HTC Magnet Systems Investment Is a BYOD Boost
HTC, the struggling Taiwan-based smartphone maker, has invested $35.4 million into Magnet Systems, a Silicon Valley company that builds platforms for next-generation enterprise applications, Reuters reported Aug. 20. Specifically, the investment gives HTC a toehold in the emerging market for bring-your-own-device (BYOD) technologies.
"The investment will bring social, mobile and cloud capabilities to HTC's portfolio of service offerings to its mobile enterprise customers," HTC told Reuters in a statement.
The announcement follows HTC's Aug. 20 admission that its investment in OnLine-a U.S. cloud-based gaming company that sold its assets and fired half its employees Aug. 17-will result in a $40 million loss.
While MarketWatch reports that "analysts and investors have recently expressed doubts about HTC's more than US$700 million buying spree since 2010 and are speculating that more write-downs will follow," HTC wasn't the only company to find OnLine intriguing. Warner Bros., AT&T, British Telecom, Autodesk and others also invested in the company.
Still, HTC also invested $300 million in Beats, whose audio technology it used to try and differentiate smartphones like the HTC One X. Nearly a year after announcing the deal, however, HTC announced plans to sell back half its shares in the company, leaving it with just a 25 percent ownership share, according to PC World.
HTC has made no secret of how challenging it has found competing against Apple and Samsung. In April, CEO Peter Chou said that, with the U.S. market the most difficult to claim a stake in, it would try to "balance sales" by leaning more heavily on the European and Asian markets. China, now the world's largest phone market, has become a particular focus, and successfully so.
"Among the international vendors, only HTC managed an outstanding performance in mainland China," Canalys analyst Jessica Kwee wrote in an Aug. 2 statement announcing second-quarter smartphone shipments.
"Its shipments grew 389 percent year-on-year to reach 1.8 million units for the quarter," Kwee continued, "noting the success was largely due to HTC's Desire V devices, which were designed with the local China market in mind. HTC's success, said Kwee, underscores the importance of tailoring offerings to local consumer preferences.
The investment in Magnet Systems will help HTC-which has appealed more to consumers, as the Beats and OnLine investments suggest-to better participate in the BYOD culture that has overtaken enterprises. Whether or not companies help to subsidize the purchase of a device or the fees associated with it, they're increasingly expected to secure it and enable its participation in a user's work-life balance.
A May study by Research and Markets found 65 percent of the enterprises that participated in the research to have plans to adopt some form of BYOD policy by year's end, encouraged by cost reductions and pressure from employees.
In June, Juniper Research reported that the number of employee-owned smartphones and tablets used in enterprises today will more than double by 2014, to 350 million devices.
Whether buying the devices or not, Research and Markets said in a statement, enterprises "must find ways to allow a diverse range of products to access corporate networks and systems, such that productivity is boosted without compromising security."