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Creative Technology CREATIVE TECHNOLOGY Oscar P.D. Walet B.Sc Thesis July 29th, 2017 “How can radical innovation bring back product competition in a stagnating smartphone industry?” Supervisors: Prof. dr. A.H Van Reekum Dr. K. Zalewska -Kurek Telecommunication Engineering Group Faculty of Electrical Engineering, Mathematics and Computer Science University of Twente P.O. Box 217 7500 AE Enschede The Netherlands CreaTive Technology Bachelor Thesis 1 | P a g e CreaTive Technology Bachelor Thesis ACKNOWLEDGEMENTS I would like to take the time to thank the people who helped me in making this thesis possible. First off, thank you to my supervisor Rik Van Reekum, for giving me the proper tools to improve my work, as well as my critical observer Kasia Zalewska- Kurek for doing the same. Furthermore, I wish to give a big thank you to my father for not only supporting me along the way, but also in helping me in finding professionals within this industry, which I cannot thank enough for all of the feedback that they gave me. I also would like to thank all of the people I interviewed, who gave me the necessary insights to improve my work. 2 | P a g e CreaTive Technology Bachelor Thesis ABSTRACT The aim of this thesis is to investigate and analyse the smartphone industry and the company, HTC, within this industry, in the hopes of finding a radical innovation that could generate product competition, in this stagnating industry. This bachelor thesis is divided into two parts where one of them is performing an analysis and the second is developing a product concept. During the first part, information will be collected and analysed from literature papers, as well as two professionals from the multinational company Thomson Reuters. The second part deals with all of the ideation and realisation of a product concept, based on the information that were analysed during the first part. Additionally, the marketing of the product concept will be made in order to make sure that the product could be diffused well if it were made. After all of this, a user testing made under semi-structured interviews was realised in order to gain some insights to how people feel about this radical innovation and if they have any suggestions to improve this one. The researches have led to the conclusion that radical innovation is one of the only way to bring back product competition in this industry, due to the fact that an incremental innovation cannot impress the potential users, who have grown accustomed to the technology, making them harder to impress. Nevertheless, this radical innovation must be useful and interesting enough for the user to actually make a difference. 3 | P a g e CreaTive Technology Bachelor Thesis TABLE OF CONTENTS Introduction ................................................................................................................ 6 Part I - Analysis .......................................................................................................... 7 Industry level .............................................................................................................. 7 1. What is a smartphone? ................................................................................. 7 2. History ........................................................................................................... 8 3. Impact on the world ..................................................................................... 10 4. Dominant design ......................................................................................... 12 5. Innovation and its diffusion .......................................................................... 14 6. Competition ................................................................................................. 22 Company level – HTC .............................................................................................. 25 1. History and evolution ................................................................................... 25 2. Corporate strategy....................................................................................... 26 3. Business strategy ........................................................................................ 31 4. Problems and recommendation ................................................................... 34 Part II ....................................................................................................................... 39 Developing the product ............................................................................................ 39 1. Ideation ....................................................................................................... 39 2. Specification ................................................................................................ 42 3. Realisation .................................................................................................. 45 4. Marketing the product .................................................................................. 48 Evaluation and reflection .......................................................................................... 54 Evaluation ............................................................................................................. 54 Conclusion ............................................................................................................ 57 Reflection ............................................................................................................. 58 Future work........................................................................................................... 58 APPENDICES .......................................................................................................... 60 APPENDIX A: relevant information ....................................................................... 60 APPENDIX B: Marketing problems and solutions ................................................. 62 APPENDIX C: Product concept ............................................................................ 63 Bibliography ............................................................................................................. 67 4 | P a g e CreaTive Technology Bachelor Thesis TABLE OF FIGURE Figure 1: Time spent by user in the app according to category 11 Figure 2: Tablet sales over the years [24] 18 Figure 3: Diffusion of innovation given by Rogers. 22 Figure 4: Indicators of Porter’s five forces model 22 Figure 5: HTC SWOT analysis 27 Figure 6: Apple’s commercial [61] 38 Figure 7: HTC’s commercial [62] 38 Figure 8: First sketch 41 Figure 9: Second sketch 41 Figure 10: Third sketch of the product concept 44 Figure 11: Available colours of the product concept 44 Figure 12: Animation and side-bar of the Edge Sense feature. 46 Figure 13: Maya render of the product concept (front and back) 46 Figure 14: Screenshot of the product concept’s OS. 47 Figure 15: Positioning Map of HTC compared to the competition 51 Figure 16: Brainstorming of the promotion of the product concept 53 Figure 17: Modifications of the radical innovation 56 Figure 18: Evolution of the smartphone design 60 Figure 19: IOS 1.0 (on the left) VS Android 1.0 (on the right) 61 Figure 20: IOS 10 (on the left) VS Android 7.0 (On the right) 61 Figure 21: A problem in HTC’s marketing 62 Figure 22: HTC’s confusing naming approach for their flagship devices 62 Figure 23: HTC MoonBlack product concept with Edge Sense 63 Figure 24: Screenshots of software prototype 63 Figure 25: Product concept in gold 64 Figure 26: Product concept in blue 64 Figure 27: Product concept in black 65 Figure 28: Product concept in silver 65 Figure 29: Product concept in red 66 5 | P a g e CreaTive Technology Bachelor Thesis INTRODUCTION The topic of this case study is to solve a problem in an important industry which is the smartphone industry. Its importance is not only present in terms of economic reasons, but also in terms of technological advancements. Indeed, in years prior to 2016, smartphone companies took risks and wanted to differentiate themselves by bringing unique designs and unique features into their high-end devices. All of this made for an exciting industry with high product competition. People were buying and people were interested, more than ever, in what companies had to offer. Though, in 2016 marks the first time that the smartphone market has gone flat, and this is mostly due to the lack of innovation and lack of creativity that the smartphone manufacturers put when designing their newest flagships. This lack of exciting products was not only noticed by consumers but also by professionals working with or on the smartphone industry, stating that this industry is nowadays “a bit boring”. Therefore, the goal of this thesis is to see whether it is possible to bring back product competition within the smartphone industry. In order to do this, it is needed to first gain insight on both the smartphone industry as a whole, as well as a specific company from it, HTC, in the hopes of bringing back product competition thanks to a feasible product concept. This product concept will be made as if HTC were the ones manufacturing the product, giving sense to the product concept, as well as give guidance to the project. Accompanying the product concept will be a marketing plan according to HTC’s resources, in order to ensure the best diffusion of the product, which will help in giving excitement towards the mentioned industry. Why HTC? HTC has always been an innovation driven company, and their
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