. HTC is on China’s doorstep, giving it a geographical advantage over Apple and Samsung, and the Chinese people have an unparalleled love of smartphones but without the deep pockets needed for the kudos of Apple and Samsung. A high-spec, mid-cost HTC range could be tailored for and focused on China.
They would probably spank the pants off most cheapo local incumbents and offer a better route for HTC back to profit than fighting on all fronts in the west. Mr Chou should set off on his travels again.
Being trade pals is paying off for Britain and Russia
A big welcome to Britain for Oleg Tinkov, the bike-racing, Speedo-wearing, yacht-loving Russian entrepreneur who this week announced the flotation of his credit-cards business in London. The float prompted a Russian business chum – nothing to do with the Russian owners of this newspaper – to get in touch and highlight how, despite the frosty political relations between London and Moscow over such tetchy issues as Syria and the murder of Alexander Litvinenko, pictured, the actual amount of business being done between the two countries has never been higher.
UK exports to Russia were up 15 per cent at £5.5bn last year and have been increasing 21 per cent a year on average since 2001. When Moscow founded its International Financial Centre, it chose London over Frankfurt for advisory services aimed at improving governance (and boy does it need some improving).
Meanwhile, my friend muses, compare and contrast the way the US and Russia have used and abused BP. Although BP got a rare good result in the US courts this week, it has been treated extremely harshly over the Gulf of Mexico spill.
Leaving aside the – ahem –rough handling of now-chief executive Bob Dudley during the grimmest stages of negotiations over the TNK-BP venture, BP is now sitting fairly pretty with its near-20 per cent stake in Rosneft, the world’s biggest oil company. One hears Mr Dudley and Rosneft boss Igor Sechin get on well. But then again, people do tend to want to be on good terms with the chap nicknamed “the scariest man on earth”.
Bingo! Our bling’s just the thing for vulgar rich
This column is a fan of canny business folk creaming the world’s super-rich. Yachts, cars, watches, houses – thousands of craftsmen and women are hired in this global industry of luxury, many of them in the UK.
For the über-wealthy, it’s not about just having the Rolls-Royce, but having the Rolls-Royce with the gold-plated body and snakeskin interior – loud, vulgar proof to the world that you’re not to be measured in millions, but billions. In Qatar, Manhattan, Singapore and Dubai you see these preposterous baubles cruising the highways like gilded barges.
Not to mention London’s Knightsbridge, of course, where Formula 1 tycoon Flavio Briatore has a fashion store actually called “Billionaire” (ironic or just vulgar? You decide). Yesterday I praised Land Rover for cottoning on to the trend for customising its 4x4s by moving boss John Edwards to focus on coachbuilding for the dumb rich.
I recommended other firms with a fair few of those on their customer lists to follow suit. Then, into my intray pops American Luxury magazine, with news that London-based Gold & Co is launching a 24-carat gold iPhone 5S. As is the way with super-luxury, no price is available – think in the many tens of thousands.
The list of stockists tells you a lot about the clientele: it’s only available in Dubai, Hong Kong, Moscow and India – not China, although I’m sure it will be soon. My bet is it will be a big hit, and I wonder why Apple has not already done a Land Rover and moved to produce similar, tailor-made devices. Nokia did just that with its British-based Vertu division, launched in 1998, and sold the business to a private-equity firm for a rumoured $200m (£124.5m) last year.
The sale has made it easier for Vertu to up its game technology-wise, and only this week it launched a phone running on Android for €4,900 (£4,150) a pop.
Expect many fools to open their cheque books in the soulless malls of the Middle East and Eastern Europe, providing more skilled jobs for British manufacturers.
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