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Saturday, May 25, 2013

A Best-Selling Phone? It\'s Not Just a Good Phone

Making a good phone isn't enough to compete in the brutal handset market. Just ask HTC, BlackBerry, Nokia and just about any company that isn't Apple. Chetan Sharma, an independent telecommunications analyst who does consulting for carriers, has come up with a formula to help explain how a phone becomes a big seller or a flop in the United States.

In Mr. Sharma's report, which will be released next week, he explains that a company must successfully execute a number of factors. Not only must it deliver a good product, it also has to have tight control over the supply chain to gain access to the components needed to make the phones - because if a phone is suddenly in high demand, the company can only sell as many handsets as it makes.

Samsung, which makes components, and Apple, which has strong influence over suppliers, are clearly at an advantage when it comes to controlling the supply chain. HTC, on the other hand, has struggled partly because its new flagship smartphone, HTC One, has faced inventory issues since the phone was introduced because of trouble getting some parts.

Another big piece is marketing, Mr. Charma said. Everything from TV ads to Web ads, and from in-store promotions to billboards, helps build buzz for a product. The phone carriers, AT&T and Verizon Wireless, play a large role in marketing. They decide how much they want to promote the handsets inside their stores, as well as how much to train retail employees on selling the phones to customers.

Branding - how a consumer perceives the company - is also a major factor. Apple and Samsung both have strong brand recognition, whereas a company like HTC is barely known in the United States.

“One has to be effective on all fronts to be a leader,” Mr.  Sharma said. “Apple used to dominate on all fronts. Its product was far ahead of anyone in the industry, but lately others have caught up.” Samsung, for instance, has been catching up on brand equity with marketing, he said.