Thu, Aug 22, 2013 - Page 14 News List

HTC visionary Chou set for biggest challenge yet

HEART AND SOUL:While acknowledging his central role in its early success, some former executives have criticized the HTC boss’ long-term planning and management style

Reuters, SINGAPORE and TAIPEI

HTC Corp chief executive Peter Chou speaks at the launch of the HTC One smartphone in London on Feb. 19.

Photo: Reuters

Now in his 10th year as HTC Corp (宏達電) chief executive officer, Peter Chou (周永明) is lauded as the architect of the Taiwanese firm’s award-winning smartphones. Yet, after the company’s fortunes nose-dived, some insiders say he is now an obstacle to any revival.

Rocked by internal feuding and executive exits, and positioned at the high end of a smartphone market that is close to saturation, HTC has seen its market share slump to below 5 percent from about a quarter five years ago; its stock price is at eight-year lows, and it has warned it could make a first operating loss this quarter.

Reuters interviewed a dozen former and current HTC executives who said Chou’s abrasive management style and weak strategic vision have played their part in the company’s decline, which has coincided with the success of Apple Inc’s iPhone and Samsung Electronics Co’s Galaxy phones.

Chou has said publicly he has no intention to stand down, and executives — none of whom wanted to be named because of the sensitive nature of the issue — said HTC has no clear internal successor.

“Part of the weakness is there is no obvious successor, and that’s not been good for morale,” one said.

Chou declined to be interviewed for this article, but in response to Reuters queries, the company said: “HTC’s board and broad employee base remain committed to Peter Chou’s leadership. The [flagship] HTC One product family — which has been met with accolades by media and consumers alike — was a result of Peter’s vision and leadership, and speaks for itself.”

OBSESSIVE EYE

Born in Myanmar but educated as an electrical engineer in Taiwan, Chou joined HTC from Digital Equipment Corp (DEC) in 1997.

Colleagues describe him as a perfectionist with an obsessive eye for materials and hardware design.

Staff would deliver trays of prototype phones for him to inspect and pore over, spinning them to check for balance and running his fingers across the beveled edges and joints. Phones would pile up on his desk, sometimes spilling onto the floor.

That attention to detail and Chou’s willingness to make decisions on the fly helped build a culture within HTC of moving quickly to address market demands.

For example, at an offsite meeting two years ago the HTC team realized it needed another device for its portfolio. Chou quickly drew some sketches on a whiteboard, recalled one of those present, and soon had the outlines of a device, its price point, and a launch date — just three months away.

Most manufacturers would need up to 18 months for a similar project, yet the Sensation XL appeared on schedule, and to rave reviews.

“Having the ability to just tear up a plan and say, OK, this is the new thing and we’re going to get it done fast. That’s Peter,” another former senior foreign executive said.

This shoot-from-the-hip style served HTC well when the market was growing fast. Shortening the time to market meant HTC could alter plans at the last minute to take advantage of new or cheaper parts.

However, as the market matured, making it harder for handset makers to differentiate their products, the approach has left HTC vulnerable. Locking in the supply of more advanced components and materials to make products stand out requires more foresight and planning than HTC currently allows, former executives say.

“The weak point is they don’t really have a long-term strategy,” one said. “It used to be a strength, and now is becoming a weak point as they don’t have a clear direction going forward.”

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