Thank you for sitting down with us.
Thank you! You have a very successful site.
Thank you. Yeah, well, we do our best, it's a lot of fun. So, Android is obviously huge news for you guys.
This is a significant announcement for us.
I assume that you guys have been working on this with Google for quite some time.
Yep. That's true.
Are we talking about, say, over a year that this has been in the works?
Two years. More than two years.
Then you've have been playing with Android, I imagine. If not on the HTC device (or devices) that you are working on, then at least some kind of build of the software. You've been fooling around with it and know what its like...
We didn't get too much of a sense of what this software is going to be about and what it's really like as a core experience. Can you tell me anything that you really like that Google has done with Android? And the things that you think that Android is really going to excel in? Things that you will be able to leverage in HTC hardware?
Maybe you can get a little more information [from the SDK]. But this is trying to be a more optimized experience of Google applications, and obviously the internet experience will be more optimized. So there are some things that I still think today are being... well, I'm a veteran in this industry and we've been working on this stuff for ten years and really waiting to see something which can really enhance the internet experience in these mobile devices. I believe in this system and I'm excited about its ability to perform well.
I think that in some ways in the last few years Microsoft has been holding its partners back with the Windows Mobile platform. I'm curious to know if you feel that Android is what is necessary for HTC to take the next step in next-generation mobile devices? Do feel that Microsoft is in some ways is holding you back?
No, not really. I think that Microsoft Windows Mobile has a lot of value and sometimes people may not see that. Windows Mobile has a lot of value and our commitment to Windows Mobile is not changing, actually. Our commitment to Windows Mobile is even stronger, but Android is, for HTC, a good opportunity to expand our portfolio. Maybe more consumer focused, that kind of an internet experience. But Windows Mobile is strong for enterprise [customers]. Of course, there are some devices we've been working on, like the Touch, where we're trying to improve the experience with it. Our belief is that not a single device can satisfy all.
We believe that a portfolio of products is important to different people and different segmentations or demographics. So at HTC our core values, our strengths, and our experience in the past couple of years is really about our commitment to innovation and our mobile operator experience. We work with all kinds of mobile operators around the world -- that kind of knowledge and trying to really drive the quality of the product up and to sort of incorporate with mobile operators. So we are adding a lot of value onto [Windows Mobile]. In short, We think that this is two truly separate things. We think that the opportunity will continue for both.
I find it interesting that you mention that this is more of a consumer focused product because I think the one thing that Windows Mobile has really done well, especially in partnership with HTC, is define these extremely enterprise-centric and very effective mobile business tools. Do you feel that Android is not really entering that space? And that they are going to limit to two different worlds -- you've got the enterprise and then the consumer?
Android is probably not entering into the enterprise. At least initially, I have to say. But do not assume Microsoft is only enterprise. Maybe in the past the devices were techy, bigger, and with an unattractive form factor, and of course we put a lot of effort to try and mature the experience. But this year you're seeing us ship devices like the Touch, which is much more consumer oriented, with a fine-tuned, simplified experience. So we believe that Windows mobile is there for consumer opportunity, and will continue working on that. But even still, there are different kinds of consumers, so we believe that Windows Mobile will continue to have opportunities.
Well, device like the Touch really underscores where HTC has been going, at least lately. You've been really effective by differentiating yourselves in the marketplace by the software and the HTC interface additions built on top of Windows Mobile. Android seems to be especially ripe for that kind of thing; is that something that you see as an extension of the HTC brand? Maybe doing a completely different user interface for Android? Or customizing it specifically to be what HTC wants from a mobile operating system?
But Android, it seems like, is going to be a lot more flexible--
Because of its eminent openness you could really do anything to it. Do you see yourselves really taking advantage of that openness and going crazy and developing all sorts of software and interfaces for it? Or do you just see something that you want to approach a little bit more like Windows Mobile at first and take it as is, and watch how the platform develops?
Well we are very committed to the Android platform and we believe that we can do a lot in the future.
That was totally non-answer! Ok, well I'm curious to know how Microsoft feels about your working with Google on Android. Obviously you guys have been Microsoft's best mobile partner pretty much anywhere in the world. When you think Windows Mobile you think about HTC. I'm very curious to know about what their reaction has been with you and how you've been dealing with them in announcing that you are going to become a two platform manufacturer.
Well our commitment to Microsoft and our partnership is not changing. I think that they are pretty clear about that. So, we have that kind of trusted relationship with Microsoft. Of course, sometimes as a company -- we are actually a very, very focused company. We are not trying this and that here and there. But sometimes we have to review our portfolio and I believe that they can understand. We are their best partner and will continue that.
Do they have anything to be concerned about Android running on current hardware? Will you or somebody somewhere be able to release a build of Android that you can throw on your Shadow or your Tilt or what have you?
Well if we want to be successful or successful products, we have to think of things holistically -- the whole thing. You need it to really impress people. Instead of just doing things here or there -- I've never seen a product that was very successful in that fashion. So I think there are no worries about that. We are actually very disciplined and professional and try to do these things separately.
Is that something you have the intention of doing? Using current hardware platforms to run Android?
So it's still going to be about the vertically integrated approach going forward? Not just about throwing any operating system on any piece of hardware.
Right. But, of course, we have a lot of the latest leading-edge wireless technology, so some of our software can definitely leverage that. But products need to be very specific. Today, people really interface with and are really passionate about [our] products, so they need to feel something really unique about them.
So how do you feel that working with Android at least in the US market is going to help establish the deep branding that you spoke about? Because HTC is obviously a brand that is coming into its own overseas and is to a certain extent doing that in the US, but do you feel that Android will really provide you new opportunity to establish the HTC brand separate from Windows Mobile and from "white-labeled" carrier devices?
Well, HTC is coming to develop our brand here -- with Android or not. Our devices, our design alone and our commitment to the market is actually [integral] to developing our brand. But definitely, having innovative design is always very helpful for brand value and awareness.
There is nothing in particular about Android that you feel is going to help you leverage that brand in the US?
I'm positive about [Android].
Jason Gordon (HTC Global Director of Communications): It enables us, based on what Peter said earlier, to go to a new consumer area. That by definition is a broader audience, and so that helps us expand the perception and visibility of the HTC brand.
What I'm getting at is when you running a Windows Mobile device, at the end of the day there always has to be that Windows Mobile badge on that back, right? When you turn it on it looks like a Windows Mobile device -- because it is one. And with Android you have a lot of opportunity there to really make your device your own -- however that may be. Your own interface or using their interface. Branding it differently and what have you. I feel like there is a lot more branding ability there for HTC in America.
So that's why I'm positive about it. That we are definitely helpful for our brand development. Brand value and awareness, both.
Well, I don't want to talk only about Android, as interesting as it is; you were just mentioning advanced wireless and there is a lot to talk about in the wireless world -- especially with you guys. One of the things that we are constantly looking at is the division between the US and "rest of world" (RoW), especially with 3G bands. How is that causing a schism on the hardware manufacturing side? We just had the advanced wireless band auction here for 1700MHz spectrum, which T-mobile obviously bought a lot of. So now that makes four different, separate, dissimilar 3G bands throughout the world. How does affect you guys on the hardware side?
It's very challenging. I really hope that one day the world can unify. Power outlets, all these plugs! [Laughs] So the world can really unify -- but the truth is every market is actually different. So people say that the US is very different, but actually Europe is very different as well. Asia is very different. China is different, India is different, Japan is different. You just need to build the capability to go to and support the market. But, of course, sometimes you might not be able to support all these technologies. Building in one wireless technology alone is already very challenging, but HTC is lucky, and, of course, we are very committed to advanced radio technologies. So HTC is actually already quite a rare company in way, having a very broad technology portfolio; we have GSM, GPRS, EDGE, CDMA, UMTS, Bluetooth, GPS, and WiFi -- all put together.
You know, sometimes you put it all together and you need to design a big antenna -- but the device has to be sexy and small. Meanwhile, inside there's all kinds of interference from audio to RF to WiFi to 3G. And microprocessors are running at very high speeds now. I joked about this two years ago, saying that "Maybe one day we'll have a handheld running at 1GHz". You know, now I think that maybe in two or three years' time we'll be running handhelds at 1GHz, but that will still produce a tremendous amount of interference -- so that is becoming a very challenging technology and capability. But if you can really do a good job in this area, then that is your value.
Do you feel like working with some of the US-only standards -- or even more specifically, with some of the very domestic-minded American carriers -- is a very distinct business challenge for you? Something that you have to look at from a completely different approach from the rest of everything that you do?
Yes, the US is quite different. US mobile operator behavior is very different. They are very powerful. [Chuckles] They are quite controlling. Sometimes there is a lot of reason for them to be so controlling, though. We can understand that because the US, for example, is very big, so you cannot build the same sales density like Europe or Asia. At the same time the US is also like maybe seven countries in Europe. The way the operate, the decisions from headquarters might not be relevant to the regional guy, so it's like you are working with seven countries. Device certification is very strict because there is a lot of quality and reception problems, so US standards and requirements are very high. So over time we have come out with US-specific versions and designs in terms to meet with all sorts of US requirements. So that's definitely painful.
So is that the future of these kinds of devices? Not including every single kind of radio and frequency that you can, but rather segmenting the market between US and rest of world? Because I think what a lot of people want to see, at least our readership, is one device that has quad-band 3G radio for example. That you can use on T-mobile unlocked or what have you (whenever they unlock their network) as well as overseas.
I believe that going forward that kind of worldphone will have more popularity. There are definitely a lot of people who are traveling more frequently, and going forward I think there will be more advanced worldphones coming out. And you know, the AT&T device we are making can roam between US, Europe, Japan. So it will become more popular.
So what is HTC's take on the 700MHz wireless auction in America? I know that every wireless company in the world has a take on it and I'm particularly interested in your opinion.
Right now, to be honest I have no idea what we are going to do with that. So where's the [700MHz radio] chip? We don't know yet. It will take some time for the networks time to work out the frequencies and chips.
The debate there, which is especially pertinent to a company like HTC, is on the one hand you have a lot of independent third party companies who want to be able to create their own networks and devices that are all interoperable. And on the other hand you have the all-controlling carriers who want to have command of that space and delegate everything therein. This actually really plays into your position, sitting in between the rest of the world and US, with its controlling carriers. How would you like to see those kinds of things change in the US market? Further, if you had control of all US wireless, what would you do differently?
Well, for us, HTC, we position ourselves as the partner of mobile operators. So we don't have that kind of power to change [the carriers]. So what we would do is just try our best to meet the mobile operators strategy. Of course, sometimes that strategy is a little bit painful but that's where you can do business. So we are not thinking to change them. But definitely I hope that some of the requirements can be reduced. Today the mobile operator has too many requirements. Very strict RF performance and network compliance and application service compliance -- the list is too long. It would be better to reduce some of that. I think that many of those I think are low value, but it looks like they just continue accumulating new requirements without getting rid of old ones. I think they have to somehow clean this up.
To tie this all together. Do you think Android is going to help clean this all up? Do you think that the complete openness is going to make things easier for everyone?
Well, there are a few operators thinking, are we asking too much? Are we asking too much in making the whole device design too complicated, and making things suppliers too difficult and driving up costs. So some operators are already thinking of this and are starting to simplify some. So I think that will be a new operator trend in the future.
Thanks so much for your time.
[Please note, Peter is not a native English speaker and did not make use of a translator, so some of his replies have been edited for clarity.]