Internet
ò Rakuten, JapanÆs largest online shopping mall, disclosed its move to change its strategy to one that could see the group expand operations into the US and Europe. The company said the shift is seen as launching up to 30 new businesses. Analysts, however, criticized the restructuring move that would see Rakuten reduce its reliance on acquisitions as a means of expansion and set up a division focused on developing home-grown business ideas. RakutenÆs services range from online shopping, travel booking and brokerages. Rakuten has also been in prolonged talks with Tokyo Broadcasting System Inc. for a possible alliance in areas such as Internet TV and e-commerce after Rakuten dropped its takeover attempt last year.
ò NEWS Corp announced that the company had begun testing its myspace.com internet chat website in Japan. The company said it would also launch myspace.com in Italy, with the groupÆs top official describing Myspace as an ôextremely effective form of advertisingö.
ò NTT DoCoMo Inc., Japan's biggest mobile phone operator, and Internet shopping mall Rakuten Inc. said they would offer online auctions for personal computers soon. The two companies announced last year, they will also offer a social network service as part of the tie-up in which DoCoMo would take a 40 percent stake, for 4.2 billion yen (US$36 million) in a new company, a spin-off of Rakuten's auction business. The alliance is seen as posing a challenge to Yahoo Japan Corp., the country's most popular web site and biggest online auction provider, as well as DoCoMo's smaller cell phone rivals KDDI Corp. and Softbank Corp., which are offering new services such as digital TV and music downloads to attract users. Yahoo Japan is 41.0 percent owned by Softbank and 33.4 percent by Yahoo Inc.
Mobile/Wireless
ò Industry sources said that Sony Ericsson, the world's fourth-largest handset maker, plans to launch an ultra-slim, high-end Walkman camera phone in early 2007 to take on Motorola's blockbuster, the RAZR. The RAZR's runaway success has inspired Samsung Electronics Co. Ltd. to launch a copycat line of slim phones in the summer, which helped boost the South Korean firm's handset sales and margins in the third quarter. The source said that Sony Ericsson, a joint venture between Japan's Sony Corp. and Sweden's Ericsson, would unveil its rival to the RAZR, dubbed "Ai", in March of 2007. Unconfirmed rumors about "Ai" and other new models from Sony Ericsson have also been circulating in various online blogs.
Media, Entertainment and Gaming
ò Nintendo announced its move to ship almost 400,000 units of its new Wii game console for its Japan launch in December. Under the move, Nintendo said it will be offering four times as many machines as Sony Corp did for its PlayStation 3 debut. The Japanese video game maker also said it plans to ship 1.5 million units of its hot-selling handheld game player, the DS, in December in Japan, doubling the availability from levels in recent months for the critical year-end shopping season. Sony, which sold nearly a million units of the earlier Play Station 2 console in the first three days of sales in Japan in 2000, shipped only 100,000 PS3s for the Japan debut last week.
Software
ò NEC Corporation and Sun Microsystems (Sun) announced an agreement to expand their alliance regarding HPC (High-Performance Computing) solution business in Europe and North America, a move that would enable a provision of NEC's SX series vector supercomputers with Sun Fire servers. The agreement involves NEC sharing its extensive experience and knowledge in the HPC solution business, in particular in terms of high-end supercomputer system integration and ISV application tuning, with Sun, in order to leverage NEC's market recognition. Under the agreement, NEC and Sun said they will share the system environment for application tuning, system evaluation and benchmarking between NEC's ATCC (Advanced Technical Computing Center, Houston, Texas) and Sun's Solution Center for HPC and cooperate in various ISV application-related activities. NEC and Sun are sharing market information in each region, and is aggressively developing a new customer base for optimized HPC solutions.
Hardware
ò Nippon Polaroid KK announced its entry to the flat-panel television market in Japan. With the move, the company said it sold liquid-crystal display TVs at less than half the price of major manufacturers. The company, the Japanese arm of US instant-camera producer Polaroid Corp., said it plans to undercut rivals by launching a 32-inch model with a price tag of about Ñ100,000 ($847) and a 20-inch model for around Ñ70,000 ($593). The company said the TVs will be sold through electronics retailer Kojima Co. from early December. Nippon Polaroid also revealed its plans to procure the TVs from a Taiwanese manufacturer, which was not named.
ò Hitachi Ltd. announced its aim to double its operating margin in four years and said that it is part of their option to pull out of flat TVs and hard disk drives if they continue to lose money. The company said it expects to generate profits from its power systems, flat TVs and HDDs next year as well as boost profitability through March 2009. If they fail to meet targets, Hitachi said it would consider pulling out of the three businesses even as the company revealed that it could also look for partnerships and acquisitions to turn them around. According to a JP Morgan analyst Hitachi does not like abandoning businesses, but also had a track record of missing its mid-term goals. Earlier, Hitachi said it would strengthen its HDD business by increasing production capacity in China and Thailand and by increasing its line-up of new HDDs using vertical magnetic recording techniques, which increase storage. The company also said it would boost shares through bigger displays and that it would increase its line-up of liquid crystal display TVs through an existing venture with Matsushita Electric Industrial Co. Ltd. and Toshiba Corp.
Telecommunications
ò Yano Research Institute Ltd. (Yano), a leading marketing research and consulting firm in Japan, said that the size of the total fiber-optic access systems market has reached Ñ76.2 billion ($645 million). The market is comprised of Ñ65.5 billion ($555 million) for PON (Passive Optical Network) systems and Ñ10.7 billion ($90.7 million) for MC (Media Converters), respectively. The sharp increase in the number of subscribers to FTTH, which almost doubled in fiscal 2005, has apparently contributed to the growth of the market. The study said that the biggest factor that has contributed to the increase of FTTH subscribers is the lowered fees for optical IP phone service with 0AB-J numbers (conventional telephone numbers) portability and lowered monthly fees for broadband Internet access services. Most major telecommunication carriers commented that approximately 60 to 70 percent of new subscribers had concurrently subscribed to their optical IP phone services, emphasizing the cost for "FTTH and IP phone" is now lower than the cost for "ADSL and conventional analog phones," in terms of monthly basic fees. Yano estimated that the total number of FTTH subscribers would exceed 27 million by the year of 2011 with over 3 million annual net increases of FTTH subscribers each year up to 2011.
Korea
Internet
ò Daum Commerce, an affiliate of Daum Communications, announced its acquisition of a 50.5 percent stake of Daum onket, an Internet open market provider for W5.1 billion ($5.4 million). Daum Commerce is a service for businesses while Daum onket is a consumer service where individuals can list, sell and buy goods with a minimal fee. A Samsung Securities analyst said that with the acquisition of Daum onket, Daum Commerce will now able to grow in terms of size, while onket gets more liquidity for its operations. Expectations for a synergy effect are high in the market. The company is scheduled to focus on middle and high priced fashion goods on Daum Commerce, with Daum onket focusing on ôfrugalö fashion products, according to a company official. As of Oct. 31, Daum onket had traffic of at least 250,000 visitors a day and one million goods are listed on average. Daum Commerce plans to take advantage of onket's infrastructure to effectively enter the consumer market. Industry observers, however, said that Daum Commerce has not been spending enough on brand recognition.
ò NHN Corp., which operates the Internet portal site Naver, signed an agreement with the Korean Film Council to provide film-related content and free films online. On the movie service section of Naver, the Korean Film Council will provide statistics, such as weekly popularity ratings, import-export figures of films, and other information from the council's film database of Korean and foreign films. NHN also acquires video contents of films that are available as free streaming services. Such films are not commercial films, but mostly short independent films and art films, which were screened at film festivals and provided with the consent of the director or the organizer of the festival during the event. Etoos, an online education site operated by SK Communications Co., announced its acquisition of a 7.1 percent stake in Cheongsol Hagwon, a private education institute that offers lectures and other college admissions-related information. The W5 billion ($5.3 million) investment allows Etoos to exclusively use Cheongsol's education content. Cheongsol runs offline institutes similar to cram schools.
ò Industry observers indicated that the release of IE7 Korean Edition will not affect domestic portals, observers are confident that their users will prefer their search engine over the MSN offering. Google and Yahoo have criticized the possible monopoly in the search engine industry with the launching of IE7, Korean Edition, which has improved security and its search engine. As a response to that concern, MS Korea signed MOUs with 25 different domestic portals working to retain relations with the South Korean portals. Korean portals expect to benefit from the added convenience for users with a new IE7 search box placement, not to mention an option given to users to freely choose existing engines in the search box. Naver looks to their existing users to switch the MSN default search window to theirs, due to familiarity. Naver is also working to release its own optimized IE7 version but isnÆt counting out the possibility of working with MS for now. Daum has also been actively promoting its 6.2 million cafe blogs and its UCC content with original word search service over other sites. Empas.com setup its own IE7 task force team to counter the release and is thinking of providing even more information to search engine users. Empas will also make available a download patch for its existing users to easily switch over from IE7. Nate.com is working on an installation patch that can overwrite MSN default settings when their 'nateon' and toolbar programs are being installed.
ò Samsung Electronics announced the signing of a contract to build a research center and a factory in China dedicated to the South Korean mobile Internet platform called WiBro locally but known as Mobile WiMax overseas. The report said the company has agreed to set up facilities in Hubei Province. Industry analysts see the report as a possible sign that Samsung may have already signed a deal with a Chinese telecom operator to commercially launch WiBro in mainland China. The company did not confirm anything but a top official mentioned a WiBro deal in China.
ò Industry sources show that the enterprise IPTV market is fast emerging as a new niche for domestic system integration (SI), set-top box and small and medium set-top box makers, with IPTV companies now moving toward banks, subway stations, public organizations and franchised stores. Kookmin Bank and the Korea Federation of Agriculture Cooperatives adopted IPTV for customers and branches nationwide last year, and Shinhan Bank and Woori Bank built IPTV this year. Other commercial banks such as Korea Exchange and Hana Bank are said to be considering similar moves. Seoul Metro said it has decided to replace the display facilities in stations with LCD TVs next year. Commercial banks aim to upgrade in-house broadcasting and provide cutting-edge information services on exchange rates, stocks and financial service products for customers by adopting IPTV. They use satellites for in-house broadcasting, and Internet facilities such as ADSL and LAN for customer service. Subway stations plan to replace the existing small light-emitting diode screens used for route information, PDP TVs hanging on the one side of walls and screen door TVs with large LCD TVs, and they are now selecting system providers. Cheonan City Hall and Gangbuk District Hall have both adopted IPTV-based information service for residents. Waba franchise beer restaurant has also set up IPTV at 200 stores nationwide.
ò Industry sources said that domestic and multinational Internet telephony solution firms are rushing to introduce new products with multimedia convergence features, aiming to expand presence in the enterprise segment. KT said it is working on VoIP services, adopting Session Initiation Protocol, which provides a variety of add-ons using IP Centrex. With the new service, customers including small and medium firms do not have to install IP PBX themselves. Samsung Electronics and Avayer entered a cooperation to develop a next-generation IP solution, which targets small businesses with some 500 employees. The new solution combines routing, switching, IP telephony and security, which is designed to integrate voice and data networks of a business. LG-Nortel has teamed up with Microsoft to introduce an IP handset, which integrates communications features, including email, instant messaging, mobile VoIP, voice and videoconferences, over a single platform. According to market research firm IDC Korea, the domestic VoIP service market is expected to grow 54 percent annually over the next five years, and is estimated to be worth around W250 billion ($267.2 million) this year and W1 trillion ($1 billion) in 2009. The VoIP equipment market is forecasted to be worth around Ñ263.5 billion ($281.6 million) in 2009.
ò Google Inc. said it has decided to work with Daum Communications as a partner for its move to expand its presence in the country's online advertisement sector. Under the alliance, Namu Communications Co., a subsidiary of Daum Communications Corp., is seen as helping Google's keyword ads operation. Other details were not disclosed and Daum officials declined to comment. Google said in a statement that it selected the South Korean firm and considered its accumulated know-how in online ads, marketing and high-quality service it provides to clients. The deal follows rumors that Daum Communications could end its business ties with Overture in its advertising business based on the cost-per-click billing system, because the company has not extended a contract that is to expire at the end of the year.
ò Gmarket continued its record-breaking run in the third quarter, with its total amount of transactions on its marketplace placed at W573 billion ($612.5 million) in the third quarter, about double the amount from the same period last year. The company also announced the number of its registered users increasing from 9.2 million to 10.1 million. Gmarket has expanded its business from online yard sales to celebrity-owned clothing shops. A pioneer of the so-called open marketplace business, Gmarket started in 2000 with an initial capital of W1 billion ($1 million). It allows any member to open online shops to sell items. In the third quarter, it is believed to have outperformed its rival Auction, to be the No.1 online seller in Korea. Auction was ahead of Gmarket until the summer, with Ñ39.6 billion ($42.3 million) of sales in the second quarter to Gmarket's Ñ36.8 billion ($39.3 million). But Auction's sales have remained stagnant since last year and profits have decreased, while Gmarket has continued double-digit growth quarter by quarter. Gmarket's revenue and net profit were Ñ41.2 billion ($44 million) and W5.4 billion ($5.7 million) in the third quarter, respectively. In June, the company successfully sold stock worth US$139 million in an IPO on the NASDAQ, making it the fifth South Korean firm listed on the tech-loaded U.S. stock market. The firm raised about US$90 million in the process by issuing new shares, while the rest of the money went to the owners of the old shares.
Mobile/Wireless
ò Samsung announced the release in the US of a slim phone called BlackJack enabled with HSDPA technology. The company said the device will be sold through the U.S.'s largest wireless carrier Cingular Wireless. Samsung said it expects brisk sales for its first phone, which combines HSDPA and smartphone technology, to hit the U.S. market. The phone is capable of data transfers of up to 1.8 Mpbs, five times faster than existing WCDMA, which is needed by users in downloading multimedia content such as videos and music files. It has the Windows Mobile 5.0 Smartphone edition operating system and a 2.3-inch QVGA LCD screen, a 1.3 megapixel camera, a camcorder, MP3 player, external memory, a file viewer, Bluetooth connectivity, and mobile printing.
ò Motorola Inc. announced that it will open a research and development (R&D) centre in South Korea this week to develop technologies for ubiquitous sensor networks (USN). USN refers to a network in which all electronics devices can be connected without wires. It can be used in various fields such as home automation and environmental monitoring in areas beyond human reach. The move follows the signing of a deal in the summer between the U.S. company and the state-run Electronics and Telecommunications Research Institute (ETRI). Details of the deal have yet to be disclosed, but a company official said the South Korean government will provide financial subsidies for its research activities.
ò Reports indicated that South Korean mobile operator LG Telecom (LGT) has been fined Ñ5.2 billion won ($5.5 million) for offering illegal handset subsidies to entice users. According to TeleGeography's GlobalComms database, the Korea Communications Commission (KCC) and Ministry of Information and Communications (MIC), in conjunction with the Korean Fair Trade Commission (KFTC), have taken a hard line on mobile service pricing, particularly regarding subsidizing handsets. In an about-turn from March 2006, the MIC began allowing companies to subsidize handsets for the first time. SK Telecom, KTF Corp and LGT are now allowed to offer financial incentives at rates set by the MIC, with the subsidies allowed to be worth up to W200,000 ($208). The rates may be offered to both existing users and customers switching from a rival network, but the rates must first be approved. Less than a month after relaxing the rules, the MIC fined all three operators a total of 10.8 billion won retroactively, for subsidizing before the new scheme was approved.
ò Helio, a venture of EarthLink Inc. and SK Telecom, announced its partnership with Google Inc. and Samsung Electronics Co. to deliver a new phone with features such as a friend locator service and driving directions. Helio, a wireless provider, said its customers would be able to find out their current location and look up traffic conditions or directions to specific addresses by using Google maps and satellite positioning technology in Samsung's Drift phone. The phone, which sells for $255, also gives users the option to look up the location of nearby friends, or to have their own location show up on their friendÆs cell phone. Sprint Nextel Corp.'s Boost Mobile unit, another youth-focused mobile service, also plans to announce details of its own location-based service next week.
Media, Entertainment and Gaming
ò With more than 14 million customers, NCsoft announced that Lineage II, has reached 100,000 active players in North America and Europe. The title started as a cult favorite of many massively multiplayer online (MMO) gamers in North America and Europe and continues its success as the premiere player-versus-player (PvP) online role-playing game for the elite PvP player. Lineage II was launched in North America in 2004 as a modest success. The game has since built itself into one of the top MMOs in the western markets, with a 25 percent growth rate in 2006. NCsoft credits the growth of the game to regular updates and free expansions to the product, and delivering features requested by players.
ò Samsung Electronics said that it has formed a deal with TVA, a cable TV service provider of Brazil's largest media group Abril, to launch Wi-Bro service. Under the arrangement, the two companies will kick off commercial services in San Paulo and Kujichiba in April next year, and expand the coverage into four major cities in three years. They already started a test service in May this year. Samsung Electronics also plans to co-launch commercial services with Omnivision in Venezuela. The company expects the deals in key Latin American markets to help expand into the entire region. Samsung Electronics plans to set up 35 base stations and system equipment, as well as provide Wi-Bro modems in San Paulo and Kujichiba. It already formed deals with Sprint of the U.S., KDDI of Japan and TI of Italia.
ò Only 13.5 percent of video files were self-made products by users among 4,500 inspected by the Copyright Deliberation and Conciliation Commission from July to October, while the rest were copies of TV shows, movies, music videos and animations. This situation has spurred major portals, TV broadcasters and the government to talk with each other on setting up guidelines for copyright protection of short video clips. According to Koreanclick, an Internet research firm, Daum's video sharing service TV Pot drew 6.7 million viewers in August, and Naver's Play had 5.6 million. Officially, the portals are discouraging users from sharing images that violate copyright law and they frequently remove such files with or without requests from copyright holders. However, due to the massive amount of file transactions, the pirated videos sometimes remain untouched. The friction between video sharing sites and conventional media is also ongoing in the U.S. Google disclosed that it is negotiating with media groups over the issue. There have been rumors that Google has already set aside US$500 million to defend against copyright claims from movie studios.
ò Nexon announced the signing of a strategic partnership with MTV Networks for the global co-publishing and promoting of online games, music and other multimedia contents. Under the agreement, MTV will air commercials of Nexon games on its TV and web broadcasting channels, and Nexon will help MTV establish Internet community sites in Asia and sell online items through them. Earlier this year, Nexon set up a U.S. subsidiary and began to service multiplayer online games, which have become hits in Asia. Targeting a young audience, Nexon's games æMaple StoryÆ and æKart RiderÆ have some 30 to 50 million worldwide users. MTV Networks is a major music and entertainment broadcaster with 130 channels on air worldwide, such as MTV Music Television, Nickelodeon and Comedy Central. It has also started operating various Web community sites such as Neopets.com and Shockwave.com, which it wants to expand to Europe and Asia in a partnership with Nexon. In a separate move, Nexon said that it is converting its PC-based games into models that can be used on the Xbox 360 and Nintendo DS consoles. It also said that it is producing TV animation films that feature game characters from Maple Story and Kart Rider.
ò Blizzard Entertainment announced that æWorld of Warcraft : The Burning CrusadeÆ, the highly anticipated expansion to the world's leading subscription-based massively multiplayer online role-playing game, æWorld of WarcraftÆ, will be available in stores by January 2007 in North America and Europe. According to the company the expansion will be available in a similar time frame in Korea, Australia, New Zealand, and Singapore. The availability for mainland China and the regions of Taiwan, Hong Kong, and Macau will be announced in the near future. In addition, Blizzard today announced that the subscriber base for æWorld of WarcraftÆ has reached 7.5 million players worldwide.
Hardware
ò KT Corp. announced the introduction of a laptop computer model incorporating wireless Internet WiBro marking the first introduction of WiBro-equipped laptop computers. The laptop computers are Samsung Electronics Co.'s NT-Q35 model with a LCD panel measuring 12.1 inches diagonally. KT said it has been stepping up efforts to unveil WiBro-enabled devices. It said that more devices will be launched over the next few months. In a separate development, KT opened an Internet computing center (ICC) in south Suwon in September this year. The company aims to open the country's first utility computing center, which has become a new mantra in the industry. Business customers are said to be keeping a close eye on the center, which represents the company's infrastructure strategy.
China
Internet
ò China Southern Airlines announced a surge in its Internet ticket sales in 2006. The company claims it was the first airline in the country to sell an Internet e-ticket in 2000. From January to September 2006, sales of China Southern Airlines' e-tickets reached Rmb10.4 billion ($1.3 billion). Airline e-ticketing by China Southern contributes at present, some 32 percent of total e-ticket volume in the Chinese aviation industry. From March 28, 2000 when China Southern Airlines first launched its e-ticketing program through March 2005, the airline has sold more than Rmb4 billion ($508.1 million) in Internet airline tickets.
ò Huicong (HC), a B2B online service provider, announced the launching of a "Care for Enterprise" plan to provide a full range care for enterprises. Under HC's ôCare for EnterpriseÆÆ, each company is regarded as an individual person, with the plan offering a package of care, which includes building an accumulated score management system, integrating online stores, enabling instant communications, blogs and forums. The service is applicable for all online and offline services and products of HC. Users of these products can accumulate online virtual money whose value can be used in exchange for gifts or advertising positions. HC is one of the largest B2B service providers in China, with more than 2.8 million active companies online. Most of these companies are classified as either medium or small.
ò Online game operator The9 released its unaudited financial results for the quarter ended September 30, 2006, showing net revenues for the third quarter of 2006 dropping by 9 percent quarter over quarter, but going up 26 percent year over year to $29.5 million. The company posted a 24 percent drop in net income for the third quarter of 2006 to $8.1 million from $10.7 million in the second quarter of 2006. For the third quarter of 2006, The9 reported a 9 percent decrease in its total gross revenues to $31.1 million from $34.3 million in the second quarter of 2006. Its gross profit for the third quarter of 2006 registered a 13 percent decline to $13.6 million from $15.7 million in the second quarter of 2006. For the third quarter of 2006, operating expenses declined 18 percent to US$5.6 million from $6.9 million in the second quarter of 2006. As of September 30, 2006, the company's total cash and cash equivalents balance was $96.4 million, compared to the total cash and cash equivalents of $83.2 million as of June 30, 2006. The9 ascribed the growth mainly to the proceeds from the sales of prepaid cards, offset in part by prepaid royalty payments related to Blizzard Entertainment's World of Warcraft's (WoW) China operations and capital expenditures for WoW in the third quarter of 2006.
ò Baidu.com disclosed plans to cooperate with six major anti-virus firms from both home and abroad to launch an online anti-virus service, which will be the largest third-party anti-virus service platform in China. The six anti-virus companies are McAfee, TrendMicro, Ahn, Kingsoft, Jiangmin and Antiy Labs. Under the alliance, the companies will not only provide free virus diagnoses and online anti-virus services on the new platform but will also offer anti-virus software for users to download. More firms are expected to join the program as Baidu pursues more talks with other anti-virus service providers.
ò Industry sources said the Chinese-language version of online encyclopedia Wikipedia has been unblocked by Beijing authorities after a year. The move came a month after China began opening up access to the English-language version of Wikipedia, an "open source" encyclopedia that allows users to edit the online information. The action also follows Baidu.com launching an online encyclopedia modeled on Wikipedia. Entries on "Baidupedia" are, however, censored by the Chinese government. The Chinese-language version of Wikipedia, which relies on voluntary users and contributors to ensure its neutrality and objectivity, was very popular until the State blocked access to the site late last year.
ò Industry sources said that News Corp, which earlier disclosed its search for a local partner in a bid to launch its popular MySpace Internet social network in China, revealed that it is in early talks with local blog companies Bokee.com and BlogCN.com. News Corp announced that it could launch a version of MySpace in China during this fiscal year if it found the right joint venture partner. Faced with an increasingly competitive market, Chinese blogging companies are in need of foreign capital. Bokee has attracted Rmb5 million ($635,000) in seed funding as well as $10 million in venture capital from six U.S. and Chinese firms. Another blog, Blogbus.com, received between $3 million and $5 million from Japanese venture capital firm JAIC and Japanese ad company Cyber Agent, in Blogbus's first round of external investment. Local sources said the number of bloggers in China is expected to hit 60 million by the end of this year and 100 million by the end of 2007.
Media, Entertainment and Gaming
ò Sina.com announced entering a strategic partnership with Shanghai-based Dragon TV. Under the partnership, the two companies said they will work on various fields covering news content and marketing activities. The partnership will see Sina.com providing its network platform and information resources for Dragon TV, including network display, information support and online interactive activities. The agreement also indicates that in the future, Sina.com will eventually be the sole portal website for Dragon TV's affiliated programs, fashion and entertainment services.
ò CDC Corporation announced that it has entered into a definitive agreement to sell $168 million of senior exchangeable convertible notes due 2011 to a total of 12 institutional accredited investors in a private placement. The company said the proceeds of the placement, placed with its cash balance, will allow it greater flexibility to pursue expansion plans. These plans include acquisitions, joining new vertical markets, and enhanced focus on R&D. The senior exchangeable convertible notes carry a 3.8 percent coupon, which is payable quarterly. Upon a qualifying IPO of either CDC Software or CDC Games, the notes become exchangeable into that company's common shares at an exchange price determinable from the IPO price of those common shares. If CDC Software or CDC Games does not complete a qualifying IPO within two years from the issue date of the notes, the notes become convertible into CDC Corporation's common shares at an initial conversion price of $10.3 per share which represents a premium of approximately 60 percent to the company's 10-day average closing price. The terms of the notes also include customary anti-dilution adjustments and registration rights. The company said it aims to use the proceeds from the transaction for acquisitions made at both CDC Software and CDC Games, as well as game development, R&D investment and for other general corporate purposes.
Mobile/Wireless
ò Wireless value-added services company Hurray! posted its unaudited financial results third quarter ended September 30, 2006, with the company reporting a general quarter-on-quarter decline. Hurray! reported a 1.7 percent decline for the third quarter ended September 30, 2006 in its total revenues of $18.0 million, from over $18.3 million for the preceding quarter, and a 9.2 percent increase from $16.5 million for the third quarter in 2005. The company said its total wireless value-added services revenues went down by 1.1 percent to US$16.4 million for the third quarter of 2006 from $16.6 million in the previous quarter and growth of 8.0 percent as compared with $15.2 million in the third quarter of 2005. Its 2.5G services revenues went down by 9.6 percent to $7.4 million for the third quarter of 2006 from $8.1 million for the previous quarter and a decline of 20.3 percent as compared with US$9.2 million for the third quarter of 2005. Recorded music revenues grew to $1.5 million, as compared with $1.4 million the previous quarter.
ò Beijing Liandong Youshi (UMPay) announced that China Mobile has reached an agreement with 19 domestic banks to jointly promote a mobile phone SMS-based banking service called Yin Xin Tong. With the service, mobile phone users will have access to financial data by way of cell phones and wireless POS through SMS or by logging in through GPRS and WAP. The agreement covers partnerships with banks like the Industrial and Commercial Bank of China, China Merchants Bank, Huaxia Bank, Industrial Bank, and China Construction Bank. The agreement enables the banks to acquire a mobile phone short message and group message-sending terminal from China Mobile to provide financial services to their clients. According to UMPay, the service will initially be free, with a charging system to be released soon. UMPay is an affiliate of China Mobile, the company that takes care of its mobile banking service, is a 50-50 joint venture between China Mobile and China UnionPay.
ò Suning, an electrical appliance retailing company announced the signing of a strategic cooperation agreement with China Mobile, for a series of exclusive agreements. The cooperation covers the shifting of Suning's products to 3C in a bit to earn bigger profits for the company. 3C refers to Computing, Communications and Consumer electronics products and companies. China Mobile indicated that the cooperation will mainly focus on terminal construction, product ordering, market promotion, data sharing, analysis and service. In addition, the companies said they will work on designing and constructing the sales of terminal, and jointly develop value-added services and one-stop services for mobile phone users. Analysts see the alliance between Suning and China Mobile as a sign that Suning has moved from an electronic retailer to full a 3C retailer.
Hardware
ò Haier, an electronic appliance manufacturer announced entering an agreement with Intel to jointly set up an Innovation Product R&D Center aimed at improving Haier's personal computer strategy. Haier said its PCs are its second-largest growth driver for the group, with home appliance service remaining No.1. The agreement will also see Haier and Intel making investments in the development of game-ready computers. The R&D center will be composed of a design team from both parties.
Semiconductors
ò Semiconductor Manufacturing International Corp revealed that it has filed a lawsuit against its Taiwan rival, Taiwan Semiconductor Manufacturing Co (TSMC) for alleged unfair competition. In the latest conflict, SMIC demanded an injunction to stop TSMCÆs alleged infringement, a public apology and unspecified compensation. In a stock exchange announcement, SMIC said TSMC had made a ôconcerted effortö to infringe on SMICÆs legal rights unfairly, ôrather than compete fairly in the marketplaceö. A spokesman for TSMC said the company planned to respond shortly. The suit is the latest development in a dispute over patent usage and trade secrets between the chipmakers. Last month, TSMC alleged that SMIC poached more than 100 of its ôkey employeesö to obtain confidential company information. In late August, TSMC filed a lawsuit in a California court, charging SMIC for breaking an agreement last year that settled a patent dispute and alleged theft of trade secrets. Shanghai-based SMIC is ChinaÆs largest chip foundry by capacity. It operates semiconductor-manufacturing facilities in Shanghai, Tianjin and Beijing.
Ventures/Investments
ò According to the China Quarterly Capital Report, venture capital activity in companies with headquarters in mainland China posted a record-breaking year, with 54 deals and investment totaling some $361.1 million in the third quarter of 2006. The report released by Ernst & Young and Dow Jones VentureOne reported a 16-deal rise in the deal flow from the same quarter last year, with capital investment rising by 47 percent from the same period. By industry, IT is still the stronghold for venture capital activity in China in the third quarter, with $221.8 million invested in 34 IT companies in the third quarter. The growth in IT investment represented an 85 percent growth in capital and an increase of 9 more deals than a year ago. Within the IT industry, the Internet-focused information services segment continued to draw the most activity, with 22 deals and $136.2 million invested. This growth stands for 13 more deals and $71.3 million more capital than was invested in the third quarter of 2005. KooXoo, a category message search engine based in Beijing, holds the largest information services deals of the quarter by getting a $10 million second round. The largest deal overall was the $35 million later-stage financing for Advanced Micro-Fabrication Equipment, a semiconductor company based in Shanghai.
ò IBM announced the launching of a major initiative to bring IBM's global information technology services expertise and capabilities to China. As part of this initiative, a top company official said that IBM will work with the countryÆs Ministry of Education to introduce a services science curriculum within Chinese universities. Under the plan, the company said it will also coordinate the development of a pilot program with ChinaÆs Ministry of Health to use IT to improve the quality of regional medical services throughout the country and expand industry-specific business services through the use of Services-Oriented Architecture (SOA). The expansion is seen as boosting the focus within the China Research Lab on services linked to small and medium-size businesses.
ò China 3C Group announced the signing of an agreement of intent to acquire Shanghai Joy & Harmony Electronics Company. Under the agreement, China 3C will begin due diligence of Shanghai Joy and Harmony, a consumer electronics retail chain focusing on the eastern China market. The chain has established 180 retail stores in Eastern China since it was founded in 1995. The completion of the acquisition will enable China 3C Group to acquire more than 800 retail stores. No other details of the terms of the agreement were revealed.
Telecommunications
ò China Telecom announced the testing of its ADSL2+-based Super ADSL service, which it will launch soon even as the company has not released details about when the service can be commercialized. Industry sources say, however, that most telecom companies in major cities like Beijing, Shanghai, Nanjing and Guangzhou have no plans yet to launch ADSL2+ in the near future. China Telecom is a major communications service operator in the country.
ò Market sources said that Huawei Technologies, China's largest telecommunications equipment maker, will make a higher counter-offer to buy out its partner 3Com in a mainland Internet infrastructure venture. The offer followed the move by the US firm to place a bid to acquire its stake. Computer network equipment maker 3Com offered to buy the 49 percent stake in Huawei-3Com owned by Huawei. Sources said 3Com's bid valued the venture at $2 billion. According to the US Securities and Exchange Commission, Huawei is required to respond within three days with an offer that is at least 2 percent higher on a per-share basis. Huawei had originally valued the venture, which makes and sells equipment that facilitates the transfer of data over the Internet, at $1.5 billion to $2 billion, sources said. 3Com is desperate to take control of Huawei-3Com because it has almost no presence in the mainland market beyond the joint venture. 3Com said in the SEC filing it is open to a negotiated agreement separate from a bidding process.
Taiwan
Mobile/Wireless
ò RF Micro Devices (RFMD) announced a cooperation with Taiwan-based MediaTek to create Bluetooth enabled EDGE and GPRS mobile phone reference designs with RFMD's SiW3500. The SiW3500 is described as a fully qualified system-on-chip for Bluetooth technology with excellent RF performance and low power consumption. MediaTek is currently the world's largest chipset supplier of CD-ROM, DVD-ROM, CD-RW, Combi, DVD-ReW and DVD player. It is also the leading wireless communication chipset supplier in China.
ò Industry sources said that Taiwan's Hon Hai Precision Industry, the world's biggest contract electronics manufacturer, has plans to produce mobile phones for Apple Computer. Apple was planning to launch the phones with iPod functions during the first half of next year, with Hon Hai making 12 million handsets. Separate units of the Hon Hai group already make iPod digital music players for Apple and produce mobile phones and components for leading brands Nokia and Motorola. No statement was gathered from Hon Hai.
Hong Kong
Media, Entertainment and Gaming
ò i-Cable Communications' Cable TV, Hong Kong's largest pay-television operator, announced that is considering slashing its basic tariffs after losing out to rival PCCW Now TV in a bid to retain the broadcasting rights of top-rated English Premier League (EPL) football matches for the three seasons starting next August. i-Cable Communications described its move as creating savings of at least HK$200 million ($26.6 million) in production costs in each of the next three years. Now TV, which has 608,000 subscribers, as of the end of June, compared with Cable's 770,000, said it is engaged in exclusive negotiations with FA Premier League, the EPL organiser, to finalise an agreement over the broadcasting rights of all its 380 games per season. Market sources said PCCW beat Cable TV with a bid of more than $200 million, well above Cable TV's offer and more than twice the $100 million it paid for the three years through next May. In its three-year battle with Now, Cable TV has lost many key channels to the upstart but still owns the rights to carry the Spanish, German and Italian leagues.
ò Telefonica announced that it would acquire 8 percent of PCCW, with tycoon Li Ka-shing's foundation, assuming a 12 percent stake for a combined $1 billion. The deal sees China Network Communications Group (CNC) holding some 20 percent stake as PCCW's largest shareholder. Spain's Telefonica and the Li group said they are buying their stakes from a consortium led by Hong Kong financier Francis Leung, who agreed in July to pay US$1.1 billion for the nearly 23 percent controlling stake in PCCW held by Richard Li's Pacific Century Regional Developments (PCRD). Earlier reports indicated Telefonica had been looking to strengthening its alliance with CNC with its plan to raise its share in CNC from the current 5 percent stake to 9.9 percent. In a related development, Telefonica, CNC and PCCW announced their signing of an agreement to jointly develop telecom and media businesses
Singapore/Malaysia/Philippines/Indonesia
Mobile/Wireless
ò Indonesian mobile phone service provider PT Telkomsel û a subsidiary of state-owned firm Telkom û announced that it looks to gain 7 million new customers next year. The company president noted that, industry-wide, there would be about 10 to 15 million new cellular phone subscribers next year. Telkomsel said it expects to get about 7 million of that number. Telkomsel, 35 percent owned by Singapore Telecommunications Ltd, is Indonesia's largest mobile service provider with more than 50 percent of the domestic market. The company said it is aiming to increase its total subscriber base to 41 million from a projected 34 million by the end of this year. In September, Telkomsel pioneered the country's 3G cellular services. The company plans to invest about Rp3 trillion rupiah ($326 million dollars) within three years as it expands its 3G coverage across the country.
Telecommunications
ò Malaysia said it will issue two licenses to telecommunication operators next year to provide fourth generation wireless high speed Internet services. The countryÆs minister for energy, water and communications said the government hoped the winning bidders will roll out the WiMAX network nationwide in 2007. The government in July cancelled the original tender for the WiMAX 2.3 gigahertz spectrum, saying that the specifications were not in line with the ministry's policy. A government official said the Malaysian government hopes to issue up to four licenses. The original tender had attracted bids from 17 companies, including Malaysia's top communications firm Maxis Communications and DiGi Telecommunications Sdn Bhd.
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