HTC: Your next fave smartphone?

October 29, 2009: 6:53 AM ET

The largest smartphone maker you've never heard of wants to capture the hearts - and dollars - of the U.S. consumer.

Motorola's (MOT) Droid phone is getting a ton of buzz, and that's by design. Verizon Wireless (VZ) chief Marketing Officer John Stratton has said the marketing htc_logocampaign behind its iPhone competitor will be the largest in its history.

But the Google (GOOG)-powered device isn't the only smartphone the company is likely to begin selling at the start of November. Though no one has officially confirmed, the carrier is expected to announce a second device that will also run on Google's  Android operating system at half the price: the HTC Droid Eris.

Haven't heard of HTC? You aren't alone.

Since 1997, the Taiwanese smartphone maker has built a business out of creating "white label" devices for companies like T-Mobile (DT) and Palm (PALM) to brand and distribute. It's been lucrative. After Apple (AAPL) and RIM (RIMM), which together command 73% of the North American market according to IDC, HTC ranks third. That's right: No. 3.

Though it only has 7% of the market, that figure doesn't tell the whole story. Until recently, HTC simply never put its name on phones it made. (For example, most of the devices represented by T-Mobile, which has six percent of the market, are made by HTC.)

From "white label" to consumer brand

But as the market heats up, HTC wants to be more than a white-label hardware provider. Jason MacKenzie, who runs HTC's North America operations out of Seattle, calls it a "major shift in strategy."

So last December, HTC bought the San Francisco-based design firm One & Co, so the designers could work more closely with its engineers. HTC's latest devices sport the company's logo. And this fall, HTC made its largest investment ever, pouring millions of dollars into an ad campaign that includes everything from bus stop billboards to prime-time TV spots that tout the slogan "HTC: quietly brilliant." The first three will go live on October 29.

If HTC hopes to remain competitive in this market, this move is crucial. When the company made its brand debut last year, as the hardware device behind the T-Mobile G1 with Google, it was the only Android device on the market. But within the year, more than 20 Android devices will be go on sale. As is evident with the Motorola Droid, not all of them will get equal marketing treatment by the carriers.

Devices trump carriers

At the same time, consumers' buying habits are changing. They no longer go to a preferred carrier like AT&T (T) or Verizon Wireless to review different phone models. Instead, they increasingly ask for phones by name, most often requesting an iPhone or a BlackBerry.

So will a "quietly brilliant" phone impress consumers enough to have them seeking out HTC devices over the iPhone? IDC analyst Ramon Llamas is skeptical. "I've got to tip my hat to these guys because the devices are very good," he says. "But branding oneself takes time, you don't get instant street cred."

MacKenzie expects to spend time. He says the marketing investment is the first of many to come.

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About This Author
Jessi Hempel
Jessi Hempel
Senior Writer, Fortune

Jessi Hempel is a New York-based technology writer for Fortune. She has written extensively about digital media, online advertising and social networking. Before joining Fortune in July 2007, Hempel worked at BusinessWeek and most recently served as their innovation department editor. Hempel is a graduate of Brown University and received a Masters in Journalism from The University of California at Berkeley.

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