HTC CEO Peter Chou discusses future of smartphones

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HTC CEO Peter Chou discusses future of smartphones

HTC, with its U.S. headquarters in Bellevue, is moving from being a faceless manufacturer to a fairly recognized brand over the last two years, as smartphone sales took off.

Peter Chou (cq), CEO of HTC. Chou carries several cell phones on him to test for reliability. HTC is a Taiwan based phone manufacturer, they produce several of the hottest selling phones. Brier Dudley story:

HTC

Founded: 1997 in Taiwan

Business: Smartphone manufacturer

Employees: 9,021 globally, 110 at U.S. headquarters in Bellevue and Seattle software lab.

First hit: Compaq iPaq

Sold: 5.9 million phones in second quarter of 2010, up from 2.5 million in Q209, according to Gartner research.

Upcoming products: Windows Phone 7 devices, T-Mobile G2

If an HTC smartphone is going to have antenna problems, one of the first people to find out probably will be Peter Chou.

The chief executive of the hot Taiwanese phone maker carries more phones than a shopping-mall kiosk.

Stashed throughout the pockets of his jeans and blazer is a virtual showroom of upcoming superphones that HTC is developing with companies such as Microsoft, Google, Sprint and Verizon.

Last week, during a visit to the company's U.S. headquarters in Bellevue, he was carrying silver, purple and black phones with 3G and 4G radios and who knows what else inside.

"I'm testing all of our devices to make sure that our devices are having a good experience and are mature and stable," he said apologetically, as he patted and searched his pockets, looking for a T-Mobile G2.

Chou, 52, had breakfast earlier that day with the chief technology officer of T-Mobile USA, which chose HTC to build the first phone for its souped "HSPA Plus" network that promises speeds on par with Clearwire's 4G service.

The G2 — which is generally available Oct. 6 — feels like a slab of brushed aluminum running Google's Android software. It's a descendant of the curvy Nexus One phone HTC built for Google to showcase its mobile capabilities.

HTC started out as the first manufacturer of Microsoft-powered smartphones in the late 1990s. Lately it has continued to produce the first phones on new platforms, including the first Android phones and the first to use Clearwire's 4G network.

The company also has moved from being a faceless manufacturer to a fairly recognized brand over the last two years as smartphone sales took off. Research firm IDC expects sales to grow 55 percent this year — to 269.6 million units — and 24.5 percent in 2011.

HTC, meanwhile, netted $423 million on sales of $3.076 billion in the first half of 2010.

Later this year, HTC will release some of the first Windows Phone 7 devices.

During an interview, Chou wouldn't say much about products beyond that. Nor would he confirm rumors HTC may offer a tablet computer or discuss the patent fight Apple started with HTC in March. But he did joke a little about the iPhone 4 antenna problems.

Here are edited excerpts of the interview.

Question: What do you think about Windows Phone 7? Do people in the industry think Microsoft has a chance to come back in the mobile business?

Answer: I do. This is a significant milestone for Microsoft in the mobile space. They put tremendous focus, effort on this design. I'm very excited about this brand-new experience. I think it will get positive acceptance from the industry and the market.

Q: You built a nice HTC software layer to differentiate your phones. That looks tougher with Windows Phone since the interface is pretty specific. What kind of "special sauce" can HTC bring to its WP7 devices?

A: Innovation doesn't need to always be the same. We are able to innovate on top of that, but the first time, just like our first Android phone, we ended up not putting in too much the first time. Over time, we believe we can innovate on top of that.

Q: Are there international markets where Windows Phone will be especially strong?

A: In China the Windows phones are very popular, the acceptance is very high. They have a lot of legacy Windows users.

Q: The G2 has a slide-out keypad. Are keypads coming back?

A: We don't think one device will fit all. What we try to do is come out with a portfolio of devices: we have Windows phone, we have Android phone, we have a keyboard device, a much bigger display like Evo 4G and we have a smaller form factor. We try to make sure all have a very good experience and let consumers decide what they want. Some people like a keyboard.

Q: There are rumors that you're working on a tablet. Will you offer one?

A: Our teams are looking into all kinds of products and portfolio possibilities, but we need to make sure we have best experience and the best value proposition when we come out with a product.

It doesn't seem like much of a stretch to go from a 4-inch screen to a 7-inch screen. In terms of capabilities and technologies and expertise, we have all of this. But we just want to make sure that we have a very good, differentiated product coming out.

Q: You built Google's Nexus One phone. Now we're hearing about Facebook doing a customized phone. Will more tech companies develop branded phones, and is that an opportunity for HTC?

A: Every company would like to come out with their own innovation. HTC, our philosophy is that business can be more cooperative and does not need to be just competing.

Sometimes you need to create a unique value or unique position for yourself. There's no rule which model is better, as long as this model uniquely positions you. I think that's the most important.

Business is about cooperation. Being humble has a great value. When you're humble, you listen. When you listen, you can hear a lot of valuable information from your partners, your customers, who want to help you. So that's why our company, the philosophy is: you're humble, let's work hard, don't disappoint our customers. So over time we've become better, better, better.

Q: The companies you work with aren't known for being humble ...

A: That's why we can work with them. If we're always showing muscle, always competing — 'who is more arrogant' — that won't work.

Q: I see AppleTV and Google TV as being partly mobile plays — you can control those devices with their phones. Do you see the phone being used more in the living room?

A: Yes, over time, definitely. The phone is becoming your everything computing device. For example, we just launched a product last week in London that has DLNA (digital networking) capability, so this device can directly, wirelessly transmit video to your TV. Instead of some device using HDMI with a cable, this one directly transmits video information to a TV.

Q: So how will we use the phone three years from now?

A: This could be your content-consuming device — with this screen you could watch a movie here. This can be your reading device — the screen is big enough; you can have a good reading experience. All of your reading content can go with you everywhere. Also, I believe the mobile Internet experience will continue to optimize and innovate. The electronic wallet should be coming in the next couple of years. I also believe that we are in a threshold point where all kinds of industries can use smartphones — for education, or health care or energy — so this can be a very important product for people in the future.

Q: Will smartphones be displaced a bit by bigger-screen, tablet devices?

A: There will be all kinds of devices. The portfolio can be from very small — wearable — to maybe 10-inch (screens), but I believe these types of (smartphone) devices probably will be a very high portion of mainstream because this will be always with you. You can save everything. This is a part of your life.

Q: The G2 has a metal case. Will you have to hold it a certain way to avoid antenna problems?

A: No, no. Antennas are sensitive, definitely, but it is our responsibility to take care of whatever the usage is so it won't be degraded. We can't complain that antennae is so complicated that 'user, you have to compromise a little bit.' You can't say that. It is our responsibility, our profession, and our expertise to take care of whatever the user scenario.

Q: So you're not going to tell people "you're holding the phone wrong" (like Steve Jobs told an iPhone 4 user)?

A: No. I can't blame consumers, how they use them.

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