A week in tech, January 2-8

A roundup of all the latest tech news.

ò Rakuten Inc. announced that it is planning to launch an online shopping mall in China in 2007. The move is seen as the companyÆs response to its slow growth in Japan and recognition of the strength of the Chinese market. According to iResearch, China's business-to-consumer e-commerce market is estimated to reach Rmb46 billion ($5.9 billion) in 2010, compared with the limited growth expectations for Japan, which faces the problem of an aging and diminishing population. Earlier, Rakuten had already expressed interest in expanding into the US and Europe. The planned launch into China would see it competing against the likes of Alibaba.com, the country's largest e-commerce company, in which Yahoo Inc. bought 40 percent in 2005 for $1 billion. Rakuten currently owns part of the Chinese online travel agent Ctrip.com.

ò Mobile phone operator Softbank announced that it has set the new price plan with a monthly base fee of Ñ980 yen ($8), in a bid to secure heavy users. Last year Softbank bought Vodafone Group Plc's local cell phone unit and has faced strong competition from NTT DoCoMo Inc. and KDDI Corp. The company has to particularly contend with the introduction of a new system by which users can keep their numbers when switching operators.

ò Industry sources said that Japan's NTT DoCoMo intends to keep its initial investment on its so-called super 3G network down to 100-200 billion yen ($841.0 million-1.7 billion). Super 3G is an upgrade to DoCoMo's existing third-generation (3G) infrastructure that would allow some 260 times faster downloads and uploads of data such as video and music clips. The paper said DoCoMo plans to introduce the service in 2010. A spokesperson from the company said the report would be verified soon. DoCoMo competes with KDDI Corp. and Softbank Corp in Japan's $78 billion mobile phone market, in which competition has intensified since the introduction of mobile number portability, letting customers reselect carriers without changing phone numbers. DoCoMo has said it planned to have the super 3G network ready by about 2009 and would spend less on the new network than it had on its existing 3G network. DoCoMo has spent a total of Ñ2.8 trillion ($23.6 billion) on its 3G network in the past six years.


ò According to a report by Spamhaus, South Korea is once again listed as one of the worldÆs five worst e-mail spam havens. As of Dec. 31, Spamhaus, the international anti-spam agency, has compiled a total of 172 Internet protocol addresses in Korea, which operate as sources of spam. The US topped the list with 2,070, followed by China with 367, Russia with 243, Japan with 229 and finally South Korea. The nation was No. 3 in the spam list during two consecutive years in 2004 and 2005 trailing the U.S. and China but it improved to seventh spot last May. The results prompted some observers to conclude that Korea was no more a major spam-relaying country. However, the downward trend came to an end in just half a year as the nation returned to the sixth slot in October and climbed a spot higher to fifth in November. The number of spam-sending IP addresses in Korea rose from 161 last May to 165 in November and 172 last month. This conflicts with announcements by the government, which has gone all-out to deter e-mail spam over the past several years. The Ministry of Information and Communication said Koreans got an average of 5.3 unwanted junk messages late last year, down from 6.9 a year before.

ò Itemtopia, a free online item trading website, has opened for the first time in South Korea. At Itemtopia, users can sell and buy online game items without paying commissions once they are registered as members. Chatting and messaging services are also available. The report said the web site aims to earn profit from advertisements. According to the Korea Game Development and Promotion Institute, The size of the market is valued at about W1 trillion ($1 billion) in 2006. About 60 percent of the trading company's profits are from the cyber money trade, with most of the item trading sites taking around 5 percent of the price as commission.

ò South KoreaÆs antitrust regulator, the Fair Trade Commission, announced a full-scale investigation into allegations of unfair market practices by wireless technology company Qualcomm. Earlier last month, the commission said it has formed a task force to probe the allegations that the company used its dominant position in wireless technology to seek excessive royalties. Qualcomm developed CDMA, a rival standard to the dominant cellular standard GSM, or global system for mobile. The company controls most of the key patents. CDMA is used in the U.S. and South Korea. Every handset in Korea has a CDMA chip and handset manufacturers have to pay royalty fees to Qualcomm. Qualcomm, which licenses technology for mobile phones and manufactures semiconductor chips that run them, earns money by licensing the CDMA technology to other chipmakers, handset manufacturers and wireless technology companies. South Korea has long been one of QualcommÆs strongest markets, accounting for 32 percent of $7.5 billion in revenue for its fiscal year that ended in September last year.

ò SK Telecom said that Sony Ericsson Mobile Communications AB plans to enter the highly competitive South Korean mobile phone market in 2007. The Korean firm said that Sony Ericsson is in talks with Korean mobile carriers on the installing of the WiFi wireless internet platform on its phones to be launched in the country. The source said Sony Ericsson may launch high-end phones in Korea in the second half of 2007, when an advanced mobile technology known as high-speed downlink packet access, or HSDPA, is commercialized. Sony Ericsson is a 50/50 joint venture of Telefon AB LM Ericsson and Sony Corp. According to Shinyoung Securities, Motorola Inc. (MOT), the world's second-largest handset maker, is the sole foreign vendor in Korea, with a market share of about 10 percent.

ò Creditors are saying that differences over pricing are stalling the deal to sell Daewoo Electronics, South Korea's third-largest electronics maker, to a consortium led by India's Videocon Industries. Earlier in October, a memorandum of understanding was to sell Daewoo Electronics for W700 billion ($748.4 million) to the consortium made up of the Indian electronics maker and Ripplewood Holdings, a U.S.-based private equity fund. Since then about 40 creditors, led by Korea Asset Management Corp and Woori Bank, have been in talks with the consortium to fix terms for the sale. The potential buyer was reportedly calling for a 13 percent cut in the price and has asked creditors to reinvest a considerable part of the proceeds in the company in the form of convertible bonds. A Woori Bank senior official said creditors would continue talks and denied news reports that the deal would be scrapped. Daewoo Electronics is a former unit of the Daewoo Group, which collapsed in 1999 with $80 billion in debts in one of the world's largest corporate failures. It posted a net profit of 93.9 billion won ($100.3 million) on sales of W2.1 trillion ($2.2 billion) in 2005.

ò Alibaba.com announced that it will soon start charging some users of its free Alipay online payments service. The company stated that Alipay users who are not doing business on Alibaba's Taobao auction site will have to pay "technical service fees" from the start of the year even as Taobao customers will continue to use Alipay for free. Alipay said the new charges are expected to help standardize the electronic payments market and promote development of the industry. Alipay revealed that it has registered some 20 million users who conducted more than 250,000 trades. Alibaba's revenue in the first half of last year were about $100 million and the firm expects total revenue to hit $1.2 billion by 2009. In a separate development, by June this year, PayPal China said it would offer its domestic service through that venture via relationships with UMPay, a joint venture between China Mobile and bankcard provider China Unionpay.

ò Google announced its alliance with China Mobile to provide mobile and internet services in China. Under the partnership, Google said it would provide technology to China Mobile, the nation's largest handset operator, allowing searches on the Chinese firm's Monternet WAP portal. The service entered trial operations last month and would be rolled out early this year. China's 132 million online users, which is No. 2 to the U.S. is seen as providing huge revenue opportunities for Google. In December last year, Microsoft and Baidu joined forces, with Microsoft to display Baidu search advertising on its MSN, Live and other websites in China. In an earlier development, too, eBay only last month announced it was downgrading its presence in China, handing control of its main website to Beijing-based wireless services group TOM Online.

ò According to the countryÆs Ministry of Information Industry, it has listed embedded software, basic software and information security software as the main areas of software development during the 11th Five-year Plan Period. The plan also considers information security software as a crucial part of the countryÆs software development in the next five years. China's electronics manufacturing market scale hit Rmb345 million ($44.1 million) in 2005 and ranked second and its production of electronic products ranked first in the global market. Among the country's top ten software enterprises, six are embedded software product manufacturers.


ò Industry sources said the central government had approved a $900 million investment by a Taiwanese firm in Chongqing for the assembly of eight-inch (200 millimeter) microchips. The government gave the nod to Taiwan's ProMOS Technologies to build the plant for eight-inch wafers. The project approved by the mainland's National Development and Reform Commission is expected to finish construction in the first half of this year. Without elaborating on the details, Chongqing said a further $500 million of investment would be needed to set up testing facilities. The project is part of the Taiwan government's plan to allow the island's microchip makers to build 200mm or eight-inch wafer plants in the mainland by the end of this year.

ò Chunghwa Telecom (CHT) says it plans to invest NT$60 billion ($1.8 billion) from 2007-2011 to replace its copper-wire fixed line network throughout Taiwan with a fiber-optic based network. According to its top official, the fiber optic network will enable users to download capacities of 10-100Mbps. Besides traditional voice services, the large bandwidth of a fiber optic system can be used for VoIP (voice over Internet Protocol), broadband access to the Internet, CATV (coaxial cable TV), HDTV (high-definition TV) on demand and IPTV. CHT expects the number of subscribers using its fiber optic system to grow from 150,000 at present to 500,000 at the end of 2007 and further to 2.5 million in 2011. Industry analysts believe that Taiwan-based network equipment makers, including Foxconn Electronics (Hon Hai Precision Industry), Tecom, D-Link, Accton Technology, Asustek Computer, Zyxel Communications, Alpha Networks and Hitron Technologies, are expected to benefit from a NT$130 billion ($4 billion) project by Chunghwa Telecom (CHT) to upgrade its network over the next five years. The investments include a budget of NT$60 billion ($1.8 billion) for a fiber-optic based infrastructure and another NT$70 billion ($2.1 billion) for mobile telephone services, Internet networks, satellite communications, sea-based cable and multimedia on demand (MOD) applications.

Hong Kong

ò India's Essar group said it is ready to offer $14 billion to buy out majority shareholder Hutchison Telecommunications. The Essar Group holds a minority stake in Hutchison Essar, IndiaÆs fourth-largest mobile phone firm. Reports indicated that Essar group was waiting for Britain's Vodafone and other contenders to submit their bids to Hutchison Telecommunications International before making a formal offer. Hutchison Telecommunications International is 67 percent owned by Hong Kong-based Hutchison Whampoa. Earlier, the countryÆs second-largest telecoms company Reliance Communications expressed that it was in the race to take over rival Hutchison Essar to create India's biggest mobile phone company, with news coming out saying that Reliance Communications had set a board meeting this month to raise funds from overseas markets through the issue of securities. Vodafone was also reported as having approached Hutchison Essar with an offer of $17 billion to $18 billion. Industry sources have also identified an Indian outsourcing group Hinduja TMT as having plans to join the bid to acquire Hutchison's majority stake in Hutchison Essar. In June, Hinduja TMT divested its 5.1 percent stake in the company in June in line with the group's policy of remaining only in those companies in which it held a majority.

ò PCCW, Hong KongÆs largest broadband service provider, announced that it is pushing its music subscription service to maintain or improve its average revenue per user and to differentiate the company from its rivals. PCCW is promoting the service as the company and other service providers such as City Telecom's Hong Kong Broadband Network prepare to raise their broadband service tariff by 10 percent to 50 percent this year. The company said its broadband average revenue per user (arpu) service has been on an upward trend. Analysts estimated the company's arpu at about HK$170 ($22) to HK$180 per month ($23). The company charges users HK$198 ($25) a month for unlimited broadband internet access which includes 18 Now Broadband TV channels. As the products provided by different service providers are broadly similar, PCCW wants to use the music service to increase its hold on users. PCCW said it sees the monthly subscription business model as helping remove the barriers to users opting to pay for digital music.
¬ Haymarket Media Limited. All rights reserved.
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