Cher Wang: The Most Powerful Woman In Wireless
Eric Savitz, On Wednesday October 26, 2011, 8:05 pm
This story appears in the November 7 issue of Forbes Asia.
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Cher Wang would rather not be pigeonholed as a billionaire (which she is). She'd rather talk about the other thing she is: one of technology's most powerful executives, certainly the most influential woman in wireless. Sure, she and her husband, Wenchi Chen, are worth $6.8 billion as of our last count, making them the wealthiest couple in Taiwan. Her late father was a billionaire, too. When we first tri! ed to si t down with Wang, the chairman and cofounder of the Taiwan mobile giant HTC, for a profile for the FORBES billionaires issue, she demurred. Too much focus on money and not enough on business. So our first face-to-face meeting with Wang, in July, more than six months in the planning, was all business. She chose the spot, the Faculty Club at the University of California, Berkeley, her favorite neutral ground. I walked into the room and hadn't turned on the recorder yet when Wang stood up to greet me, laughed in a throaty Lauren Bacall voice, pointed at the iPhone in my hand and said, "You've got the wrong smartphone." In a clear sign of their growing rivalry, Apple and HTC have been suing each other for patent infringement in courts around the world. In some respects HTC is proxy for Apple's competition with Google's Android operating system software; Apple has also been wrangling with Samsung over similar issues. HTC lost the most recent round, after the U.S. International Trade Commission ruled that the iPhone does not violate HTC's patents, although the court found the HTC patents at issue to be valid. HTC's response was that the ITC case was just one step in many proceedings, and that it intends to protect its intellectual property. This is going to be a long, drawn-out war. HTC's rise to the top ranks of the smartphone sector has been nothing less than astonishing. Just a few years ago the company was a little-known Taiwanese contract manufacturer called High Tech Computer Corp. Now it ranks among the world's largest players in wireless handsets. With a market capitalization of $21 billion, HTC is worth more than Research In Motion ($12 billion) and is just slightly behind Nokia ($23 billion). While based in Taiwan, HTC does little business in Asia; the company sells half of its phones in the U.S. and another 35% in Europe. HTC sold one of every five smartphones in the U.S. in the second quarter, according to research firm Canalys, which made it the number-two vendor, trailing only Apple at 25%. And H! TC conti nues to gain ground: In September it posted sales of $1.5 billion, up 68% from a year ago. For the third quarter sales were up 9% from the prior quarter and 79% from a year ago, to $4.5 billion. (The company has reported monthly sales only so far, and not full third-quarter results.) It is only now starting to gain some traction in mainland China. Wang leaves the day-to-day operations to her longtime friend, CEO Peter Chou, an early hire. She spends a lot of time living not in Taiwan but in Silicon Valley and not, by the way, at HTC's U.S. base in Bellevue, Washington, 5 miles down the road from Microsoft headquarters. While there are advantages to Wang being in Silicon Valley, it does raise questions about just how actively engaged she is in the company's operations. Yet there's no doubting her prominence in Asian business. In addition to her role at HTC, she is chairman of Via Technologies, a Taiwan chip company where her husband is CEO; the two were among a small group that built Via in the 1980s from the remains of Symphony, a California maker of core logic chips. And make no mistake: The vision behind HTC's success is all Cher's. "I confer with him frequently on strategy, directions, acquisitions, major hirings, legal issues, government relationships and risk management," she says of Chou. Wang's vision these days is for HTC to become more than just a phonemaker. It wants to expand the content and experiences available to users of its devices, and to do so it is bulking up its patent portfolio and spending on acquisitions. HTC in November 2010 cut a licensing agreement for the 30,000-plus patents held by former Microsoft exec Nathan Myhrvold's company Intellectual Ventures. In April HTC bought a collection of nearly 100 mobile technology patents and applications from the infrastructure provider ADC Telecom for $75 million. In July HTC agreed to pay $300 million to buy S3 Graphics, a company owned by Via and an investment company controlled by Cher herself that happens to have a portfolio of 235 pate! nts and applications used to render images on cellphones. Among S3's licensees: Microsoft, Sony and Nintendo. While some knocked the deal as being not-quite-arms-length, HTC has good reason to own S3. On July 1 the U.S. International Trade Commission ruled that Apple infringed two S3 patents related to compressing images and image data formats. Coincidence? Uh, no. Google in September handed over nine of its patents to HTC for use in an ongoing series of patent battles with Apple. While the legal skirmishes go on, HTC's longer-term plan is to distinguish itself in the handset market by offering an HTC-specific experience on both Android and Windows phones. It starts with a piece of software called HTC Sense that sits on top of the operating system and provides considerable fit and finish to the phones. Ergo, the weather app on the HTC phone includes lifelike animated graphics; when it is raining outside, digital water droplets appear on your phone's screen. Thunderstorms bring animated lightning displays. You can silence a ringing HTC phone simply by turning it over. To make it easier to find your phone buried inside a pocketbook or backpack, the phone rings louder when in the dark, then quiets when pulled into the light. Integrate your phone with your social networks, and a phone call from a friend will pop up his latest status update. If it happens to be your pal's birthday, you'll know it at the first ring. HTC wants to involve itself in experiences outside of the phone. In early 2010 HTC invested $40 million in OnLive, a startup founded by WebTV inventor Steve Perlman that hosts network-based versions of multiplayer video-console games. While OnLive's software so far has been targeted largely at PCs with fast Internet connections, the service is likely to spread to mobile devices as 4G access becomes more ubiquitous in 2012 and beyond. At some point HTC sees its devices becoming a gaming platform. Asked when OnLive might debut on HTC phones, Wang would say only that "it's coming, it's coming." More recently ! the comp any invested $300 million to take a majority stake in Beats, a headphone company started by rapper Dr. Dre and music producer Jimmy Iovine. The idea behind that deal: that your phone isn't just about making calls, it's about being entertained, which includes having highend audio experiences. HTC's first entry into the tablet market, the Android-based HTC Flyer, hasn't grabbed much market share, but give credit to HTC for trying to think differently: The 7-inch Flyer includes a stylus, of all things, on the theory that there are applications where you want an alternative for taking notes to using your finger or tapping a keyboard. One cool feature of the Flyer: You can record conversations while taking notes and synch the sound to your notes, making it easier to review your work. HTC Chief Marketing Officer John Wang (no relation) nicely sums up the company's philosophy on the tablet market: to make just one more Android-based tablet that looks like the dozens of others, he says, would hardly be "quietly brilliant" (HTC's slogan). Cher Wang was born to be in business. Her late father, Y.C. Wang, was the legendary founder of Formosa Plastics, the Taiwanese petrochemical conglomerate that now has about 100,000 employees. A larger-than-life figure who had three wives and nine children, he eventually died intestate--in Short Hills, New Jersey, of all places--as one of Taiwan's richest men. Her tycoon father shipped Wang to the U.S. when she was just 15 years old to live with her sister Charlene, who at the time was in Los Angeles. Not long after she arrived in the States, her sister decided to move to Detroit to accommodate a job change for her new husband. Rather than drag Wang to Detroit, Charlene found her a slot at the pricey College Preparatory School in Oakland, California. At a meeting ahead of her arrival at CPS, she met an Oakland family that agreed to play host to Wang for over a year; thus it came to pass that Cher Wang, Taiwanese corporate royalty, came to spend her senior year in high school with! the fam ily of a Jewish pediatrician in Oakland. After high school Wang went on to Berkeley, where after a few weeks' flirtation with a career in music--she played piano--Wang shifted gears and studied economics. After finishing her degree she began doing some work for First International Computer, cofounded in 1980 by Charlene and her husband, Ming Chien. Cher did a stretch in the mid-1980s in which she traveled by train around Europe peddling motherboards for FIC. While at FIC Wang launched a PC brand called Leo Computers that never quite took off; she also later led FIC's acquisition of the PC maker Everex. "I always think about branded devices," she says. During trips she craved some kind of more portable computing device, something she could carry around in a briefcase or pocket. She occasionally mentioned this need to her friend H.T. Cho, who had worked for 11 years for the Taiwan arm of Digital Equipment Corp., also one of her customers. Cho eventually rose to be head of engineering for DEC Taiwan. In 1997 she was approached by a Microsoft contact who wanted to find manufacturers to build devices based on the Windows CE operating system. I could do that, she said, and persuaded her friend Cho to join her in starting a handheld company. The technology to build a decent handheld computer, of the kind Wang wanted to build, didn't quite exist. So HTC opted to start with something more familiar, laptops, but the effort was a bust. HTC lacked competitive advantage. "We totally wiped out," she says. HTC moved on to plan B and became a contract manufacturer of PDAs and mobile phones. Its first big win was a 2000 deal to design and produce the Compaq Aero PDA. It was no breakout hit but did lead to more PDA work with Compaq and others, including Palm, and handsets for carriers such as T-Mobile, Orange and O2. G1, Google's first Android phone, was built by HTC. Wang was getting closer to her dream of making HTC-branded mobiles, a cause she had been pushing for years. "Peter one day asked me, Cher, do you really wan! t to do brand-name phones?' and I said, As quickly as possible,' " she says. Inching toward the goal, the company started by cobranding phones with some of the carrier partners but then shed the double-labeling and shifted focus to HTC's own brand. In the process the company has been aggressively pushing cutting-edge phones. Phones with huge screens. The first 4G phones. The first phones with 3-D displays. And, coming soon, some of the first phones using Windows Phone 8. They knew the decision would hurt, and the company's stock price fell to half in 2006, not to regain lost ground for another four years, as HTC had to increase investment in manufacturing its own phones while making phones for others. They decided they did not have the engineering talent to both design products for others and for their own products. "For a year things were actually very difficult," she recalls. "A lot of people didn't believe our message." But starting in 2007, as HTC began rolling out more phones under its own brand, it was able to tap the strong relationships it had built as a contract manufacturer with all four of the big U.S. wireless carriers--an asset Nokia conspicuously lacked. HTC phones are among the best sellers at AT&T, Verizon Wireless,T-Mobile and Sprint.The company has also maintained its strong ties to Microsoft: While best known for Android phones, HTC also sells models based on Windows Phone 7 and will be among the pioneers when Phone 8 debuts next year. Google's recently announced deal to acquire Motorola Mobility raises some difficult questions for HTC and other Android licensees; assuming Google chooses to keep the Motorola handset business, it will face the delicate business of competing with its own licensees. HTC so far has been supportive of the Motorola deal; the cache of patents at the heart of the deal will help Google protect Android handset-makers from Apple and others claiming patent violations. But Cher recently indicated that the company could at some point decide to buy an operating system of! its own , perhaps a signal to Google that it had better watch its step. Wang admits she is following in her father's footsteps, though she didn't see much of him while she was going to school in Oakland. She confides her father would send her handwritten letters--sometimes as long as 20 pages--giving her advice on life, wealth and business. "He'd write me letters to tell me how he thinks," she says. "How he manages things ... to really be responsible for your wealth to the people around you and to bring value to people. That's something that really affects me. He also told me that you have to find the root of a problem and really dig deep and try to be a perfectionist." As we left the Berkeley Faculty Club Wang offered to walk me to my car. Just a few parking spots over was a space reserved, half in jest, for Nobel Prize winners. She whipped out her HTC phone, took a picture of the sign and laughed. If they ever start giving out Nobel Prizes for smartphones, you know Cher Wang will be quietly gunning for that parking spot.[/caption]Follow Yahoo! 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