When the figures for global smartphone shipments in Q4 of 2012 were released by IDC they revealed that HTC is losing its grip and Sony is making gains. Sony claimed fourth place in the chart with 9.8 million handsets shipped and a 4.5 percent market share. HTC dropped out of the top five altogether, although it is listed as fourth for the whole year with a 4.6 percent share. The two companies seem to be going in opposite directions and if we look at the branding strategies we can clearly see why.
The race for second
The battle for second place behind Samsung in the Android world is set to be fierce this year. The Chinese contenders Huawei and ZTE, third and fifth respectively in that same Q4 2012 chart, are expanding fast. LG has raised its profile considerably with the Nexus 4. Google’s Motorola Mobility acquisition could still bear hardware fruit. Then we have Sony and HTC.
Both companies would dearly love to claim that spot and maybe even take on the might of Samsung in years to come, but success requires the right strategy.
Understated quality with HTC
We’ve discussed the rise and fall of HTC in the past. The company has been in a steady decline since Q3 of 2011. It built a reputation for manufacturing quality, premium Android smartphones like the HTC Desire and solid mid-range devices like the HTC Hero. It released the first ever Android smartphone, the HTC Dream or T-Mobile G1 and manufactured Google’s first Android flagship, the Nexus One. That reputation for innovation continued with the first 4G release, the HTC Evo 4G.
HTC was on the cutting edge. The brand, with the tagline “quietly brilliant” was all about word of mouth. The devices spoke for themselves and HTC was the manufacturer to go with for people in the know. The Taiwanese company had seemingly come out of nowhere to claim the third spot behind Apple and Samsung.
Where did it all go wrong?
As 2011 wore on HTC deviated from the premium strategy that had served it so well. The company had dabbled with the budget end of the market with the HTC Wildfire, which probably didn’t do much to enhance its reputation, but worse was to come. The HTC ChaCha, Salsa, and the Rhyme were all very different from previous HTC releases and they didn’t do well. Combined with a confusing naming convention which revived old models and tagged letters on the end, HTC was eroding its own reputation.
At the end of 2011 there was the HTC Rezound and the Beats Audio partnership. Instead of establishing winning audio quality and the cool factor HTC wanted, the whole Beats Audio thing dominated all the advertising and gave the impression that HTC phones were about music, rather than being all-round cutting edge devices.
In 2012 HTC belatedly tried to create a Galaxy style brand with the One series. It’s interesting because even in the summer of 2012 when the HTC One X went head-to-head with the Galaxy S3 a lot of people thought the One X edged it and no one was predicting the landslide victory that the S3 enjoyed. The advertising was off again. In the UK HTC ran an irritating ad featuring a fashion photographer skydiving and using the One X. Nick Jojola ten times a day accompanied by a smug voiceover did not enhance the brand and it also focused on the photography angle too much. Just as the Beats campaign gave the impression of a music phone, this ad gave the impression of a photography phone.
It wasn’t really until December 2012 that HTC managed to create a buzz again, this time with the 5-inch HTC J Butterfly or Droid DNA, but concerns about battery life and a lack of storage in the DNA (only 11GB free and no microSD card) don’t make for a smash hit.
HTC has squandered its reputation and it lacks the marketing muscle to break back into the big leagues. The only way back is to produce quality smartphones with cutting edge features. Goodwill for the HTC name is not completely depleted, but without a hit release in the near future it soon will be.
Sony Ericsson in feature phone obscurity
There’s no doubting Sony is a well-loved electronics brand with years of awesome TVs, audio and video equipment, cameras, desktops, laptops and tablets, as well as hugely successful brands like the Walkman and the PlayStation, behind it, but Sony was never a mobile player.
When the Japanese company decided to have a go at breaking into mobile through a merger with Ericsson in 2001 it didn’t even have 1 percent of the mobile market. The new Sony Ericsson brand wasn’t well received. Attempts to innovate through better cameras and by using the Walkman brand to create music phones resulted in a line of moderately successful feature phones. Within a few years the profits began to roll based on a line of solid feature phones and a focus on emerging markets.
The release of the iPhone in 2007 sounded the death knell for Sony Ericsson. Profits and market share dropped sharply and the company shed thousands of jobs in an attempt to survive. It soon became clear that the smartphone market was the future. Towards the end of 2011 Sony bought out Ericsson and wiped the slate clean. Sony Mobile, relocated in Tokyo, would rise from the ashes.
Ericsson was already in trouble when Sony signed the merger and although it gave Sony a partner with a history and expertise in telecommunications it was never clear that the joint Sony Ericsson brand was a hit with consumers.
Climbing the charts
By focusing on a purely Sony brand the company has been able to instantly tap into the reserve of goodwill for the Sony name. It’s well known the world over for quality consumer electronics. The Xperia branding is clear and the aim is obviously premium smartphone success on the Android platform. There’s no Windows Phone off-shoot to distract Sony, there’s no attempt to mop up the budget end of the market, but Sony still has to learn to hone its line-up and concentrate on a handful of premium releases. Thankfully the company has been making noises about leaving the entry-level market behind.
The ability to tie in the design and branding with its wider product offerings in TV, audio, photography, and gaming, gives Sony serious marketing muscle. It also makes sense to consumers that manufacturing the ultimate convergence device – the smartphone – is something that a company like Sony is uniquely well-suited to do. The marketing is understated, the branding is clear, and that silver signature power button doubles up as the new logo. Is Sony making a comeback? The Q4 2012 figures don’t lie and that’s before the flagship Xperia Z hits the market.
Sony has shown off an ability to make premium Android smartphones, but that’s not enough, just ask HTC. There is another problem for Sony, especially if it wants to crack the U.S. mobile market. Releasing unlocked devices is fine in some countries, but most people go for carrier subsidized deals in the U.S. and Sony doesn’t seem to have much of a relationship with U.S. carriers. If the Xperia Z gets picked up by U.S. carriers it’s likely to do well and we can see it flying off the shelves in other markets.
Big branding fail for both HTC and Sony
Sony may be on the up as HTC declines, but there is one big branding fail that both companies are repeatedly committing and it needs to be sorted out. Samsung is the most successful smartphone manufacturer in the world. What is Samsung’s flagship device? You’ll say the Galaxy S3 or the Note 2 right? Now what would you answer for HTC? What would you have said for Sony before the Xperia Z was announced?
The problem isn’t necessarily having too many releases because Samsung has more smartphones than you can count, the problem is profile. The average person on the street can name the flagship Samsung device and they can walk into any mobile store and buy it. The company releases a lot of smartphones, but it focusses resources and marketing on the flagships. Sony and HTC don’t seem to have picked up that trick and until they do they will never really challenge Samsung.