On the Hot Seat with HTC America's Jason Mackenzie

HTC has certainly made inroads in the U.S. market over the past year, offering smartphones with all the major U.S. operators. The company made a big splash earlier this year with the release of the first Android-powered handset, the T-Mobile G1.

FierceWireless associate editor Phil Goldstein recently spoke with Jason Mackenzie, vice president of sales and marketing for HTC America about its collaborative relationship with operators, the importance of brand name and HTC's plans for more Android devices.

FierceWireless: In November, the Touch Pro smartphone became available on Verizon Wireless, joining Sprint Nextel and AT&T Mobility. And T-Mobile USA obviously is the exclusive carrier of the G1. What steps has HTC taken to cultivate the relationship it has with the major U.S. carriers and to gain traction in the U.S. market?

Mackenzie: We've been very fortunate in the sense that we do business with every operator here in the U.S., and take pride in the relationships we've been able to build. We have a very account-focused organization to make sure we're integrating their services, for example, into our products. And we're not just dropping the applications on the device, we're really trying to invest in making sure that we integrate those key services that are important to our customers in a way that's smooth and doesn't look like you're jumping from one operating system to another, for example. You mentioned the Touch Pro. That's a great example of being able to take a product and drive it across multiple key accounts. And we'll continue to do that going forward.

You might have read, Peter Chou, our CEO, was quoted recently saying that we had a phenomenal [Consumer Electronics Show], which is odd, because we didn't have any big announcements or anything. But really what he was talking about is that our meetings that we had with our operator customers were great. The business relationships are strong. We're excited about the products that we're collaborating together with them on this year and we expect to really grow our footprint from a SKU standpoint in each of our major operator customers going from 2008 into 2009. That is exciting especially because the operators at the same time are contracting the number of products they want to carry.

FierceWireless: One of the biggest problems that Nokia has had in trying to break into the North American market--especially the United States--has been its aversion to allowing the carriers and the operators to customize its handsets with their software and particular branded services. How has HTC dealt with this issue?

Mackenzie: I'd say we're basically the exact opposite. And what I mean by that is if you look back at the history of HTC, and our roots, and where we come from, we're coming from an ODM, mentality. And what I mean by that is working with partners like HP and Dell and Palm etc., where we would build those devices for them to their specs and they would manage the operator customer, if they had an operator customer on that side. So we came from very much a partnership-centered philosophy and then built upon that as we've kind of gone away from the ODM-type business and more to traditional OEM philosophy and working directly with the operators, not having that middleman, and then thinking more about the end user.

For myself, and my team, one of the things I'm preaching and pushing through, and it's also coming down from Peter Chou at the top is that we want to be easy to do business with. We understand that if you don't have distribution and you don't have strong partnerships, you'll always be on the edge of falling out and really suffering. And so we make a concerted effort to really try and integrate things that are important to the operator, but at the same time stand behind the things that are central to our brand.

FierceWireless: I know it's not customary to talk about the competition, but where does HTC see itself compared to its competitors in the market in North America?

Mackenzie: I think HTC sees itself not just in North America, but globally, as a pioneer of the smartphone category, which is, at the moment, transitioning from what characterizes a traditional smartphone into a more mass market. So, really, the way we see it is the area we've led and been quite successful for the last few years is the smartphone arena. People are looking for devices that do more, allowing them to be free and connected wherever they are, accessing email, calendars, contacts, all that stuff. That's kind of the heart of who we are. We've always made smart devices. The exciting thing now is what has in the past been a niche market is now becoming mainstream. We feel like with our strong partnerships that we have with Microsoft and Windows Mobile and Google with Android--having a head start on Android--we are poised to basically replicate the success we've had on the Windows Mobile side on the Android side, and really be able to offer customers a choice in this whole category of smart portables and smart devices.

We want to develop cutting-edge, innovative devices that help people be more productive and also allow them to have access to content that they want wherever they want. So I would say, to your example, we're definitely pushed toward the smartphone, Android category. And volume is obviously important. We want to continue to grow. And we're happy with the growth we've had so far.

FierceWireless: In December, HTC acquired the design firm One & Co. What was this meant to signal and what can be expected from HTC as a result of this kind of partnership?

Mackenzie: The first thing is that the One & Co. acquisition, which we're excited about, is really about just continuing to increase our competency around the area of design. You look at the Touch Diamond, for example. It has a great design, slim, beautiful, eye-catching, with the beveled back. We want to continue to push the envelope and meet the customer's demands in what they're looking for. In order to continue to do that we're scaling the business at the same time as our sales continue to increase. We've done business in the past with One & Co., and it just made sense to acquire them to beef up and grow our design center to keep pace with our business and our sales.

FierceWireless: I was at the G1 launch in New York. And someone asked Peter Chou whether or not he was a little miffed that they were calling it the T-Mobile G1 instead of the HTC G1. And he said not really, it was obviously about the partnership and what it meant instead of the name. Can you elaborate on that? Also, how aggressively will HTC produce more Android-based phones, particularly for the U.S. market?

Mackenzie: To answer the first part, because it actually ties in nicely with our initial discussion of partnerships and the way we do business with the operators. Growing the HTC brand is extremely important to us. You're going to see more and more investments going forward, and you'll see a lot of that happening this year.

Regarding the partnership with T-Mobile, we took the approach of, let's partner with the operator, transition with them and let's really try and show our customers the value of HTC, with the belief that eventually they'll come around. I think if you talk to our partners, they probably really respect that. With a few exceptions, all of the products we launch in 2009 will be HTC-branded, which is very exciting for us, because we got there not just by kind of putting our foot down, and trying to bully customers, but really in showing and educating the customer on our value.

So I think that goes to what Peter was talking about with not being miffed. Sure, we're trying to grow a brand, so would we have appreciated calling it the HTC G1? Of course, everybody would. However, there was definitely not a feeling of being miffed, because it is such a powerful device. We were actually honored to be a part of that project.

In terms of more Android devices, absolutely we will make more. We want to be No.1 in Windows Mobile device sales and in Android sales. We'll definitely be growing and expanding on our Android portfolio, the same way we do and will with Windows Mobile. What does that mean for Windows Mobile? Are you going to be scaling that down? The answer is no. We've got a very healthy-sized Windows Mobile engineering team, as you can imagine, having done that and led that category for five to 10 years. And also we've got a great head start on our competitors in terms of the expertise we've been able to assemble throughout the development of the G1, and we intend to utilize that to fulfill our ultimate vision in providing a wide range of products for a wide range of customers.

FierceWireless: How has HTC's channel distribution model evolved in North America? How reliant is HTC on carriers for distribution?

Mackenzie: The carrier obviously plays a huge part in distribution because the carrier's company-owned retail stores--it doesn't matter if you're talking about Sprint or T-Mobile or AT&T or anybody--those stores are driving significant volumes. They all have their dealer partners, and then national retail.

When I started in October 2005 there were just a couple of us here. And so I really had the opportunity to help build out what our channel engagement process looks like. Now we've got roughly 120 people that are focused in one way or another on driving sales of HTC products. We have individual account teams that focus on actually going out and partnering with the operators that sell our devices, whether that's though their company-owned retail stores or their dealer partners. So we rely heavily on them. We come alongside them, make sure their folks are all trained on our devices and help make sure that we're getting the distribution we need and that we're maximizing all the channels.

The second thing is really probably more toward national retail. That's one of the advantages I would say of a couple of years ago we started playing a little bit with unlocked devices. Experimenting is probably the better word. That was not all about, let's try and sell millions of unlocked devices in the U.S. It's not the case. What that was about was we can sell some, we can make sure our HTC fans are happy and that they're getting the devices that they may not be able to get if they're just going through operators. So devices that may have launched in Europe or Asia but were not going to come through carrier distribution, we wanted to make sure those were available for our HTC fans. And then, two, a big piece of the strategy was around growing our relationships with our national retail partners. I'm very, very pleased with how that's going. We've been able through that process to get a lot closer with folks like Best Buy, for example that we may not have been able to when we were only relying on the operator as an intermediary.

FierceWireless: One of the predictions that FierceWireless recently made for 2009 was the demise of the clamshell form factor in cell phones. Do you agree with our prediction?

Mackenzie: I think that demise is too strong of a word because a few years ago everyone was talking about the demise of bar phones. And everything was clamshell. I just think that the market is so cyclical and things come around, especially in the wireless industry. It seems like things are moving so fast. But I think right now it's a tough time for the clamshell because of the touchscreen device. If you want to deliver a great web browsing experience, it's tough to do it on a screen size that's not big--2.8-inches or bigger. And that's what I think is driving a lot of smartphone usage right now, is that the browsing experience is getting so much better.