A week in tech, May 15-19

A round-up of all the latest tech news.


ò Softbank reported its first profit in five years, with the company citing lower marketing costs and increased subscriber growth as the mains reasons for its good performance. The company reported net profit of Ñ57.6 billion ($523.5 million) for the year to March, compared with a Ñ59.9 billion ($544.4 million) loss a year earlier, with the gain partly ascribed to asset sales totaling Ñ194.2 billion ($1.7 billion). Softbank said its Yahoo BB Internet service is gaining on former phone monopoly Nippon Telegraph & Telephone in the high-speed web access market by offering cheaper rates. The company said its sales posted a 33-percent rise to Ñ1.1 trillion ($10 billion). Softbank does not provide earnings forecasts. The company is reportedly testing the WiMax wireless broadband system and expanding its faster fiber-optic network. Softbank, which is JapanÆs second-largest internet access provider, said it aims to collaborate with affiliate Yahoo Japan, operator of Japan's most-visited web portal.


ò Apple Computer in partnership with Softbank announced that it is getting ready to enter the cell phone market with a handset built with iPod music player functionality. The company said the new cell phone will feature the ability to directly download songs from Apple's iTunes Music Store. Initially required to connect to personal computers, early next year, the iTunes Music Store will unveil a new service that allows users to download songs directly to cell phones. Jointly developed with Softbank, a fast-growing Japanese internet and telecommunications group, the agreement is seen as using the power of Apple's brand to compete against mobile market leaders NTT DoCoMo and KDDI Corp.

Media, Entertainment and Gaming

ò Nexon Japan announced that Nexon is currently developing a version of its popular online game, Maple Story, for Nintendo's portable game device, the Nintendo DS. Nexon hopes to focus on the Japanese and US markets with the Nintendo DS version of Maple Story. Nexon America, Nexon's subsidiary in the US, has recently hired its CEO and will be starting a major marketing campaign starting this summer. Maple Story currently has 50,000 concurrent subscribers in North America and other English-speaking countries. The Nintendo DS recorded unit sales of 4 million and 5 million in North America and Japan, respectively.


ò Toshiba Corp announced its plans to almost double capital investment to 2 trillion yen ($18.1 billion) over the next three years, with the company saying that the 61 percent of the investment will go into semiconductors and displays. The company said it also plans to increase spending on research and development to Ñ1.2 trillion ($11 billion) from Ñ1 trillion ($9 billion) previously. The company derives some 50 percent of its operating profit from chips. Toshiba said it is boosting spending on semiconductors as price declines and also to take advantage of growing demand for flash memory. The report said about Ñ326.4 billion ($3 billion) of the three-year investment plan will be spent on the Westinghouse acquisition. Toshiba said it was waiting for approval from the Committee on Foreign Investments in the United States and hoped to complete the purchase by September. After having disclosed that it would build a fourth factory in central Japan, Toshiba said the new investment would include a fifth factory.



ò NHN and Yedang Online announced the signing of a publishing contract for the game Priston Tale 2, which is currently in development, and Audition. Yedang Online disclosed that it has invested some W10 billion ($10.7 million) for the last three years to develop its MMORPG game, Priston Tale 2. Priston Tale 2 uses the Unreal 2.5 engine, known to be one of the best game engines around. The development team is made up of the developers who worked on the first Priston Tale. NHN said it plans to publish the game in both Korea and Japan. Priston Tale is set to start closed beta service in 3Q06 in Korea and commercial service in January 2007.

ò Hanarotelecom Inc. reported a 17-percent rise in first quarter revenue compared to the preceding period, ascribing the growth to an increase in broadband revenue via its merger with Thrunet and through continuous growth in voice net additions. The broadband operator said it posted revenue of W432.3 billion ($463.8 million) and operating profit of W16 billion ($17.1 million), with its net loss going down to W6.1 billion ($6.5 million) in the first quarter. Industry analysts noted that Hanarotelecom's shrinking customer base started to show signs of improvement in the first quarter, as industry data shows the company lost some 12,000 subscribers last February compared to 1,600 this March. Hanarotelecom added 73,000 broadband users in April, posting a net subscriber increase for the first time this year, while acquiring 15,300 voice subscribers in the same month.

ò KT, the country's dominant telecom operator, and TV station KBS announced the launching of a beta service utilizing WiBro and terrestrial digital multimedia broadcasting (DMB). With the offering, users of the mixed service will be able to watch continuous terrestrial DMB mobile broadcasting by inserting a universal serial bus-type device into dedicated WiBro terminals, which will provide the internet-on-the-move feature. The audio-visual service powered by the converged gadgets is a substantial advance compared to that offered by the current stand-alone DMB devices as it provides two-way applications. Users will be able to check for background information regarding TV programmes broadcast on the hybrid WiBro terminal and also replay past editions of programmes on offer. The two companies said they plan to add later services such as T-commerce, interactive games, or quiz events as well as real-time polls.


ò SK Telecom, South Korea's biggest wireless operator, announced its agreement with Warner Music Group, the world's fourth-largest recording company, to set up a joint venture in South Korea. Through its subsidiary, Seoul Records, SK Telecom is setting up a venture, named WS Entertainment. Under the deal, Warner Music and Seoul Records will invest W8 billion ($8.5 million) in WS Entertainment, with Warner retaining a 60-percent stake in the start-up while Seoul Records holds the remaining 40 percent holding. SK Telecom took over Seoul Records in May 2005 by acquiring a 60-percent stake in the outfit with the aim of enhancing its entry into the content industry. A top official of Seoul Records said that audio content from Warner Music would also be available via the telephone services of SK Telecom and its smaller rivals, KTF and LG Telecom.

ò Industry observers are saying the South Korean telecom market is going to be affected by the plan of Skype to enter the market by offering an international telephone service at a fraction of the ongoing rates in the next couple of months. Of the countryÆs companies, KT and Hanaro Telecom are seen as more vulnerable to the entry of Skype. Skype said it plans to deploy two-way VoIP services within the next two months. Users of PC-to-phone calls based on downloadable programmes, dubbed Skype-Out, will have to pay about W20 ($.02) a minute across the world through a pre-paid card, compared to KT, which charges W696 ($0.7) a minute for a call to Japan and W282 ($0.3) for a call to the United States.
ò Baidu.com reported first quarter net income rising to Rmb35.2 million ($4.3 million) from Rmb2.5 million ($312,000). The company ascribed the good performance to a rise in advertising sales, with observers noting that the present results helped in closing the gap on those of Sina Corp. BaiduÆs advertising revenue tripled to about $16.5 million. At the end of last year, Baidu registered a 56.6-percent share of the Chinese search market at the end of 2005, according to IResearch. Google, the world's most widely used search engine, had a 32.8 per cent share. Yahoo was the third most-used search site with a 5 per cent share. Google owns a 2 per cent stake in Baidu.com. In a separate development, Baidu announced itÆs launching of an online encyclopedia modeled on the US-based website Wikipedia. Called Baidupedia, entries to this new service are said to be censored by the Chinese government while Wikepedia is reportedly blocked by the government.
ò Sina Corp announced the appointment of a new CEO. The company announced the resignation of Wang Yan from the post of CEO and his moving to the vice-chairman position. Completing the change was Charles Cao, SinaÆs former president and CFO, who was appointed CEO.
ò With its first-quarter profit posting a 51-percent rise on the same period in 2005, China.com is reportedly seeking advice from investment bankers about switching to the main board or listing outside Hong Kong. The company reported for the first quarter profit of HK$8.5 million ($1 million) as its revenues climbed 72 percent to HK$130 million ($16.7 million). The report said that even as the companyÆs strong balance sheet showed more than HK$925 million ($119.3 million) in net cash, the board of China.com did not recommend an interim dividend for the quarter. This decision was explained by an official who said that the company is reserving cash for future mergers and acquisitions in China. The company said it will focus on its online games business this year following its acquisition of the remaining 52-percent stake of 17 Game and transforming it into a wholly owned subsidiary in March. The company said it will increase its investment in Internet content production this quarter in order to draw in more users to its China.com portal.
ò 51job Inc. reported 188.8-percent growth in its first-quarter net income to $3.3 million, with the company attributing the growth to an increase in online recruitment advertising. 51job said its revenue went up by 21 percent to $21.5 million.
ò Tom Online Inc. announced its financial results for the first quarter ended Mar. 31, posting 32.5-percent increase in its net income to $12.1 million, from the same period last year but down by 4.6 percent from the last quarter. Tom OnlineÆs wireless Internet revenues rose by 36 percent to $45.4 million, over the same period last year and a 2-percent rise over the previous quarter. The company said wireless Internet revenues accounted for 93.6 percent of the company's total quarterly revenues. The company enumerated accomplishments during the quarter: it developed an Internet relationship with CCTV-5 for this year's World Cup tournament, signed a strategic cooperation agreement with Titan Sports, the country's top-selling sports newspaper, to provide joint coverage on this year's FIFA World Cup in addition to a range of other long-term initiatives. The company looks to mobile music as an important driver of growth for its business in 2006.
ò Alibaba.com Corp. announced the launching of its business-to-consumer (B2C) services on its Taobao.com online consumer marketplace. Under the offering, Taobao.com is seen as expanding its e-commerce model to include products and services provided by major manufacturers and retailers. Taobao.com said it has signed up manufacturers and retailers including Motorola, Nokia, Haier, Aigo, Lining, Adidas, Giordano, and UT Starcom. Alibaba.com said that currently, more than 10 million small- and medium-sized businesses use Alibaba.com online marketplaces for B2B marketing and sales. Taobao.com said it expects to see a large number of Alibaba.com members joining its new program along with leading international companies. Citing the China Internet Network Information Center, Taobao stated that its web site has about 67.3-percent market share in Beijing, Shanghai and Guangzhou, versus eBay China's 29.1 percent. It added that the Chinese Academy of Social Sciences has found Taobao.com to be the clear market leader in China, with 72.2-percent market share. Currently, Taobao.com now has more than 26 million product listings, nearly 20 million registered users, and over 100 million page views per day. In 2005, Taobao's transaction volume, or Gross Merchandise Volume (GMV), hit $1 billion, which stands for a 700-percent growth from 2004.
ò Research In Motion Ltd. (RIM), a maker of BlackBerry handsets, announced its closing of a deal with China Mobile Communications Corp. With the agreement, RIM said it aims to launch soon a service to be priced between $15 and $20, an amount the company said is less than half of what BlackBerry users in the US pay. RIM has already set up services in Hong Kong. The introduction of the mainland China service is seen as lowering costs for existing BlackBerry users who previously had to pay roaming charges to Hong Kong. The company said the deal will be focused first on servicing foreign business travelers and multinational organizations already using their own BlackBerry devices. In a separate development, China Mobile is expected to launch its own version of the service next week called LeadTone, which is said to be cheaper than RIMÆs service.
Media, Entertainment and Gaming
ò China Digital Media Corp. announced that it is starting shipment of the new version of its IP-based Set-Top-Box (STB) to be used for the migration of cable TV subscribers from analog to digital system in the city of Nanhai in Guangdong province. The company is one of the first digital TV operators in China to deploy the full functions IP-based STB to the digital TV subscribers. The new IP-based STB is built around the IBM Power PC architecture and equipped with Java platform, Ethernet port for Internet connection and XML-based information browser. These features are expected to become standard in all STB models for migration and sales. IP-based STB is capable of providing interactive services to end-users; such as targeted advertising, interactive TV programs, online games and interactive education services.
ò Hangzhou, capital of east China's Zhejiang Province, announced its plans to build a major animation industrial park. Hangzhou identified the 600 hectare-park in the Binjiang high-tech zone, where 40 such companies are already based. The area is expected to accommodate some 100 animation companies. A top official said the park is part of Hangzhou's plan to become the country's capital of cartoons and animation. HangzhouÆs animation industry currently employs 2,000 skilled workers and has produced 8,580 minutes of cartoons and animated TV programs and films in 2005.
ò Haier announced that the companyæs net profit posted a 35.2 percent decline to Rmb239 million ($29.8 million) in 2005, compared with two other electronics makers Midea and Gree in China. Gree reported a 21.1 percent rise in net profits to Rmb510 million yuan ($63.6 million) in 2005, while Midea reported an 11-percent rise in its net profit to Rmb382 million ($47.7 million), according to a report published by the 21st Century Business Herald. Officials from Haier Electronics Group Co. attributed the results to the rising cost of raw materials and intense market competition. An analyst with Orient Securities indicated that Haier must increase investment to win the competition. HaierÆs overseas sales income grew 51 percent last year, accounting for 31 percent of the companyÆs total. Haier, however, had to invest some Rmb150 million ($18.7 million) to improve products according to European technical standards and another Rmb80 million ($10 million) to build research and development centres in the United States and Europe in 2006.
ò Taiwan Semiconductor Manufacturing Co (TSMC) reported a 43.7-percent growth in its sales for April to NT$27.1 billion ($863.1 million) compared with the same month last year. No reason for the increase was given. TSMC posted revenue of NT$18.9 billion ($602 million) for April last year. The company said the sales in the four months to April posted a 40.1-percent rise to NT$104.4 billion ($3.3 billion) from the same period last year. Taiwan Semiconductor Manufacturing Co is considered the world's largest contract chipmaker by revenue.
ò United Microelectronics Corp reported a 32.9-percent increase in its April revenue to NT$8.4 billion ($367.5 million), up 32.9 percent from the same month last year.
ò Industry observers see High Tech Computer (HTC) as significantly reshaping the worldÆs PDA and mobile phone industries. Already, it has formed an alliance with Microsoft, making it the software giantÆs partner in design, development and production of the most advanced Windows-based smartphones for cellular network operators around the world. Analysts are saying original design manufacturers (ODM) like HTC and Quanta Computer are meeting the growing demands for smartphones outside of major suppliers. This high demand for HTC products are seen in the massive 243-percent increase in the companyÆs first-quarter net income of NT$5.4 billion ($172 million) year on year. HTCÆs big clients include operators Vodafone, T-Mobile and Cingular Wireless. In 2005, HTCÆs sales doubled to about $2.2 billion. Gartner forecasts that smartphones are expected to make up 26 percent of worldwide cellular handset sales by 2009 from just 6 percent this year. Smartphones run on operating systems that include Windows Mobile, Linux and Symbian. Analysts, however, are saying that its partnership with Microsoft will pose a problem for HTC to develop phones using Symbian or Linux software. It has to contend, too, with the introduction in China of RIMÆs Blackberry handheld communication device.

Hong Kong
ò Hutchison Whampoa announced its plans to take its loss-making Australian mobile unit private, a move that follows its becoming the world's only pure 3G telecommunications stock after the planned closure of its 2G network in August. The companyÆs top official said that the management would review HTA's capital structure, as its share price had not responded to the unit's improving performance. The review would also tie in with the maturing of its A$600-million ($463.6 million) convertible note next year. A key official of HTA stated that the privatising of HTA and having Hutchison convert its note into HTA shares were two possible options to improve its capital structure. A conversion would lift Hutchison's stake to 87 percent. HTA said it would advance the closure of its CDMA network to August, from a 2009 schedule, with the company aiming to upgrade another 50,000 of its existing CDMA customers to 3G by August, on top of the 200,000 already upgraded. In view of this an HTA said it would book A$145 million ($112 million) one-off charge in the first half for the hastening up of the depreciation of its CDMA fixed assets.

Information Technology
ò Malaysian electronic smart card manufacturer Iris Corp revealed it had discussions with the Nigerian government to supply identity cards. The deal is valued at $300 million. Iris is already engaged in a contract worth M$246 million ($68.7 million) to supply an electronic passport system to Nigeria. The report said the ID card contract is reportedly being floated for the second time after an earlier deal signed with France's Sagem was withdrawn. Iris makes electronic smart cards for Malaysian passports and identity cards. It has also secured varied contracts from abroad including those that will allow the company to provide E-passports to Turkey and Thailand.
Dell announced the setting up of set up a technology and development centre in Malaysia's high-tech city Cyberjaya. The company said the center will be involved in activities including software development and process design. The report said Malaysia was chosen as a site for the center over other locations where Dell operates like India, Ireland and the Philippines. At present, DellÆs manufacturing plant in Penang, Malaysia manufactures the bulk of the companyÆs notebook computers. Dell has also launched in January an enterprise support center in Penang to respond to mission-critical information technology issues in southern Asia. Last year, it exported from Penang 28 billion ringgit (US$7.8 million), which accounted for about 30 percent of the total electronic products out of Malaysia. Cyberjaya is located in Malaysia's Multimedia Super Corridor, a 750 square-kilometer zone modeled after California's Silicon Valley. The zone gives tax breaks as well as grants to IT companies and researchers.
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