After writing extensively about HTC Corp, formerly High-Tech Computer Corporation, and their worsening problems I have come to the following conclusion. I strongly believe that if HTC Corp wants to truly move forward they have to free themselves of current CEO Peter Chou. I also believe that Chairperson Cher Wang would be a good choice as CEO for two reasons. The first is that she, like Mr. Chou, co-founded HTC Corp and has been with HTC Corp since the beginning. The second is that Mrs. Wang is both highly respected and viewed as a role model by Taiwanese society and the Asian tech industry as a whole.
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The Chou Vision
CEO Peter Chou was hailed as HTC’s savior and at first this was the case. Mr. Chou was able to draw up new products on the fly and push them to market. His boldness and meticulous attention to detail helped HTC grow in early 2011. However, today the smartphone market has matured and is saturated with alternatives to HTC from every tier. Facing stiff competition from Samsung in the high and middle tier smartphone market as well as competition from Huawei and ZTE in the bottom tier has changed the game for HTC and Mr. Chou.
The strength shown by Mr. Chou in early 2011 now spells weakness as there was no real long-term strategy and the product range had no real focus. Furthermore, locking in the supply of more advanced components and materials to make products stand out requires more foresight and planning than Mr. Chou currently allows. This lack of foresight and planning was the tipping point for HTC executives, investors and consumers alike.
The Chou Management Style
It was reported that Mr. Chou did not foster an open environment in contrast to an internal memo sent out in August 2012. The problem with Mr. Chou and his management style had everything to do with his unwillingness to allow senior executives greater authority to make calls on products and projects they were more familiar with.
To make matters worse, Mr. Chou openly chastised managers and compartmentalized executives when sales targets were not met. “There’s a culture in HTC not to discuss numbers at senior management meetings,” said one former executive. “Those discussions tend to become hard or ugly, but if you don’t solve it, it becomes bigger.” So much so that at times there would even be multiple teams working on the same project.
This has led to an exodus of mostly foreign executives and the eventual arrest of some key local executives over trade secret theft. You can read more on that unfortunate situation here.
The Chou Gamble
In my article, HTC Corp Profits And Shares Keep Sliding; With Potential For Another Disappointing Quarter, I discuss how last week saw new lows for HTC Corp as their stock dropped by 4.7% to $131 New Taiwan Dollars (USD $4.39). As it stands now, HTC Corp is expected to post a full-year loss for the first time in its history. This trend will also see the firm miss their third quarter guidance which will only further drive their share price down.
The driving factor was a slowing in growth and sales that forced out smaller corporations. I believe we are starting to see that with the smartphone market. In my article, Are Things Getting Worse for HTC?, there was further evidence of a global slowdown in the high-end smartphone market. This slowdown could see a further erosion of their current global position.
Despite all these shortcomings and obstacles imposed by Mr. Chou, HTC has decided to continue on with the 10 year reign of their CEO. HTC chairwoman Cher Wang told Economic Daily News that Peter Chou has done a great job and that HTC has no plans to remove him from his current post. She continued noting that HTC has many innovative products and will continue to work to introduce excellent products to the world over.