ò Sony, Matsushita, Sharp, Toshiba and Hitachi, the Japanese consumer-electronics giants, announced an agreement to develop a joint standard for internet-connected TVs. Under the alliance, the group plans to establish a common standard for aspects of internet TV such as the OS, security, copyright protection and network connectivity. The move is aimed to make it easier for content makers to produce viewing material for televisions that link to the web. Industry observers are saying that the alliance might push rivals overseas either to develop alternatives in competition, or adopt the planned Japanese standard. For the OS, companies have decided to adopt Linux, rather than MicrosoftÆs Windows system. Beyond that, the specifics of the standard are undecided. The five rivals set up a joint company last month called TV Portal Service Corp to develop this common standard, with Sony and Matsushita as the lead shareholders, each with a 35 percent stake. The others have 10 percent shares.
ò Nippon Telegraph and Telephone reported an 18.5 percent decline in profit for the first fiscal quarter to Ñ144.7 billion yen ($1.2 billion) from Ñ177.6 billion ($1.5 billion) the same period the previous year. The company ascribed the drop to the continuing declines in income from its fixed-line business as well from the costs it incurred in promoting its broadband internet services, and its mobile operations. The company said that its mobile carrier unit NTT DoCoMo still dominates the Japanese market, and the service still continues to grow. Its operating profit, however, went down by 21 percent in the latest quarter, despite rising revenue. The company said expenses at NTT DoCoMo were also higher, mostly related to selling new handsets, while service prices have been plunging because of intensifying competition. NTT said it has been increasing users of a fast 3G data transmission on mobile phones called Foma, which allows people to use handsets to watch video clips and relay more data.
Media, Entertainment and Gaming
ò Camelot Software Planning, the studio that has become known for its line of Mario sports software, disclosed that it will take a pause from its alliance with Nintendo to concentrate on a partnership with Eleven-Up Inc. and Yahoo! Japan. The studio revealed it will develop a new golf title for the PC called Golf Daisuki. The game begins beta testing later this month and once complete, will be distributed on the G-Planet service created by Eleven-Up and Yahoo! Japan. Camelot is a small studio of about 30 development staff. The team has not ruled out future development with Nintendo. Camelot said the studio would devote its full resources to G-Planet because it sees immense potential in the service's future.
ò Sharp announced that it would initiate operations in its LCD plant this month, two months ahead of schedule in a bid to meet surging demand in bigger but slimmer TVs. The plant, which costs about Ñ150 billion ($1.3 billion), was set to open in October. It is expected to manufacture top-notch panels for flat-panel TV called ôeight-generationö TV. Observers note that Sharp was successful in its operations compared with other Japanese electronics makers in competing with cheaper Asian competition. The Osaka-based maker of Aquos brand TVs got a head-start by focusing on flat-panel TVs and has the advantage of making both panels and TVs in-house, instead of having to buy panels from other companies. According to DisplaySearch, Sharp holds about 13 percent of the global market in LCD TVs, even as it is in a tight competition against three strong rivals, Sony, Samsung and Royal Philips Electronics. Sharp said the new plant would produce 15,000 panels a month, enough for 120,000 40-inch TVs. Production will be boosted to 30,000 panels a month by March next year. It looks to sell some 6 million LCD TVs worldwide during the fiscal year ending March 2007, up from 4 million in the fiscal year through March.
ò Dell beat Fujitsu in April-June to become the second-largest PC supplier in Japan, according to IDC. Dell is already the world's largest personal computer vendor, but Tokyo-based NEC Corp. and Fujitsu have been the largest and second-largest PC suppliers in Japan in recent years. IDC noted that Dell made use of aggressive pricing and advertising campaigns to boost its market share. NEC remained in the No. 1 spot, with a 19.6 percent share, followed by Dell with 16.1 percent, and Fujitsu with 15.6 percent. Overall PC shipments in Japan, the world's third-largest personal computer market in unit terms, fell to 3.4 million units in April-June, down 2.3 percent from a year earlier and the first decline in more than three years.
ò HanaroÆs IP Media TV portal service, Hana TV, said it has attracted 13,000 subscribers in just nine days since the service launch. The service has attracted a lot of attention and Hanaro says it is getting more than 1,000 calls daily from potential subscribers who are interested in the service. Hanaro TelecomÆs internal target for Hana TV is 250,000 subscribers by the end of the year.
ò SK Communications said it has developed an in-house a search engine to be used for its Cyworld and Nate.com services starting the middle of this month. So far NHN is the only South Korean internet firm that has successfully developed and launched its own search engine. With the entry of SK Communications, competition is expected to be intense in the already highly competitive domestic search market. An industry official was also quoted as saying that Daum Communications is also in the development stage of its own search engine.
ò NHN Corp, Korea's top online portal, reported a 120 percent rise in its second-quarter net profit on year to W32.4 billion ($33.9 million), driven by a solid growth of online advertisement income. The company said net profit in the April-June period declined 7.7 percent from the first quarter. Sales jumped 59.9 percent to W132.9 billion ($138.7 million). Analysts said NHN earnings topped expectations through higher income from their online ad business, partly helped by internet-based events that included the World Cup soccer finals in Germany. Sales from search engine-based ads jumped 70.8 percent to W68.1 billion ($71 million) from a year earlier.
ò South Korea's three mobile carriers are expected to refrain from increasing handset subsidies in the second half, noting how snowballing marketing costs negatively affected their earnings in the second quarter. SK Telecom, KTF, and LG Telecom posted disappointing earnings in the second quarter largely due to bigger marketing expenses after the government lifted a three-year ban on handset subsidies in March. The Ministry of Information and Communication has long blocked the carriers from offering subsidized handsets in return for restrictive membership conditions such as obligatory subscription for up to two years. The lifting of the ban, however, is just limited to the handset subsidies of existing long-term subscribers, not the one for attracting new users. As the marketing strategy revolved around handset subsidies, the carriers had no choice but to raise the subsidies in a fierce competition. But the subsidy race is now expected to cease. KTF, the country's second-largest mobile carrier, is set to apply a new handset subsidy rule from July 5, allowing existing subscribers to get an extra subsidy of as much as W100,000 ($104) when they upgrade their handsets and keep their membership. KTF's generous offer this month is aimed at competing with LG Telecom, which raised the handset subsidy for its own subscribers by up to W100,000 last month. But SK Telecom said it would not follow suit for a while after releasing its second quarter earnings.
ò KTF Co., South Korea's second-largest mobile operator, exceeded its rivals in gaining new customers in July thanks to its marketing efforts to retain subscribers, according to industry data. KTF said it attracted a net 83,855 customers last month, bringing its total subscription base to 12.7 million at the end of July. The figure compares with the previous two months when it gained 49,600 and 21,500 subscribers respectively, as its business was affected by aggressive marketing by other operators on the back of the government's reintroduction of handset subsidies. LG Telecom added 52,117 customers last month. SK Telecom Co, the nation's top mobile operator, however, lost a net 10,685 subscribers amid advances by other smaller companies. SK Telecom led the market with a 50.5 percent share, trailed by KTF with 32.1 percent and LG Telecom with 17.2 percent.
Media, Entertainment and Gaming
ò Cinero.com, which launched the countryÆs first Online Download Movie Theater service in April this year, reported a sharp rise in the number of its fee-paying users in 3 months. Industry experts are closely watching the new service to see whether the movie content market would move toward the online download service area. The company is offering unlimited access to downloadable high-quality movies for a fixed rate of W8,000 ($8) monthly. In July, some 60 percent of members used the site pay for download service, which is higher than around 40 percent average among other streaming service users. In a related development, Cowon, a firm specializing in portable multimedia players and digital music players, said it is also seeking to launch content download service, and MBC teamed up with Warner Brothers to introduce a digital movie download service middle this month. Cinero.com is now offering 'My Great Teacher, Part II' and 'My Wedding Story.' The company is aggressively securing movie content, expecting online releases to move up to the time of video releases.
ò SK Telecom Co., South Korea's largest mobile-phone operator, reported a 20 percent decline in its net income to W373.3 billion ($390 million) in the second quarter. The company said its sales went up by 4.4 percent to W2.6 trillion ($2.7 billion). SK Telecom joins rival KT Freetel Co. in reporting lower than expected profit in the latest quarter, underscoring how competition has intensified since the end of March, when wireless operators began offering handset subsidies. China
ò Sina reported a 4 percent rise in its net profit to $10.4 million, in the second quarter as turnover gained 16 percent to $53.7 million. The firm, considered as ChinaÆs most popular portal ascribed the performance to a strong second-quarter advertising revenue growth. Sina said the recent World Cup contributed some 45 percent boost to advertising fees, a contribution valued at some $8 million. During the second quarter, Sina announced an earning of $2 million from the sale of its stake in a joint venture company formed with South Korean online game company NCsoft.
ò Sohu.com announced that it has completed its $15 million stock repurchase programme. Sohu revealed it is continuing with a separate and additional $15 million stock repurchase programme, which is in place at present.
ò Industry observers are saying that big foreign mobile phone makers led by Finland's Nokia and South Korea's Samsung Electronics are making headway into the China market, as consolidation pushes smaller mainland players away. Industry experts cite expanded distribution and local alliances as factors that are making it easy for the worldÆs top three handset suppliers to be dominant forces in the China market. According to Gartner, some 25-30 handset vendors would remain in China by the end of this year. Strategy Analytics said that Nokia continues to set the agenda in larger emerging markets such as China, allowing the company to capture a 33 percent market share worldwide in the second quarter. Nokia is working with local operators in rural markets to help make monthly tariffs affordable, with growth from China and other emerging markets seen as boosting Nokia's global mobile phone shipments to 101 million units this fourth quarter, up 20 percent from 84 million units a year earlier. Partnerships with local players are also helping to drive growth for overseas companies.
ò Analysts are saying the mainland's major mobile operators are expected to post far more robust first-half results than fixed-line carriers. According to a median of eight analysts surveyed by China Daily, China Mobile, the world's largest mobile operator by subscribers, is likely to register a 21 percent growth in the January-June period to reach Rmb29 billion ($3.6 billion).
ò Lenovo Group reported a decline of 89 percent in its first-quarter profit to $5 million, which it ascribed to restructuring costs at the unit it acquired from IBM. Lenovo said that it spent $19 million to pay for job cuts and relocation. The company reported its sales going up by 38 percent to $3.5 billion. Lenovo said it is cutting about 1,000 employees and moving offices at a cost of $100 million after acquiring the personal computer unit of IBM for $1.2 billion in May 2005. It looks to the restructuring as bringing it a saving of as much as $250 million a year. It reported a loss in the quarter to March after booking $70 million of restructuring costs. The remaining $30 million will be taken into account this fiscal year. IDC said LenovoÆs share in the global market went up to 7.7 percent at the end of June from 7.5 percent a year ago. Notebook computer sales, which rose 23 percent in terms of shipments, accounted for 51.6 percent of total revenue, with desktop computer sales taking 41.8 percent. Its sales in the mobile handset business posted a 64 percent growth to $174 million, making up 5 percent of total revenue. Sales in the Greater China region, which made up 38.5 percent of total sales, registered a 31.6 percent growth to $1.3 billion. Its revenue in North and South America, making up 29.2 percent of total sales, went up by 43 percent to $1 billion. Asia-Pacific sales contributed 13.3 percent of the total and posted a 45 percent rise to US$416 million, with the growth coming from India and Japan.
ò Microsoft Corp said it would spend $700 million annually in the next five years to purchase hardware products from China. The company, however, did not mention if it plans to introduce the video game console Xbox in the Chinese mainland even though it will launch the product in 10 more countries this year. At present, most of Microsoft's hardware products are manufactured in southern China, and all Xbox consoles are manufactured in China.
ò Best Buy Co disclosed that it is considering further acquisitions in China, including Beijing Dazhong Electrical Appliances Co, as the biggest US home-appliance chain prepares to open its first store in the world's most populous country. A top official of Dazhong revealed the plans to nullify an agreement to ally with China Paradise Electronics Retail. Best Buy's plan to enter China's $75 billion home-appliance market has spurred mergers among domestic companies. Dazhong stores account for more than half of sales in Beijing, a prize for either Best Buy or Gome Electrical Appliances Holdings, China's biggest home-appliance retailer, as they vie for wealthy, urban consumers.
ò United Microelectronics Corp (UMC), the world's second-biggest contract chipmaker by revenue, reported a massive rise in its net profit for the second quarter to NT$6 billion ($183 million), up from NT$299 million ($9.1 million) in the second quarter of last year. The result was even higher than the NT$4.4 billion ($134.2 million) average estimate from analysts polled by Dow Jones newswires. UMC explained the huge growth as partly caused by the company selling stakes in MediaTek and SirF Technology Holdings.
ò Nexgen Mediatech, which handles the LCD-TV business for the Chi Mei Group, said it is scheduled to enter the LCD-TV market in China by the end of the year. The report also indicated that Nexgen would place LCD-TV orders with Sampo Technology, a member of Sampo Group, to avoid high tariffs in China. Sampo Technology will assemble Chimei-branded TVs in Kunshan, in Jiangsu Province. Nexgen
+ Hutchison Telecommunications International Ltd (HTIL) said it has asked the courts to stop Essar Group from selling its Mumbai mobile business to a third party. HTIL owns 67 percent of the stake in partnership with Essar, which holds the remaining 33 percent of the joint venture. With 2.1 million customers, Hutchison Essar is the largest operator in Mumbai. It operates in 16 of India's 23 license regions. Essar said it is due to sell another seven licenses to Hutchison Essar. Earlier, HTIL said it aims to spin off Hutchison Essar, valued at $10.6 billion by some analysts, as early as the end of this year, a plan that the company said has remain unchanged.
Media, Entertainment and Gaming
+ Industry observers note that Hong Kong's digital music sales have grown to 4 percent of total music sales, and yet the trend to legitimize music downloading initiated about a year ago has not yet countered the decline of the music industry in the said market. A top official of the International Federation of the Phonographic Industries (Hong Kong) said they are expecting a substantial decrease in the revenue from physical sales of music. In 2005, the industry posted total sales of HK$629 million ($80.9 million), which is a 6.3 percent decline compared to sales posted in 2004. The federation reported that global music sales had fallen 16 percent in five years, from $39.7 billion in 2000 to $33.6 billion in 2004. But digital sales have grown to $1.1 billion, triple that of 2004. Legal music downloading websites are adopting various strategies in the hope of boosting sales, including price cuts. The New World Telecom's NWTmusic.com has slashed the price per song, which previously ranged from HK$10 to HK$12 to between HK$2 and HK$7, even as the firm said it was not aiming to open a music downloading price war. Rival EOLAsia.com and i-Cable's imusic, also launched last year, said they would not follow suit. EOLAsia.com will maintain an average of HK$8 ($1) per song, while imusic will keep it at HK$6 to HK$9.
+ Solomon Systech (International) reported a 50.7 percent decline in its profit to $17.8 million in the first six months from $36.3 million a year ago. The Hong Kong-listed display chip designer ascribed the decline to a drop in its selling price. Solomon said its turnover went down by 20 per cent to $149.4 million despite a 16 percent gain in shipment volume to 125 million chips. Solomon generates much of its revenue from mobile phone display chips. The company said it has managed to retain its 20 percent market share in the mobile phone display chip market worldwide. A top company official noted how the mobile phone display chip market is becoming less profitable because of keen competition, said the company aims to develop display chips for other consumer electronics. In line with this, the company stepped up its investment in research and development in the first half to $7.9 million, compared with $5.5 million a year ago.
ò Malaysia said authorities would begin cracking down on bloggers who write rumours seen as destabilising the economy and bringing about disharmony. The statement from the countryÆs prime minister was seen as one of the latest efforts from the government to police the cyberspace. Officials have made statements that proper internet governance was needed to prevent disunity in the multiethnic Southeast Asian nation. Observers note that Malaysia has always monitored print and television media, leading people to go to the internet for alternative news source and commentary. A government official however, said that bloggers have more freedom than those practitioners in print and TV media.
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