A week in tech, September 12-18

A round-up of all the latest tech news.

ò Google announced that it is looking to hire more engineers in Japan to develop new technologies in one of the most advanced markets for mobile technologies. The move is seen as GoogleÆs strategy to expand its presence abroad, where Google has more than 50 percent of its operations. Google's 7,000 staff around the world is mostly made up of engineers. The company began offering searches in Japan from 2000 and set up its Tokyo office in 2001. It also has its own R&D team in Japan. Earlier this year, Google made a venture with KDDI Corp., the country's No.2 phone operator to offer its first search engine and advertisement products for mobile phones. Analysts say offering more mobile services is important in Japan, where more people access the web via mobile phones than from PCs. About 60 percent of Japan's mobile customers use 3G networks that allow faster music and video downloads. The company said it is seeking to develop new technologies for social network services (SNS). SNS such as Friendster and Japan's "mixi" feature blogs and other services that let users communicate and share information online. Services such as blogs and SNS are growing rapidly in Japan among young people. Mixi, one of the first SNS in the country, has signed up 5 million users since its launch in 2002. Google Japan also said that the company is seeking partners to contribute contents for a video service in Japan.

ò Virtual mall operator Rakuten posted a group pretax profit of Ñ20.8 billion ($179 million) for the half ended June 30, a figure that represents a 82 percent growth on the year. The company said its sales went up by 190 percent buoyed by the June 2005 acquisition of consumer credit firm Kokunai Shinpan Co., which has since been renamed Rakuten KC Co. Rakuten said its online direct-marketing operation registered a 64 percent increase to its operating profits of Ñ7.9 billion ($67.5 million).

ò NTT DoCoMo said it plans to cut tariffs for international roaming to undercut rivals and encourage more Japanese to use their phones abroad. In a related development, the seven operators of the Asia-Pacific Mobile Alliance (APMA), including DoCoMo, were seeking to cut the fees they charge each other when serving each other's customers. This arrangement, according to the group, gives its alliance members an advantage over competitors and eventually helps bring down fees for travelers. DoCoMo is expanding overseas and has taken stakes in carriers based in popular travel spots for Japanese such as South Korea and Guam. APMA was set up this year by DoCoMo, Taiwan's Far EasTone Telecommunications, India's Hutchison Essar, Hutchison Telecommunications International in Hong Kong, South Korea's KTF, Indosat, and Singapore's StarHub. The group also aims to roll out by the end of this year services such as caller ID display and connections to the users' voicemail accounts in their home countries.

ò Sharp, which is No. 4 in global LCD television sales, said it is doubling the spending on advertising for its Aquos flat-screen sets in markets outside of Japan to regain the top spot. The company said the majority of advertisement spending will go to the US market, without providing specific figures. Sharp, the top seller of LCD TVs last year, is focusing on selling larger, high-definition screens overseas to protect its market share and profit margins. Global LCD TV sales are poised to rise 39 percent to $33.4 billion this year, according to researcher iSuppli Corp. Sharp fell behind Sony Corp., Samsung Electronics Co. and Royal Philips Electronics NV last quarter as it could not make screens fast enough to meet demand. The company is aiming for overseas markets to account for 55 percent of LCD TV sales by the end of this year, from about 44 percent currently.

ò Samsung Electronics said it plans to introduce its own online music service to compete against Apple Computer's market-leading iTunes-iPod franchise and Microsoft's upcoming Zune music products. The company said it would work with media provider MusicNet to launch a music subscription and download service later this year in Britain, Germany, and France. Samsung said it planned to later expand the service throughout Europe and Asia. Samsung said the online music service will be compatible with its upcoming line of portable MP3 and media players, but did not disclose further details about the service, pricing or fees. Analysts expect the company will try and achieve a similar kind of integration between the music software and portable devices, similar to Apple's iTunes Music Store and iPod player combination.

ò Industry observers are noticing nate.com with its new search engine, which it dubbed 'SearPle'. The new search engine, which will be available in both Cyworld and Nate.com, stands for collaboration of two phrases 'Search Plus' (more information) and 'Search People' (common forum). According to the company, the most noticeable new feature for the new search engine is in incorporation of hot topic web 2.0, which is expected to give users power to make a difference in the search outcome. Unlike the conventional search engines where the user simply has no control over the search returns, with its new inquiry process the user can influence search results. SK Communications explained that the Searple is different from other search engines where the results are based on information that is sorted by tens of millions of intellectuals rather than results produced by multiple searches or by machine alone. The SK CommunicationsÆ concept of using people based search is made possible by using CyworldÆs daily average updates of 12 million pictures and video database linking 18 million memberÆs informative knowledge databases. In a separate development, Daum said it is releasing its own search engine expected to handle and digest up to 300 billion of data.

ò A government report indicated the countryÆs online sales transactions increased 7.3 percent in July from the previous month on brisk sales of computer-related items and travel products. The report said that e-commerce transactions came to W1.15 trillion ($1.2 billion) in July, hitting a record high on a monthly basis. The figure compared with W1.07 trillion ($1.1 billion) a year earlier, according to the National Statistical Office (NSO). The office said online sales, on an annual basis, went up nearly 30 percent. There were 6 more cyber-shopping malls in July than in the previous month, bringing the overall number to 4,478, according to the report.

ò KTF, following its rival SKT, is reportedly also keen to break into the Chinese WCDMA market, with the company having formed already a partnership with NTT DoCoMo for WCDMA business, and established the Asia Pacific Mobile Alliance with 6 operators in the region. The company forecasts demand for roaming in China to surge, with its partner NTT DoCoMo expecting the wireless operator to serve as an advance party for its expansion. KTF aims to become a major candidate for WCDMA service license to be issued by the local government. It is also tapping into deals with China Netcom and China Telecom, the third and fourth largest wireless operator in China, respectively. The company is now devoting resources to the early launch of single band single mode (SBSM) service, which it sees as key to competition in the Chinese WCDMA market. In a separate development, SK Telecom is taking a two-prong approach, by buying $1 billion worth of convertible bonds issued by China Unicom Hong Kong and tapping into a TD-SCDMA technology deal with the Chinese government. China Unicom Hong Kong rolls out both CDMA and GSM service, and SK Telecom aims to become a major player in the 3G CDMA division when the two business units are separated.

ò The countryÆs Information Ministry is considering allowing all telecommunications companies to bundle sales of wireless and fixed-wire services. The practice is now prohibited among companies deemed to hold a monopolistic position, defined as half the market. Should the rules be relaxed, it could bring big changes in the telecommunications market. As of late July, Hanarotelecom had 3.6 million subscribers for its high speed Internet service, of whom about 80 percent were also using its fixed-line telephone service. In June 2004, KT began its "one-phone service," which links their landline telephone to their cell phone service. But with KT prevented from offering further cuts in fixed-line charges, because it has a share of over 50 percent in that market, it was unable to offer sufficient discounts to lure many customers to its "one-phone" service. KT, as the dominant player in the fixed-line and high-speed Internet market, and SK Telecom, the leader in mobile services, have been prohibited thus far from offering bundled services because of fair trade laws. But if the rules are changed, KT will be able to offer bundled services with it subsidiary KTF. The industry expects that competition will become fiercer through the bundling of wireless and fixed-wire services.

ò KT revealed its plans to spend close to W200 billion ($209 million) on the purchase of Wibro repeaters by the end of this year. This follows the companyÆs previous announcement that it would spend W500 billion ($522.5 million) in expanding Wibro coverage to all of Seoul by the end of this year. The report said repeaters companies will be asked to bid for the orders at the end of this month. In a related development, KT said it will be reintroducing its VOD service and Megapass TV this month. KT announced that it plans to provide various visual content such as movies, TV dramas and educational programs through its Megapass TV service. Essentially, Megapass TV is a revision of its existing VOD service, HomeN.

ò Samsung Electronics, the world's third-largest mobile handset maker, announced that it has developed the world's first intelligent chips that can provide vivid images on screens of mobile devices even under strong sunlight. The company said the display driver interpreted chips, called DDIs, will keep image quality on liquid crystal display screens by automatically measuring sunlight and adjusting the extent of backlight. The new chips, with their sunlight-detecting functions, are expected to save power when mobile phones are used indoors. China

ò Alibaba.com disclosed that it is looking at æYahoo ChinaÆ to make a profit next year, with its Taobao auction site contributing some 30 percent of revenues in four to five years. In a related development, Jack Ma, Alibaba's founder and chairman, revealed that he had frozen plans to go public because he wanted to focus on building the business rather than on financials. He said Alibaba would introduce a new service in the next month but declined to give details. Taobao, which displaced eBay in China's fast-growing market, is a free service with 27 million users and is adding 60,000 each day. The site was one factor that pushed eBay to cut prices last year. Yahoo China was absorbed by Ma's company when Yahoo bought a 40 percent stake in Alibaba last year for $1 billion.

ò Industry sources said that China Mobile has decided to cancel the one-month free trial that it requires its value-added service providers to grant its customers. Since then, the operator has adopted other steps mandated in July by the Ministry of Information Industry to prevent inaccurate charges, such as requiring value-added service providers to receive double confirmation of new subscriptions. The value-added services such as ring tones and informative short messages, many provided by outside firms, have become China Mobile's growth driver. China Mobile would not comment. The reported move follows other value-added service providers, Tencent and Tom Online, complained that the free trial period has made it difficult for them to gain new customers. Tom Online with a similar complaint also called the requirement of China Mobile as a way to use the free trial to attract users to its Monternet value-added platform.

ò The National Development and Reform Commission announced that it has led a team of mainland telecommunications equipment vendors, including ZTE and Datang Mobile, to sign a memorandum of understanding with SK Telecom on co-operation in building a trial network in South Korea, based on the mainland's homegrown 3G standard, TD-SCDMA. Under the agreement, SK Telecom would run small-scale trials of TD-SCDMA in the second half of next year. Beijing would issue 3G licenses around the middle of next year at the earliest, with fixed-line carriers China Telecom and China Netcom expected to be given 3G licenses. Industry analysts said that at least one of the licenses is expected to be for services using the TD-SCDMA standard. In a related development, SK Telecom told the TD-SCDMA Alliance, which represents chipset makers and equipment vendors developing the technology, that the company might promote the commercial use of TD-SCDMA after the trial. Whether SK Telecom will promote it within Korea or China is not known. China Mobile, China Netcom and China Telecom are conducting TD-SCDMA field trials in Baoding, Qingdao and Xiamen.


ò The Taiwanese capital, Taipei, announced that it had become a wireless city with the capacity to offer its citizens access to the Internet anywhere in the city. The mayor of the city said that, for a fee, residents could access the Internet in the Taiwanese capital using their mobile phones or laptop computers with built-in wireless cards. The announcement follows the two year development, which saw the city setting up about 4,000 access devices at selected buildings that transmitted and received internet signals.

ò Ericcson announced that it has chosen Taiwan as the headquarters for its mobile telecommunications technology development unit in the greater China area. According to Ericsson Taiwan, Greater China houses important customers for Ericsson convincing the Ericsson Mobile Platform (EMP) to establish its greater China headquarters in Taiwan to service its customers in Taiwan, Hong Kong and China. EMP is a business unit within Ericsson in charge of developing and providing various systems for mobile phone networks, including a global system for mobile communications (GSM), general packet radio service (GPRS), enhanced data rates for global evolution (EDGE) and wideband code division multiple access (WCDMA). The greater China EMP headquarters now has 22 research and development staffers.

ò Analysts are saying that given the growing trend of digital convergence around the globe, Chunghwa Telecom Co, the nation's top telecom operator, has a good chance of getting permission from the national regulator for its broadband television service. Chungwha Telecom is due to submit further clarifications regarding the service to the National Communications Commission (NCC). The top official of Chunghwa Telecom's Internet TV business said that Chunghwa Telecom is one of the few local companies that can afford the massive investment required to operate a digital TV service. Chunghwa Telecom, in which the government has a 42 percent stake, obtained state approval to offer TV programs on its broadband network in compliance with the Telecommunications Law in late 2003. The company says it has invested between NT$2 billion ($60.8 million) and NT$3 billion ($93.2 million) in the TV business.

Hong Kong

ò Hutchison Whampoa and its allied property developer Cheung Kong (Holdings) have cut by two-thirds their more than 30 percent interest in Priceline.com, according to the New York-based online travel company. Analysts place the disposal at more than $300 million. The two Li Ka-shing-controlled Hong Kong companies slash their interest to 9.6 percent from 31.8 percent. The sales would be worth about US$304 million based on the stock's highest level since September 2003. Hutchison declined to disclose the net gain from the sales. Priceline made a name for itself with its "name your own price" auction service for plane tickets and hotel rooms and quirky advertising. Given the recent development, Hutchison and Cheung Kong still hold 3.8 million of Priceline's shares, worth about $130 million, and will continue to have the right to appoint representatives to Priceline's board of directors. The two firms bought a stake in Priceline in February 2001 for $73.5 million and increased their holding to 30 percent four months later for another $109 million, with the two becoming the largest shareholders. The five-year investment generated about $120 million in cash returns for Hutchison. Priceline said Hutchison and Cheung Kong held about 12.7 million of its shares before the sale and sold 70 percent of them in the sale, with Goldman Sachs serving as underwriters.

ò According to Customs intellectual property investigation bureau, more than 180 people have been arrested for copyright infringements in Hong Kong in the last five years. The mainland has already introduced tough laws to prevent the crime, and now Hong Kong customs said it has launched a campaign promoting the use of authentic software. To this end, the top customs official said the Genuine Business Software Campaign was organized by customs and the Intellectual Property Department and Business Software Alliance. It aims to promote the use of authentic software. Under the campaign, once there is sufficient evidence against an infringer, customs officers will take appropriate enforcement actions in accordance with the Copyright Ordinance. Under the Copyright Ordinance, people who knowingly possess pirated computer software in the course of business have committed a criminal offense.

Media, Entertainment and Gaming
ò Tom Group disclosed that it has revived its cross-media sales department in an effort to boost its share of the mainland advertising market. Under the strategy, Chief Executive Tommei Tong Mei-kuen has appointed mainland advertising veteran Richard Lee to head the department, tasked to maximize synergies from the company's billboards, web sites and publications. Against the skepticism of industry observers, Tom said it plans to transform its sports marketing subsidiary Yangcheng Advertising into the group's media solutions arm, leveraging on Tom's media assets to provide online and offline promotion and marketing muscle. Yangcheng is based in Guangzhou, where it is seen as having a good local network. Its clients include multinationals such as Philips Electronics. According to Tom's first-half results, income related to advertising and marketing accounted for HK$474 million ($61.0 million), which represents about 31 percent of its total revenue of HK$1.5 billion ($192.8 million), with analysts stating that given that figure there is still room for growth.


ò Spice Telecom of India announced its decision to sell 20 percent of its equity to raise about $300 million through an IPO by the end of the year. The company provides mobile phone service in northern Punjab and southern Karnataka states and was looking to invest more than $2 billion to expand its operations throughout India. Telekom Malaysia currently holds 49 percent of Spice, with MCorp Global, the Indian partner, holding 51 percent. The percentage of equity each company would sell in the IPO was not mentioned in the statement. India, with a population of 1.1 billion, has more than 90 million mobile phone users, according to government figures. The boom in mobile phones has been driven by cuts in call rates offered by more than 10 companies. Restrictions on phone services were lifted a decade ago, ending a state monopoly that was divided between two government-owned firms.
¬ Haymarket Media Limited. All rights reserved.

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