A week in tech, May 26 - June 2

A round-up of all the latest tech news.
ò Yahoo Japan and East Japan Railway announced that they have entered into an agreement to form a business tie-up in online wallet services. The business alliance includes creating an online wallet service for purchases at internet shopping mall Yahoo! Japan using mobile phone handsets equipped with JR East's Suica electronic train fare cards around next spring. It also includes creating integrated circuit cards combining Yahoo! Japan cards and View-Suica cards around the winter of fiscal 2007. The new cards can be used to pay for shopping at the Yahoo! Japan Internet shopping mall and to pay for train fares on JR East Railways.

ò Oki Electric Industry and KDDI Corporation announced an agreement to collaborate in providing mobile solutions for the enterprise market using KDDI's "au" mobile phone equipped with wireless LAN functionality. Based on this agreement, Oki will provide mobile solutions for enterprises in Japan, starting October 2006. Private IP Centrex systems are becoming popular among Japanese enterprises, with a high interest in wireless LAN-based mobile Centrex systems. Oki has been providing its IP telephony server, the IP CONVERGENCE Server SS9100 to enterprise customers for their IP Centrex and mobile Centrex systems. By including KDDI's E02SA into its lineup, enterprise users will now be able to seamlessly connect to PSTNs (mobile phone networks) and private networks (LANs) using a single handset, which will flexibly provide various enterprise needs.

ò Matsushita Electric announced that it has secured a contract to supply mobile phones to KDDI, which the mobile operator will use for its ôauö phone services. The company said the contract is part of its attempt to increase its range of customers. According to KDDI, it will introduce a handset model made by Matsushita Electric during the spring of 2007, marking the first handset to be supplied to KDDI by the company in four years. Matsushita Electric also said it is considering providing mobile phones to Japanese mobile operator Vodafone KK, recently acquired by Softbank, although no details have yet been confirmed. KDDI is also to introduce a mobile phone which can be used as an IP phone, in conjunction with electronics company Hitachi, with an IP phone service to be introduced this October.

ò Flash memory is replacing hard disks in new portable computer models by two manufacturers; with Sony and Samsung saying the switch will make the machines faster. Sony said that it plans to release as early as July a flash memory computer. Samsung announced that it will market two models in early June. Both companies will use NAND-type flash memory chips. Sony and Samsung said the quicker read-write speed of flash memory will make start-up as well as operations faster. Other advantages over hard disks include greater shock resistance and less power consumption. Samsung said its flash memory computers start up is 25-50 percent faster than hard disk models and have twice the shock resistance. Sony's mobile computer, equipped with 16 gigabytes of flash memory, will be about palm-top size. It will be compatible with the Windows operating system. Samsung's lineup consists of a standard notebook computer and a lighter portable computer, which both come with 32 GB of flash memory. Sales will be initially limited to South Korea. The notebook model will sell for $3,600 and the lighter model for $2,400. Samsung said it would consider sales overseas after analysing demand from local consumers.

ò Gravity announced that, based on South Korean GAAP, its revenues posted a 16-percent decline from the previous fiscal year to W49.2 billion ($51.8 million), down 16 percent from the previous fiscal year. The company ascribed its financial performance primarily to intensifying competition in the online market, due to the relative maturity of the company's Ragnarok game. Gravity said its net income for 2005 was negatively affected by the decline in revenue and due to an increase in operating expense, resulting in part from increased expenses attributable to the investigation of irregularities relating to the diversion of royalty payments by the former company Chairman. The company said its operating expenses were W51.1 billion ($53.8 million), compared with W24.5 billion ($25.7 million) in the previous year. The company said Ragnarok II, the long-awaited sequel to the company's most successful online game, Ragnarok Online, is due to be released in the early 2007. In a separate development, a minority investor group in South Korea's Gravity demanded that the company find a way to get more money for the Japanese license to its popular Ragnarok online game. The Japanese license is held by GungHo Online Entertainment. Gungho is majority owned by Softbank BB Corp., a wholly owned broadband unit of Softbank Corp., and operates online video game services.

Media, Entertainment and Gaming
ò Sources said the South Korean government has begun laying the groundwork for setting guidelines for the trading of computer game items, in a bid to find an ideal solution that can reduce the social side effect of the phenomenon while not hampering the prospering game industry. The government authority said it has not yet decided whether it will propose a regulation that will prohibit such trading, which has been blamed for inducing a number of online and offline crimes. The trading of items and cyber money used in online computer games has been a controversial issue in South Korea for the past several years. But the government has never actively intervened in the situation, as it was considering possible damage to the game industry. The size of the market is estimated to have reached W1 trillion ($1 billion) last year, according to the Korea Game Development and Promotion Institute. Itembay, the leading game item trader in South Korea backs the calculation by saying that items worth W300 billion ($316 million) had been traded via its web site last year, with roughly 5 percent charged in commission. Most of the game companies like NCsoft have been against the trade of virtual items for real money, insisting that the cyber items belong to the game companies, not the individuals.
ò Microsoft said that it would hold a game-development contest in Korea this year in a bid to consolidate its partnership with local game developers and provide more localised contents to customers. The software said it will be launching a nationwide effort this year to invite Korean game developers to create XBox Live arcade titles and we will select up to five companies that Microsoft will then supply with development kits.
ò Hanbitsoft announced that it would start commercial service of the popular golf game, Pangya, this month in Singapore and Malaysia. Pangya's local service in these two countries is provided by Asiasoft Online. Pangya is currently serviced in twelve countries including Korean, Thailand, Japan, US and the Philippines. Hanbitsoft is currently developing the sequel game, Pangya: Season 3.
ò The countryÆs terrestrial DMB service is set for expansion into the Indian market, as US-based ABSi wins a major deal in league with South Korean networking gear makers. ABSi, which specializes in system integration and consulting, said it has agreed to form "MoTV" consortium with local firms including a state-owned broadcasting company in India, and launch terrestrial DMB in New Deli, India. The MoTV Consortium led by ABSi comprises of 4 local firms including Prasa Barti, Mother Company of stated-owned All Indi Radio, and two content providers. The consortium disclosed its plans to launch test service in October this year before commercial service is set for next year. Under the agreement, South Korean networking gear makers such as Pixtree and SMCNS, which are in deals with ABSi, will provide broadcasting systems required for DMB service. The test service will adopt the same standard as Korean terrestrial DMB, offering video and audio channels in Deli area. The consortium also plans to add data and video-on-demand service, and expand the service area into Mumbai and Calcutta depending on reactions to the early service.
ò TU Media announced that, with its target of 2.5 million subscribers by the end of 2007, it will add an average of 100,000 subscribers each month starting July, with the aim of reaching a total of 1.2 million subscribers by year-end. TU Media revealed that it invested W11 billion ($11.5 million) to make its S-DMB service available in the Busan subway lines and on the express train KTX. S-DMB currently has 585,000 paying subscribers and has 50,000 subscribers in the Busan area alone. TU Media hopes to make its first profit at the end of 2007. The company has at present paid-in capital of W218 billion ($229.5 million) and recorded a cumulative net loss of W120 billion ($126.3 million) as of 2005. A top official of the company said they will need to issue new shares in order to pay for additional capex and marketing costs but said that further investment from its major shareholders is limited due to current regulations prohibit the major shareholder owning more than 33 percent of the company. The company said it was able to raise some W80 billion ($84.2 million) last year through the issuance of new shares and expects to raise W40 billion ($42.1 million) again this year if regulations are eased. SK Telecom currently holds 29.5 percent of TU Media shares.

ò SK Telecom and Yahoo! Korea announced that they will bring Yahoo! multimedia search service to mobile devices. Under the offering, SK Telecom subscribers will be able to search video images showing entertainment, restaurants and other information about the neighborhood even when they are far from their desktop and produce their own images, explained the mobile carrier. With the agreement, MMS-MO (sending from the handset), a wireless-fixed-line convergence service will be available so that users will be able to upload video images shot by a cell-phone camera to Yahoo!Portal or Mobile Nate Search. The video uploading service is seen as enhancing the search service under the wireless-fixedline convergence based on UCC or User Created Contents.

ò LG-Nortel announced that it has agreed with Microsoft to jointly the develop world's first WinCE 6.0 based videophone and to cooperate in developing and marketing IP telephones. The two concluded an MOU over joint development and marketing of WinCE 6.0 powered VoIP. LG-Nortel said that the partnership between MS, whose recent business focus is on VoIP, and LG-Nortel that is excelling in videophone and VoIP phones would be appealing greatly to telecom service providers around the world. Microsoft expects to increase revenue from embedded solutions with the MOU and LG-Nortel aims to expand its market by securing various videophones and IP terminals.

Information Technology
ò Even as it noted South Korea's remarkable ascent in key IT sectors in recent years, iSuppli said that the country is now losing market share and leadership in certain areas including flat-screen televisions and mobile phones. The research firm said competitors û Taiwan and China û are outdistancing South Korea on multiple fronts. The report, however, stressed that as Korea is five years ahead of other countries in terms of IT infrastructure, it can leverage its existing settings to move forward. To maintain competitiveness, iSuppli said the nation must change its approach to the high-tech industry, focusing more on entrepreneurial innovation and less on lower-margin commodity products. South Korea was the leader in LCD panel production. Taiwan replaced Korea in the third quarter of 2005 as the world's largest LCD panel making nation. The report also said that South Korea has lost ground in the fast-growing LCD television market. In 2003, Korea was the world's second-largest LCD television maker after Japan, with a market share of 26 percent. By 2005, the country's share slipped to 20 percent, claiming third place behind Japan, and Taiwan/China combined. In the mobile market, South Korea ranked No. 2 in terms of phone production, following Europe, according to iSuppli data, but its market share reached a plateau in 2005, while Europe rebounded and the U.S. continued to grow.
ò Tencent Holdings, a provider of Internet and mobile value-added services, announced a 157-percent surge in its net profit over the same period last year to Rmb249.7 million ($31.1 million). The company attributed its good first-quarter results to the continuing demand for its online games service. The company said its revenue from internet-based value-added services, including online games and online community services, registered a 193-percent growth with the newly launched multiplayer online game, QQ Fantasy, being one of the strong drivers. Tencent said it plans to introduce an expansion pack for QQ Fantasy in a bid to boost usage. It announced, too, the launching of a new game, R2Beat. The company said the peak concurrent game users recorded during the period reached 2.8 million. With 220 million users in the first quarter, which represents a 9.2-percent rise on the previous quarter, Tencent is ChinaÆs largest instant messaging service provider.
ò KongZhong announced the setting up of a separate wireless value added service partnerships with Chinese e-commerce website DangDang.com and real estate information provider SouFun.com. Under the agreement, the two internet companies are entering an alliance with KongZhong in wireless value added services (WVAS) and establish co-branded channels on KongZhong's wireless Internet portal, Kong.net, to provide wireless users with content and services. DangDang is one of the largest China-based e-commerce websites specializing in books and consumer electronics in China. KongZhong's partnership with DangDang in the co-branded business to customer (B2C) online shopping channel on Kong.net WAP platform is exclusive. The partnership with SouFun in the co-branded real estate information channel on Kong.net WAP platform is exclusive except for limitations specified.

ò China exported 228 million mobile phones in 2005, of which only 5.8 percent, or 13.2 million phones, were Chinese home brands, according to government sources. The figure means that less than six out of every 100 mobiles phones that China exported last year were home brands, with the market share of foreign-brand mobile phones posting a 60-percent increase in 2005 while that of home brand phones declined to 40 percent last year from 44.5 percent a year earlier.
ò Nokia announced that it has secured a GSM network expansion deal with Sichuan Unicom, a subsidiary of China Unicom, marking its entry into the GSM market in Sichuan and Western China. Under the agreement, Nokia said it will deploy its GSM radio and core networks, including the Nokia MSC Server mobile softswitch, in four cities in the Sichuan Province. Nokia said it will also provide a range of services, including network planning, optimization, and rollout services.
ò China Unicom announced the increase of subscribers to its global system for mobile (GSM) service to 98.7 million at the end of April, from 97.9 million at the end of March. The company said its postpaid GSM users increased by 2 million in the first four months of the year, with the number of prepaid increasing to 1.6 million. China Unicom revealed that its CDMA subscribers registered 33.9 million, compared with 33.6 million at the end of the previous month, while its postpaid CDMA subscribers climbed to 1.1 million for the first four months this year, with prepaid users rising to 65,000.
ò After reportedly beating other competitors, China Mobile, the worldÆs biggest mobile operator by subscribers, is said to be ready to acquire Millicom International, an emerging markets mobile operator, in a deal valued at $5.6 billion. Two of the companies identified in the bidding to take over Millicom were MTC of Kuwait and Telenor of Norway. China MobileÆs adviser for the deal was Morgan Stanley. China Mobile made an earlier attempt to acquire a stake in Pakistan Telecommunications, which was also advised by Morgan Stanley. With mobile operators looking for expansion in emerging markets, Millicom, with its 9 million customers, is seen as providing a relatively untapped region. The company is present in 16 emerging market countries in Asia, Latin America and Africa, and in the Congo, Sri Lanka and Guatemala. In these areas, Millicom operates in a population of some 390 million, with a small percentage owning mobile phones.
ò Posting a 10.9-percent increase quarter on quarter, China's mobile value-added services (MVAS) market was valued at Rmb6.2 billion ($772.5 million) in the first quarter of 2006, according to Analysys. The report marked a 5.4-percent growth rate for the CRBT (colour ring back tone) service, a sharp decline from 27.1 percent in the fourth quarter of 2005, which shows saturation in the CRBT market. Analysys said IVR (Integrated Voice Response) services, also known as audiotext, posted an 8 percent quarter-on-quarter rise. The market size for MMS (Multimedia Message Service) was valued at some Rmb229 million ($28.5 million), which represents a 10-percent increase over the previous quarter. Forming the biggest portion of MVAS was the SMS (Short Message Service) services, whose value went up by 5.4 percent to Rmb1.7 billion ($211.8 million) in the first quarter this year, compared to the fourth quarter of 2005.

Media, Entertainment and Gaming
ò Shanda Interactive Entertainment announced that it will bring Walt Disney's characters to its game platform to tap into China's online game market, which is predicted to jump fourfold in the next five years. Both parties were quoted as saying that the cooperation will help the second biggest US media firm enter the rapidly growing game market in China for the first time. Observers are saying that Shanda can strengthen its online casual game business through the deal as its revenue in MMROPG has declined. Shanda said puzzles, chess, and card games with Disney's characters will be available in China in the spring of 2007. IDC said the revenue in the Chinese online game market, which has a growing segment of female gamers, reached $68.7 million last year and it is expected to hit $210 million in 2010. Aside from the partnership with Shanda, Disney revealed it is also in talks with the Shanghai government to build a theme park in the city after the US-based firm opened one in Hong Kong last year. Shanda said it plans to expand its core business to home entertainment services and casual games after the online MMORPG business dropped, as it faces challenges from NetEase.com and the9.com.

ò In terms of market size, ChinaÆs software industry registered a massive 700-percent increase to Rmb390 billion ($48.5 billion) in 2005, compared to Rmb59.3 billion ($7.3 billion) in the year 2000, according to figures disclosed at the 28th World Software Engineering Conference. The report noted that with the rapid development of the countryÆs software industry was the increase in its market share on the international arena. The report said software export and software outsourcing went up to $3.5 billion last year, compared to the countryÆs software industry exports that totaled only $400 million in 2000. With this performance, the sales value from ChinaÆs software industry increased 3.5-percent to surpass India and South Korea.

ò TCL Corp revealed that it has begun marketing low-priced laptop computers, with the laptop going as low as Rmb5,000 ($623). The company said that the move is a bid to bring in profits even as it stated that it has made investments in R&D, which led to more than 200 new technologies expected to boost the companyÆs chances of returning to profit this year. TCL said it has spent some Rmb2.1 billion ($261.6 million) to develop new products and it promises to shell out almost the same amount this year. TCL Corp is reputed to be the world's largest maker of televisions.
ò Lenovo Group announced a 359-percent year-on-year rise in its revenue to HK$203.6 billion ($26.2 billion) for the fiscal year ended March 21. The company, however, said that given the utilisation of funds for the acquisition of IBMÆs personal computing division, the profit attributable to shareholders stood at $22.3 million, a figure that is 85-percent lower than the previous year.

ò Galaxy Semi-conductor Holdings, a Chinese maker of diodes, announced its plans to launch an IPO in Hong Kong with the aim of generating up to HK$90 million ($11.6 million) for business expansion. The company is one of the mainland's largest makers of diodes used in consumer electronics, information technology and lighting products. The company reported a net profit of HK$440 million ($56.7 million) in 2005, with turnover at HK$250 million ($32.2 million). China Capital is the sponsor of the listing.
ò TC Interconnect Holdings, a maker of printed circuit boards, announced its plan to have a Hong Kong listing. The company posted revenue of about HK$500 million ($64.4 million) in 2005, with 14 percent of the revenue attributed to sales of multilayer PCB products, with the company announcing that it aims to expand sales of the products. TC Interconnect said it has also plans to build another plant in 2007. CAF Securities is the sponsor of the deal. According to Custer Consulting Group's estimate, the global market for electronic products will be $1.6 trillion in 2008.

ò China Telecom Corp announced that it would indeed spin off its network and engineering services unit into a new company called China Communications Services, with the plan to have it publicly listed in Hong Kong. Through the IPO, the company is aiming to raise between $200 million and $400 million in the second half. China Communication Services will include the telecommunications network design and engineering businesses in six provinces and cities û Shanghai, Guangdong, Fujian, Hainan, Hubei and Zhejiang û which have a total asset value of Rmb23 billion ($2.8 billion). In a separate development, China Telecom said it has formed a wireless service department for mobile services, with the mainland trials to use the TD-SCDMA standard at 100 cell sites by the end of this month. Goldman Sachs and China International Capital Corp sponsor the IPO.
ò Taiwan hosted 8.21 million internet domain names in January of 2006, according to the Focus on Internet News & Data and Innovation Diffusion Enabler & Activator of the Advanced e-Commerce Institute (FIND) under the government-sponsored Institute for Information Industry (III). According to the study, Taiwan's 8.2- million hosted internet domain names consisted of 3.9 million for the top-level domain ".tw" and 4.2 million for the second-level domain ".hinet.net,". The numbers, which can be seen as a rough indicator of Taiwan's internet hardware serving capacity and size of internet user base, accounted for 2.1 percent of the 394.9-million hosted internet domains around the world.
ò The Graduate Institute of Business Administration and Electrical Engineering departments of National Taiwan University (NTU) announced its collaboration with Nortel in a WiMAX broadband service trial that includes interoperability testing using a variety of wireless devices and multimedia applications. The NTU WiMAX lab trial site supports field-testing and demonstration of a wide range of high-bandwidth multimedia applications û such as VoIP, video streaming, video surveillance and a WiMAX/WLAN handover to 3G networks. The trial will be using PDAs, laptop computers, Wi-Fi handsets and WiMAX customer premise equipment. Earlier, Nortel previously announced a Center of Excellence for WiMax Devices in Taipei. In a separate development, Nortel has signed an agreement with Chunghwa Telecom to deploy a WiMAX solution in the operator's experimental park to create an environment for testing WiMAX and wireless mesh integration.

Hong Kong
Information Technology
ò PCCW Solutions said it is considering expanding its operations outside Greater China this year. The move comes after the company secured high-profile public sector contracts in Hong Kong. PCCW Solutions, the PCCW GroupÆs information and communications technology services arm, stated that the new areas for expansion that Asia and Europe are offering would be generally for e-government projects, with projects ranging from electronic passport systems and smart identity card projects to government financial information systems. The Asia-Pacific IT services market is valued at some $37.6 billion this year, up from $34.8 billion in 2005, according to Gartner.

ò Hutchison Telecommunications International (HTIL) and Communications Authority of Thailand Telecom (CAT Telecom) announced that there is ongoing an negotiation between the two companies that is expected to lead to a deal conclusion. If concluded, the deal would see HTIL launching 3G services throughout Thailand early next year. Loss-making Hutchison CAT Wireless Multimedia is a marketing joint venture between state-owned CAT Telecom and HTIL that sells CDMA2000 1x mobile service in 25 central provinces, including Bangkok. The CDMA network is owned by another Hutchison unit and CAT Telecom and HTIL share revenue from the business. CAT Telecom is also expecting full completion of its CDMA 2000 1x network in 51 provinces by January. HTIL maintains operations in seven markets, including Thailand. Out of this market, only India and Israel declared profits in 2005. Reports have described the negotiations between CAT Telecom and HTIL as having been difficult. Outside of the deal, several foreign firms and Thai operators were reported as having talked with CAT Telecom on the possibility of tie-ups.

ò Globe Telecom of the Philippines announced the signing of an agreement with Mobile ESPN to provide sports content to clients on their cellular phones. The deal comes under the Bridge Mobile Alliance, brings together seven mobile phone companies in the Asia-Pacific region, which will simultaneously offer Mobile ESPNÆs products, especially news and video content from the forthcoming 2006 World Cup in Germany. The deal follows the move of Smart Communications, GlobeÆs main rival, to enter into an agreement with the IMG sports network to provide sports content to clients on its 3G network. Mobile ESPN is the mobile sports content service provided by ESPN Star Sports, AsiaÆs No. 1 sports broadcaster and content provider. ESPN Star Sports broadcasts the worldÆs premier live sports and leading regional sports events to over 139 million households on ESPN and over 63 million households on Star Sports.

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