A week in tech, June 30 - July 6

A round-up of all the latest tech news.

ò The Japanese arm of Google Inc. announced the launching of a content-linked video advertising service adding one more to its varied offering of online services. The search-linked video advertising service known as Click-to-Play automatically updates the Google Japan site and distributes the most appropriate video ads. The Click-to Play service, which utilizes Google's AdWords search-linked technology, distributes video ads to sites linked to keywords or page content as specified by the advertiser.

Media, Gaming and Entertainment
ò Three Japanese cable companies announced their agreement in a bid to deliver on-demand programming to more than 600,000 subscribers. The three companies û Chubu Cable, C-Tech, and CTY û are running a trial of the system, which is based on software and equipment from SeaChange International, ahead of full commercial deployment scheduled later this year. The trial includes services such as on-demand movies, music videos, and local programming. SeaChange said it had developed the subscriber-navigation solution using its VODlink application platform, which is integrated into the customer's digital set-top box. The entire on-demand process is automated and integrated with third-party electronic program guides and browsers.

ò Warner Entertainment Japan, a subsidiary of US media giant Time Warner, plans to acquire more Japanese films and increase local production of movies in response to the growing popularity of domestic films. A top official of the company said the company hopes to form alliances with publishers to produce movies from best-selling novels, a business model that has proven successful around the world. The company said it is also looking for growth to Warner's Asian and Western movies, as well as acquisition of other company's films overseas, which it wants to distribute exclusively in the Japanese market. The official said the industry could not increase the number of moviegoers if it does not get access to more theaters. Warner Mycal, a joint venture between the Time Warner Group and domestic supermarket chain Mycal Corp., a subsidiary of retailer Aeon Corp, opened Japan's first cinema complex in 1993. Of the 2,926 screens nationwide, 1,954, or two-thirds, were part of a multiplex in 2005, according to the Motion Picture Producers Association in Japan. But like any other countries where broadband is common, Japan also suffers from Internet piracy. The official noted that unlike in the U. S., people who buy pirated films in Japan are not subject to penalties and thus the government needs legislation to curb the problem.

ò Matsushita Electric Industrial announced that it has doubled its production capacity for plasma display panel televisions at its factory in Amagasaki, Hyogo Prefecture, in a bid to respond to surging global demand for flat-panel TVs. The company said that with the plant having initiated production on a full-fledged basis, its annual output capacity has reached 3.4 million units, which is about 2.3 times the previous capacity of 1.5 million units. By increasing the production capacity at the plant, Matsushita said its total annual production capacity including the Shanghai plant and the factory in Ibaraki, Osaka Prefecture has stood at 5.5 million units. The figure includes the production at its Shanghai plant and the factory in Ibaraki, Osaka. With a total investment of Ñ180 billion ($1.5 billion), Matsushita is building the world's largest plasma display panel factory next to the Amagasaki plant. It aims to begin operations at the new factory in July 2007.

ò BT Group and KDDI revealed their plans for a joint venture that will enable them to provide and manage global communications networks for leading Japanese companies. The venture is expected to be launched in August and will provide and manage voice and data networks for leading Japanese companies and their operations across the world. The alliance is forecasted to generate revenues of $1 billion within three to five years. According to industry observers, BT has been seeking to reestablish itself as a force in Japan after selling its minority stake in Japan Telecom to Vodafone in 2001.


ò Sources say that interest in subscription and service terms and conditions is intensifying as KT readies to launch the Wi-Bro wireless internet service in a few weeks. Other than the launch, the concern remains about the price of PCMCIA (Personal Computer Memory Card International Association) cards, which are expected to be set higher than earlier estimated. Estimates put the price as hitting as high as W300,000 ($316), making the price of PCMCIA cards higher than wireless LAN cards. For commercial service, cards will be switched to Universal IC smart cards (UICCs) KT developed last month. The new UICC is capable of integrated management of personal information for financial services as well as certification of Wi-Bro. The company said the card is an essential part of KT's content differentiation strategy.

ò SK Communications, operator of South Korea's third-largest internet portal service provider, announced its entering into an agreement with GermanyÆs Tonline, a subsidiary of Deutsche Telekom, to launch a version of its popular Cyworld social networking service in Europe. Tonline is considered to be GermanyÆs biggest Internet service provider. The partnership will allow the two firms to launch a joint European office in Germany and introduce European Internet users to its Cyworld social networking blog. SK Communications is the Internet business unit of SK Telecom, South Korea's largest mobile phone operator with 19 million subscribers. The Deutsche Telekom affiliate has 14 million subscribers in German-speaking European nations. Germany is reputedly home to some 50 million internet users in Europe and has a well-equipped Internet infrastructure. SK said it plans to provide the service for free until it sees success, and then gradually start charging for services.

Media, Entertainment and Gaming
ò NCSoft revealed its move to lay off 70 of 300 employees in its US operation based in Texas, as performances of its games have slowed down this year in the world's largest market. The publisher of popular online games `öLineageö, öGuild Warsö, and öCity of Heroesö said that it is restructuring the US office by reducing members of its workforce, who are mostly support staff, for the first time since it first made inroads into North America in 2001. NCSoft has been considered a dynamic game company in the US with the worldwide successes of its multiplayer online games. The company posted 339 billion won ($357.4 million) in global sales last year with an operating profit of W76 billion ($80.1 million). Such performance is said to have been the main reason why other South Korean game firms, like Webzen, ventured into the US market. NCSoft disclosed that its profits are likely to decline this year after it has failed to achieve huge success with its games. In its report to investors, NCSoft said it is looking to an operating profit of W57 billion ($60.1 million), which represents a 25 percent decline from 2005.

ò Webzen, a video game company announced that it has secured a deal that will have Microsoft Corp.'s newly acquired Massive Inc. advertising unit place promotions in two of its upcoming titles. The agreement marks the first for Webzen and signals MassiveÆs entry into the Asian market. Massive sells advertising to companies such as Coca-Cola and Honda Motor and helps them place their online promotions in slots created by game makers. The company's technology allows advertisers to run their online campaigns in specific geographic areas and for specific periods of time, rather than buying a spot that is written into the game software. Industry observers forecast the new advertising medium to grow into a global market valued at more than $3 billion. Games included in the deal are the upcoming PC versions of the massively multiplayer online first-person shooter (MMOFPS) Huxley and the urban action MMOG All Points Bulletin. Both games are slated for worldwide release and will include in-game advertising in each territory. Financial terms of the deal were not disclosed.

ò The countryÆs top information official has confirmed that major South Korean cell phone makers' royalty obligations to Qualcomm will partially expire in August. US-based Qualcomm holds patents for CDMA, which refers to the worldÆs second generally used mobile platform that enables wireless telephony services. The report noted that Samsung Electronics' contract with Qualcomm indicates it will finish in 2006 for sales on the domestic market and 2008 for exports. LG Electronics is also believed to have signed an almost identical contract in 1993 with Qualcomm. According to data compiled by the countryÆs Ministry of Information and Communication, Qualcomm has collected up to $2.6 billion in CDMA technology fees in Korea starting in 1995 through last year. Qualcomm contended that South Korean mobile phone manufacturers will have to continue to pay royalties beyond this August.

ò LG. Philips LCD announced a $95 million investment on a new plant in ChinaÆs Pearl Delta region. The South Korean company said the new plant will work on module production, which forms the last part of the TFT-LCD production process. There will be two factories in the site: one on the producing of TFT-LCD modules and the other on the manufacturing of cells and modules for smaller TFT-LCDs that are used in cell phones or other portable electronics. The factory is the second module production complex in the country for LG. Philips.

ò Baidu.com announced itÆs launching weblog services soon in a bid to compete with its rivals such as Google, Microsoft, and Yahoo. The company said the blog service is dubbed Baidu Space and is now being tested before launching. Reports indicate that the population of blog users in China is predicted to reach 60 million by the end of this year and 100 million in 2007. Google, Sina, and Sohu have already deployed their blog services in the country.

ò Online games company NetEase and China's leading drinks maker MasterKong announced their formation of a reciprocal promotional partnership with the aim of boosting sales. Under the agreement, NetEase said it will plaster ads for the new games on millions of bottles of MasterKong's icy green and red teas to diversify its marketing channels. Under the deal, Masterkong will use Datang to promote its products among young gamers with in-game ads. NetEase will brand certain virtual settings, items, and characters in the game with MasterKong's bottled tea products. Industry observers see online games emerging as a preferred advertising medium in China because the country has the second-largest number of Internet users in the world, and online games play an important role. A report by Shanghai-based iResearch showed that China had 29 million online gamers, increasing 38 percent over the previous year, with the figure expected to go up to 40 million this year.

Media, Gaming and Entertainment
ò ChinaÆs Ministry of Information Industry (MII) announced its launching of a training program for talented online game developers and designers, with the government body identifying the gaming college of Beijing Huizhongyizhi Tech as the first gaming talent training base under the programme. Government sources indicated that games developers are in short supply in the country. The Chinese Academy of Social Sciences predicted that the market volume of online games in China will reach Rmb8 billion ($1 billion) in 2006.

ò Legend Capital announced that it is funding the expansion of Shanghai-based Virtuos, one of the world's largest outsourcing services providers for the games software industry. Legend Capital is the investment arm under the Lenovo Group owner of Legend Holdings. A top official of Virtuos stated that Legend Capital, the investment arm of the Lenovo group owner of Legend Holdings, was the only investor in its Series A shares round of financing. Legend Capital manages some $300 million involving three funds. According to Screendigest, a market research firm, the global demand for games outsourcing can be estimated as hitting $1.1 billion in 2006, and is expected to grow to $2.5 billion by 2010. Virtuous revealed that it is planning to use the new funding to triple the size of its teams in the next two years even as it stated that the company will also invest in further training, processes, security and IT. New Access Capital, a corporate finance advisory firm known to specialize in China, served as the adviser on the Legend Capital investment.

ò Lenovo Group announced that it has secured another deal with IBM, a move that will boost its software business. Under the deal, IBM said its Global Technology Services has obtained a three-year license to use LenovoÆs ThinkVantage Technologies. The deal includes the productivity software under the former IBM personal computer business that Lenovo acquired for some $1.7 billion in May 2005. The agreement is expected to enable the Global Technology Services of the computer giant to introduce six ThinkVantage software tools on different computers and also enhance its management of corporate customersÆ non-Lenovo systems worldwide. The IBM unit provides supports to millions of PCs and users with help-desk and desktop services contracts.

ò Analysys International predicts that the enterprise Wi-Fi market in China will expand by 45 percent over the next four years. The report said telecom providers have already set up about 10,000 hotspots in the Asian country; a number that is expected to expand as wireless networking and fixed-mobile convergence becomes a value-added supplement to consumer broadband service. A spokesperson for the research firm said that with the expected 3G developments in China, operators will be focusing more on FMC (Fixed Mobile Convergence) services. The statement said Wi-Fi and 3G are a good choice of China carriers in the initial phase of FMC.


ò Texas Instruments (TI) announced that it will start volume shipments of its single-chip LoCosto solution for handsets in the second half of 2006, with one or two Taiwan-based ODMs planning to start shipping handsets based on the new ultra low-cost chip this year. A company official said that more handset makers are expected to adopt the 90nm-manufactured LoCosto chips, and the product should be the mainstream TI GSM/GPRS solution by the second half of 2007. According to sources at Taiwan handset makers, Compal Communications will ship handsets that incorporate the LoCosto chips to Motorola in the third quarter of this year, with Chi Mei Communication Systems (CMCS) to follow later. In addition, TI plans to begin volume production of its standard 3G chips by the end of this year or early 2007.

ò Inventec Appliances announced that it will invest about $4 million to establish a wholly-owned subsidiary to set up an assembly plant in the Czech Republic in order to meet requirements of its OEM clients. The subsidiary is tentatively named Inventec Appliances (Czech) s.r.o., according to the filing. The company spokesperson said the plant is scheduled for completion by the end of this year and will commence commercial operations in early 2007. The new assembly production line will mainly supply products to Apple Computer. Inventec Appliances reportedly makes video iPods for Apple. In a separate development, Inventec and Mitac International are reportedly completing the move of their server production lines to China by the end of 2006, following the steps of other major Taiwan-based server manufacturers such as Quanta Computer, Micro-Star International (MSI) and Arima Computer.
Hong Kong

ò Hutchison Whampoa announced its signing of an agreement with US-based online service provider Yahoo! to offer its portfolio of mobile services to 3G customers worldwide. Under the terms of the agreement, the two companies will work together to offer key internet services such as Yahoo! Search, Yahoo! Mobile Web, Yahoo! Messenger, Yahoo! Mail, and Yahoo! Go for Mobile over Hutch's 3G networks, with further services planned in the future. The Hong Kong-based company said it has plans to launch the first services in the UK this summer, with other key markets to follow, including Italy, Ireland, Austria, Sweden, Denmark, and Australia. Subsidiary Hutchison Telecom International plans to launch similar Yahoo! mobile applications for customers in Hong Kong and India.

ò PCCW disclosed that it may offer a HK$7 ($0.9) per share special dividend to get shareholder approval for the proposed sale of its assets. The statement indicated that PCCW will decide which of the two bids it will take within the next ten days. PCCW said it has received two bids for all its media and telecoms assets from Macquarie Bank, which was joined in its bid by News Corp., and Texas Pacific Group. The sale, however, has received objections from key PCCW shareholder, State-controlled China Network Communications Corp. (China Netcom), as well as from the Chinese government, which are not keen about foreigners holding such large stakes in strategic assets such as telecom and media. It has been reported, too, that, representatives from the Assets Supervision and Administration Commission and from the Ministry of Information Industry have plans to visit PCCW to discuss the asset sale.

Information Technology
ò Reports said Octopus Cards have been cleared to export its smart card technology for cashless transactions to Shenzhen and Macau. The development indicates that Octopus is going beyond Hong Kong, where 13.5 million cards are in circulation and are used for different types of transactions. For Macau, Octopus has received approval from the Hong Kong and Macau monetary authorities to implement its technology. Octopus said it is currently looking for suitable retailers and businesses even as a company official said that it is initially targeting Macau companies with existing Hong Kong operations. Octopus said it is not looking to applying its technology in casinos, as it is not familiar with gambling activities. In Shenzhen, Octopus is limited to the retail business and is currently signing up retailers. Octopus said the smart card will be operational both in Macau and Shenzhen before the end of 2006. Octopus is teaming up with China Union Pay, the network of mainland banks that support electronic payments, to settle its Shenzhen transactions.


ò Singapore Telecommunications (SingTel) announced that it is targeting double-digit earnings growth in the near future, with the company stating that its Singapore business is likely to produce free cashflow and operating revenue that are comparable with those for the financial year 2006. The company said Singapore Telecommunications' regional mobile communications associates were also expected to continue to deliver double-digit earnings growth. Given this target and development, cash dividends from associates were expected to increase. Singapore Telecommunications reiterated its proposal to return S$2.3 billion ($1.9 billion) to shareholders via a capital reduction involving the cancellation of about five per cent of the company's total issued share capital. Singapore Telecommunications reported a group net profit of S$4.1 billion ($3.5 billion) for the year ended March 31, 2006, a figure that represents a 27.4 percent increase. Optus, which is owned by SingTel, reported an annual net profit of $593 million for 2005/06, compared to $1 billion in the previous year.

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