HTC Hero Gives a Sense of What Android Can Do

| June 26, 2009 | Mobile Devices | Competitive Intelligence Report

| Analyst: Avi Greengart

Current Perspective: Positive
Vendor Importance: Very High
Market Impact: Very High

Event Summary

June 24, 2009 -- HTC debuted HTC Sense, a people-centric user interface that will be applied across a portfolio of phones beginning with the HTC Hero. Sense is designed around three principles: make it mine, stay close, and discover the unexpected. The Hero runs Android and has a 3.2-inch HVGA touchscreen, GPS, a 3.5mm headphone jack, and a 5MP camera. It will be available in Europe in July and in Asia later this summer. A distinct North American version will be available later in 2009. No pricing was provided.

Analytical Summary

• Current Perspective: Positive on HTC’s Hero device and Sense software user interface, as this combination finally “finishes” Android, which always felt half-baked (even with recent software updates). Sense provides a complete user interface overhaul that respects Google’s core UI constructs while dramatically improving and polishing every application. The most critical change is in contacts; HTC employs a people-centric metaphor that puts all interaction with someone – and their social network feeds – into that person’s contact record. As if that were not enough, the Hero is the first device to have Adobe Flash 10 integrated into the browser, arguably making it the most desktop-like browsing of any mobile device. The Hero will not arrive in the U.S. until later in the year and, as Sense is not backward compatible, it risks hurting sales of its Android phones until then.

• Vendor Importance: Very high to HTC, which has established an early lead in Android devices but is about to get a lot more competition. As the company moves beyond its roots as an ODM (original design manufacturer), it needs to establish not only a brand, but also a brand identity. Sense is a major step in the right direction and it will be even more powerful once it is applied broadly to HTC’s Windows Mobile line.

• Market Impact: Very high on the smartphone market, as HTC is now not only the first off the block with Android phones; it is also the first to meaningfully differentiate using Android as a base. Samsung has TouchWiz, but a cluttered page for widgets is not enough to provide a meaningful user experience in an iPhone age. Motorola has said that it is planning Android phones with social networking at their core; that description could also be applied to Sense. HTC has said that its TouchFLO 3D UI overlay on Windows Mobile will gain Sense’s capabilities, but that Google-experience Android devices, like T-Mobile’s upcoming myTouch, will not be upgradable. This instantly makes the myTouch obsolete before it is even launched.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Mobile Devices | More information

Recommended Competitor Actions

• Palm needs to add social networking status updates to contacts, and point out that it retains an advantage in rich, visual multitasking that Android does not offer. However, the best thing Palm can do to ensure its long-term viability is to get its mojo SDK for webOS out the door and start building an application ecosystem around the Pre. Thirty apps – no matter how many times they have been downloaded – are not enough.

• Apple needs to add Flash 10 support to Safari, provide for multitasking of third-party applications, and start thinking about making the much-praised iPhone user interface more integrated and customizable. Apple retains a significant competitive advantage in purchasing and synchronizing video content and podcasts, as well as in applications. In its next round of ads, Apple should highlight the new hardware accessories enabled by the iPhone 3.0 SDK.

• HTC has given Samsung and LG a roadmap on how to do widgets right while demonstrating that widgets are just one small piece of the overall user experience. The Koreans have some hardware advantages in terms of scale and access to advanced components, but if they do not dramatically improve their software design efforts, they could easily find themselves squeezed between vertically-oriented software/hardware combinations (such as Apple, RIM, Palm) and strong custom implementations of licensed platforms (such as HTC).

• Nokia needs to up its game and stop distracting itself with online services and chip announcements; it is all about the device’s software experience. The contact-centric metaphor is something Nokia has discussed internally for most of this decade; why has HTC gotten there first?

• Motorola is betting its future on its own social network-specific implementation of Android, but the company has not disclosed any details on what products it has planned or what its user interface will look like. HTC’s Hero appears to be a fairly strong version of that same vision, so the window of opportunity for Motorola to garner press and analyst enthusiasm for its upcoming products is closing.

Recommended End User / Customer Actions

• The T-Mobile G1 (and upcoming myTouch) are plain-vanilla Android implementations that will not be upgradable to Sense down the road. Consumers considering an Android phone really ought to wait for the Hero to start shipping in the U.S.

• Consumers seeking an integrated social networking experience on their smartphone will have two choices once the Palm Pre makes its way to Europe and the HTC Hero comes to the U.S. The Pre uses Synergy to pull contact and calendar information from several sources, and the Hero uses Sense to pull contact, status updates, and messaging history into a unified view. The Pre has better multitasking, while the Hero has access to a much bigger app store.

• Consumers looking for the widest variety of apps and accessories should get an iPhone. While the size of the App Store is not relevant in absolute terms – nobody is going to download 50,000 apps – the tremendous variety and innovation available for the iPhone/iPod touch platform means that the experience can be customized to exactly the apps you need.

• Entertainment-centric users will also want to consider the iPhone ahead of all rivals. The Hero has a CoverFlow style music playback interface, but the iPhone actually is an iPod and can play music with DRM, along with rented or purchased movies. The iPhone also ships with 8-32 GB of flash memory standard, while the Hero does not have a significant amount of internal memory for media storage.

• The iPhone is also the phone to get for anyone who is seeking simplicity; everything goes through the home button (so you can never get lost), there are minimal menus, and you do not need to memorize a half-dozen gestures to navigate around.

• Enterprise users who are required to get a BlackBerry have many choices at many carriers, but the HTC Hero obviously is not one of them. However, even email-centric consumers who do not need to hook up to a BES will want to look to the BlackBerry line before the Hero. A BlackBerry Bold, Tour, or Curve provides a physical keyboard and more holistic e-mail experience. BlackBerrys buzz when new mail comes in, a light flashes, and new messages are automatically brought to the forefront when the unit is removed from the holster.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Mobile Devices | More information

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