As original design manufacturer (EDM) ETC earned 80% of the revenues out of the Pads, but Choc and Wang also decided to enter the mobile telecommunications market. Their new goal was to make smartness and wireless Pads. ETC was operating in two segments: the EDM business and the mobile operator business. All these processes were done with little connection to end-users. But In 2006 competitors were rapidly catching up In the EDM market. The strategy of ETC had to be changed.
An advantage of ETC Is their strong organization. They have always had a high experienced management, a quick nimble organization and an open work environment which stimulates Innovation. Especially the speed on which they can create new systems is appealing. Knowing these strengths, ETC started branding and selling handsets under the company’s own name. Although history did not speak for them, several DMS have tried to build their own brands with little success; ETC officially started its brand strategy in 2007.
In order to get better margins and to differentiate among DMS, ETC invested in complementary business by offering mobile operators customized phones based on products conceptualized and designed by ETC. The advantages of this approach were that it was highly customized and it gave a lot of flexibility. Operators gained a greater sense of control over their product portfolio, which they appreciated a lot. Downsides were the high costs on R efforts and employees.
ETC focuses on the overlap of professionals and consumers, but this also has the disadvantage that consumers expect innovative designs with attractive designs and functions that would catch the operators’ attention. Because of the speed and excellent technical innovation in ETC they were able to lower the average product life cycles compared to competitors, but this also brings more costs with it. Because of he growing market for smart phones (exhibit AAA), ETC started its own internal research center “Magic Labs” to drive innovation for the launch of a new series of smartness.
The big advantage of ETC was that Apple launched its phone, Just before ETC launched Its first ETC Touch. The Phone already educated the end-users to understand and accept what the technology could really bring to their lives. The Touch and Its follow-up phone, were are success. ETC started working with Google, with the Android technology, which Is also a company with a lot of competences. Looking at Drank awareness HI c still NAS a long way to go. An advantage AT their customer satisfaction, if the customers buy a ETC product, the satisfaction is very high, but they are not familiar with the brand (Ex. AAA and bib). The prices of ETC products are relatively high compared to competitors (Ex. 11). They already downsized a lot of costs, but economies of scale are difficult because they are quite small compared to competitors like Monika. Monika had 30% component cost advantage over ETC due to economies of scale in purchasing. This strong competition also has a disadvantage for their strategy to spread and create the brand awareness or ETC. Among the big competitors they are forced to a global roll out, so try to introduce to all markets at the same time.
But ETC does not have the abilities to do so. Next to this ETC is still quite dependent on others, they also have to pay a lot of different fees. This is a big part of their total costs, which is money they cannot spend on marketing or R&D. 2. Itch’s Operating System Strategy To decide what is the best choice in operating system for ETC an analysis has been made for the two current partners, Microsoft and Google, and developing an own operating system. Microsoft ETC had its breakthrough in 2000 with its PDA that ran on a Microsoft Windows platform.
Also during their new step into the mobile telecommunication market they had a good collaboration with Microsoft, which led in 2002 to the first Window-based smartened. ETC sold 30 million Window smartness. These two companies built up a close relationship in the years, which is a good base for the future. However during the last years a decrease in the percentage of the revenue for ETC from Window based phones can be seen: from 84% in 2007 to 53% in 2010 (Ex. 9). This shows that ETC became less dependent of Microsoft. Also the licensing payments to
Microsoft represented the second biggest expense category for ETC. There is not a good fit between Microsoft and ETC anymore. ETC is known for innovation, user friendliness, while complaints about the Windows Mobile are poor user friendly experience, weak support for design and an unattractive design. Android In 2006 ETC started a collaboration with Google. It is an open-source platform that can be distributed through organic growth and a potential to run on any network on any platform. Another positive aspect is that there is no licensing fee.
Android is a popular system which gets a lot of media attention. Google is known for its innovation which is a fit with ETC and what they want to have as their image. During the last years there was an increase in revenue for ETC: from 0% in 2007 to 47% in 2010 (Ex. 9). If ETC cooperates with Google, they will still be dependent on another company. The question is how far dependent ETC wants to be in the future. Own operating system n now HI c NAS always Eden dependent on toner companies Witt regard to tenet operating system.
This could change if they decide to develop one themselves, then they would have everything under their own control. This way ETC can also try to how their innovative character in the operating system. However the costs are $200 million (double the current R costs) and $50 million for annual maintenance costs. Also the time span is at least two years, this can mean that before it is finished a lot of new aspects are already developed by competitors. That is also the reason why it is so difficult to be innovative. Recommendations For ETC it is important to create economies of scale.
The two approaches for growth which fit the best with ETC are: product development (new markets, existing product) and market development (new products in existing market). Both strategies fit the innovative character of ETC. In the mobile phone market a lot is happening, there are new entrants, shorter product life cycles and innovations are breathtaking. Because ETC is strong in innovating in a fast pace they should keep their focus there, instead of investing a lot of time and money in an own operating system. Our recommendation is to keep cooperating with Google.
With the popular and innovative character of Android this will fit the ETC phones. Another important aspect is that there is no fee involved which is an advantage. ETC should however keep in mind for the future how Android develops and if it will stay popular and innovative and respond pro active on this. 3. Recommendations towards an App Store With the growth of the smartened industry also the app stores are a fast growing aspect. To make the decision what ETC should do four options are compared. Apple Apple has a very popular app store with a large brand awareness and is known for its user friendliness.
Some people say this is what makes a device worth the price, it adds a great value. Also they have an extensive offer of APS, 40,000 APS are available. The app store of Apple is proprietary which also means that Apple will always stay in control and there is no room for any input of ETC. Microsoft has a central app store with multiple third party stores. They have a large offer of APS, 20,000 in total. However they are very expensive, APS cost on average $10. When taking the ambitions towards economies of scale of ETC in consideration, this is a large disadvantage.
Google In 2008 Google’s Android entered the market, in a short time it already has 3,200 APS Ana expectations are Tanat Is well Keep on growing In a Tats pace. It Is an open-sourced platform which means that third party developers can create APS that can be carried out on different devices. A disadvantage can be that many mobile devices will SE Android and ETC will not stand out enough. Own App Store If ETC will create their own app store it will be a forward integration and the growth approach diversification can be used.
They will have everything under own control and are not dependent on others. All their innovative ideas can be brought to reality. But building up a store will be time and cost consuming. It is hard to start from scratch especially with all the competition it is hard to stand out. While the market offers already many app stores and ETC is too far behind it will be hard to achieve this within a short period of time. It is not a good idea to develop an win app store for ETC. If they will start now they will have the role of a follower which can be negative for their innovative image.
The large disadvantage; Apple has it is proprietary and they will stay in full control. Microsoft has too expensive APS and this does not fit in the strategy of ETC. Android is an open system, innovative and free in use, all positive aspects which fit ETC. The cost and time ETC will save with not setting up an own app store they should invest in building up knowledge and innovative strengths. Because they are very innovative, they can try to find a blue ocean in order to create uncontested market pace, create and capture new demand and align the activities in order for differentiation and low costs.
With a strong R&D department they have to focus on new opportunities and catch up with competitors. With a new innovation they can also make advantage of the first mover advantages. The innovations can take place on substantial and transformational level, big changes are still needed to stand out against competitors. Furthermore with the innovation ETC should keep focusing on brand awareness and customer satisfaction Reference 0 Huffier, D. , Renee, K. (2009), ETC Corp.. In 2009, Harvard Business School Publishing