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June 16, 2006 1:34 am

HTC launches its mobile brand in Europe

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High Tech Computer, the world?s largest manufacturer of Windows-based mobile phones, has launched its own brand in Europe in a strategic adjustment that could help it retain its competitive lead in the long term.

?We feel that we have accumulated enough power and experience to provide more support to our own retail customers,? said Peter Chou, chief executive.

The move makes HTC the first handset maker to pursue a combination of branded operations with contract manufacturing.

The Taiwanese company saw its net earnings jump threefold to T$11.78bn (US$362m) and revenue grow by 100 per cent to T$71.89bn last year, mainly driven by its niche strategy of developing and contract-manufacturing top-end devices for mobile carriers such as Vodafone, Orange, T-Mobile and Verizon.

Analysts said the strategic change was likely to raise concerns in the short term because conventional wisdom holds that contract manufacturing and branded operations in one company create conflicts of interest with existing customers.

HTC?s share of the world market?for?converged devices ? gadgets that combine the PDA and mobile phone functions ? is expected to reach 11 per cent this year, according to CLSA, the emerging markets broker.

The company?s unique business model of making customised devices for carriers has been the main reason for this strong market position.

Dominic Grant, an analyst at Macquarie Securities in Taipei, said: ?What they are doing is a kind of backdoor branding that could give them the edge that they need in a few years? time when Microsoft?s many other licensees also have products,? he said.

HTC already sells mobile devices under the brand name Qtek in Scandinavia ? where it does not have operators as customers ? and alongside customised models through operators in some other European markets. But yesterday it started launching new models under the HTC name.

Mr Chou said the company would continue to prioritise the demands of its mobile operator customers and would use its branded operations as a ?sluice gate? to exploit untapped market potential.

?We will apply this strategy in a highly flexible way and not start a huge marketing campaign with huge expenses,? he said.

Mr Chou said HTC aimed to buy up to 70 per cent of Dopod, a branded handset company which is already its main channel in Asia, by September and the remaining 30 per cent at the same price at a later date.

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