A week in tech

A round up of all the latest tech news in the region.

Japan

Hardware

- A new class of enterprise storage systems from Hitachi Data Systems (HDS) promises to streamline and automate common management tasks across all storage system devices, including those from market giants EMC and IBM through its refrigerator-sized TagmaStore Universal Storage Platform. Storage virtualization is an approach that enables a large organization to treat all of its data storage assets as logical rather than physical resources. This allows an organization to transform this infrastructure into a utility, which makes it possible to create as many virtual storage systems, and at a cheaper cost than adding new devices. It is also an approach that every player in the storage industry has adopted, which prompted HDS to add a difference-making feature to TagmaStore. The result is a new economic framework for information infrastructure, providing large organizations with millions of dollars in potential cost savings. At about the same time the announcement was made, HDS Storage partners Hewlett-Packard and Sun Microsystems unveiled their own versions of the TagmaStore USP system: the HP Storage Works XP 12000 and the Sun.

- NEC Corp. and Sony Corp. plan to start releasing internal PC drives supporting next-generation DVD standards in the latter half of 2005. Their plans will likely make the battle over the next-generation DVD standard spill into internal DVD drives for PCs, which are expected to take up a large part of the market for next-generation DVD hardware. NEC supports the HD-DVD standard with Toshiba Corp. and others. Sony backs the Bluray Disc standard with a group of companies that includes Matsushita Electric Industrial Co. NEC is working toward starting commercial production of an internal, read-only HD-DVD drive for desktop PCS around next summer. The company plans to eventually release a read-and-write capable product that is thin enough to be installed in a notebook PCs. Developing drives that are thin enough to be installed in PCs is a major challenge for manufacturers. OEM internal DVD drives for PCs are currently supplied to PC makers at 5,000 yen ($45) to 6,000 yen ($54) apiece. But next-generation internal DVD drives for PCs are likely to cost between 30,000 yen ($272) and 50,000 yen ($453) per unit initially.

Internet

- Hewlett-Packard Japan (HP Japan) and KDDI Corp. will begin offering in early December a joint internet-based service that enables photos taken by KDDI's camera-equipped "au" cell phones to be remotely printed out on HP printers, a source said. To print a photo, a cell phone user must e-mail the image to a server managed by HP Japan. An HP printer compatible with the service downloads the photo from the server and then prints it out. Because no personal computers are involved, even people with poor computer skills can easily get photo printouts. Three of the eight latest printers unveiled by Japan will be compatible with the service. All eight models will be on sale in stages beginning in October, with the top-end products priced around 50,000 yen ($453).

Media, Entertainment and Gaming

- Sony's music unit is abandoning its CDs that use built-in technology that limits copying them. Such CDs let users copy their music once for free onto a personal computer but use the internet to charge a fee for subsequent copying of the same disk. However, Sony Music Entertainment had announced it would stop publishing them, mainly because its message against illegally copying CDs for uses such as file sharing over the internet had widely sunk in. Sony Music had learnt that only a small part of the population illegally copy CDs. The music giant recently started adapting its strategy due to the proliferation of MP3 computer files used to store music in audio players such as Apple's iPod, which are rapidly becoming a global music industry phenomenon. Sony said that its portable audio players, which will soon go on sale in Europe, would be able to use any MP3 files. CD sales have plunged in recent years in Japan and elsewhere, as people increasingly use the internet to download music.

Investment/Ventures

- Softbank Corp has sold its stake in eAccess. The stock and warrants, which would raise the stake to 16.7%, if executed, were sold for an estimated 20 billion yen ($181 million) to a securities firm, which will now seek new investors. Softbank intends to invest the proceeds from the sale in its new fixed-line service, according to an official, in a strategy aimed at taking on industry giant Nippon Telegraph and Telephone Corp. The new fiber-optics service will provide the industry's fastest transmission speed of 1 Gbps. In addition, Softbank's new offering will be available at a monthly charge of 4,200 yen ($38), excluding an access fee, which is up to 300 yen ($2.71) cheaper than NTT units' fees. The company will also challenge NTT in the fixed-line phone business by offering low rates for the new service slated to start in December. The firm also said that it plans to branch into the mobile business.

Software

- Matsushita Electric Works Information Systems Co. (NAIS-IS) has partnered with webMethods KK to help large corporations shift from legacy mainframes to inexpensive open systems. webMethods KK is the local arm of the US-based webMethods Inc., a leading provider of enterprise application integration (EAI) services. For smaller companies, NAIS-IS will market software for the construction of enterprise resource planning (ERP) systems. NAIS-IS began its business of open-systems support in 2001. The market for EAI services was worth 45 billion yen ($408 million) in 2003, and is expected to grow to be worth 100 billion yen ($906 million) in 2006. Given the solid base of demand among companies shifting to open systems, NAIS-IS decided to team with webMethods in order to broaden its range of product offerings.

- Systems Developer Information Services International-Dentsu Ltd., or ISID, will launch sales of a videoconferencing system that will work in conjunction with groupware. ISID made it possible to use groupware known as desknet's, which is sold by software developer Neojapan Inc., with a videoconferencing system by IBE Inc. From a system screen of desknet's, users will be able to make reservations for a videoconference just as they would schedule use of a physical conference room. The combination use also facilitates sharing of information among videoconference participants. Cameras and microphones that attach to personal computers are required. Prices for a system for simultaneous use by five people will start at 1.2 million yen ($11,000). The desknet's groupware is used by many in the construction industry and is also used by local governments. ISID will market to such existing users as well as those in the retail sector. The firm will aim to sell 125 systems by the end of fiscal 2005.

- RSA Security Japan, a subsidiary of US encryption software firm RSA Security Inc., will begin sales of a system to strengthen the security of Windows-based notebook personal computers. The software is expected to better protect critical company data if the machines are lost or stolen. RSA SecurID for Microsoft Windows replaces conventional passwords with a user ID and a six-digit random number that is generated by as a one-time password every 60 seconds by a SecurID device. Since the notebook is not always linked to the internet to interact with the corporate server and establish ground rules for this ever-changing password, a set of as many as 100 random numbers are encrypted and sent to the computer for use in subsequent sessions. The package consists of server software and the SecurID software for installation on each PC. RSA Security Japan will charge 971,000 yen ($8,800) for a 25-user license and 9,000 yen ($82) per person for the SecurID device for a two-year, 49-user license. The goal is to sign up 3,000 companies for the next three years.

- Wiseman, which develops and markets computer systems for welfare facilities and medical institutions, will go public on the JASDAQ market. The company enjoys one of the largest market shares in the category of systems for welfare facilities. While many other systems developers sell their systems via agents, the company maintains its own sales/support systems, enabling to promptly reflect customers' development needs. Wiseman expects 510 million yen ($4.6 million) in group pretax profit in the current fiscal year through March 2005. The company plans to funnel the money to be raised from the upcoming public offering into developing new welfare and medical systems. In particular, it will focus on improving medical systems, for which it holds only a small market share. Initial public offering is 800 shares; secondary sale is 800 shares.

Telecommunications

- Japanese telecom giant Nippon Telegraph and Telephone (NTT) unveiled cut-rate plans for its land-line services to compete with smaller rivals KDDI and Softbank who have been offering cheaper services. Effective January 2005, NTT will reduce its fixed-line basic monthly charge by up to 150 yen ($1.4) or about 8.5% for urban residents. NTT East and NTT West, two regional operating arms, said their monthly fees for households in urban areas would be lowered by 50 yen ($0.45) to 1,700 yen ($15) and by a further 100 yen ($0.91) agree to be billed via the Internet. However, even the maximum reduction will still leave NTT's fixed-line fees higher than those offered by KDDI and Softbank.

Korea

Mobile/Wireless

- The number of Koreans using their mobile phones for bank transactions is nearing two million. This is just a year after LG Telecom introduced the country's first mobile banking services, according to industry figures. As of August, LG Telecom, the smallest among the country's three mobile-phone carriers, had 1.1 million subscribers to its mobile banking service, BankOn, providing banking transactions to 13 local banks. No. 1 mobile-phone operator, SK Telecom Co., had 420,000 customers for its M-Bank mobile banking service during the same period, while KT Freetel Co. had 380,000 users of its K-Bank services for a total of 1.9 million subscribers. Industry analysts believe the number will exceed two million by the end of the year. The country's largest lender, Kookmin Bank, has more than 510,000 mobile banking subscribers, followed by Woori Bank with 267,000 and Chohung Bank with 77,5000. Mobile banking has been among the driving forces of LG Telecom's increased market share during number portability, according to Daewoo Securities. Mobile banking transactions amounted to W2.2 trillion ($1.9 billion) in the second quarter, up 58.1% from the first quarter, the Financial Supervisory Service reported. LG Telecom expects the number of its mobile banking customers to reach 1.3 million by the end of the year.

- SK Telecom's initiative toward satellite-based mobile broadcasting has suffered another setback, with the country's broadcast regulator blocking the airing of terrestrial televised content on wireless receivers. The broadcast regulator, Korean Broadcasting Commission left open the possibility of reversing directions in the future, saying it will discuss the satellite retransmission issue again when they grant business licenses for ground-based mobile television projects early next year. Satellite-based mobile television, dubbed here as satellite-based digital multimedia broadcasting has been among the more ambitious attempts to keep growth alive in the domestic telecommunications sector where the wireless and wired penetration is among the highest in the world. SK Telecom had expected satellite-based digital multimedia broadcasting to attract 1.5 million subscribers by 2006, break even in 2008 and have 8 million customers by 2010 with $1 billion in revenue.

Semiconductors

- Shares of Hynix Semiconductor Inc. surged to a 52-week high on the Korea Stock Exchange on the back of the sale of its nonmemory chip unit to Citigroup Venture Equity Partners LP. Hynix's W954.3 billion ($833 million) sale to the venture arm of Citigroup Inc. included W379 billion ($331 million) in assumed debt and paved the way for normalizing the heavily indebted chipmaker. Net cash and debt reduction from the sale of nonmemory chip business is expected to bolster the firm's credit profile. The sale will help cut its debt-to-equity ratio to 79% from 116% at the end of June. The company intends to focus on is core businesses of producing dynamic random-access memory chips, for use in personal computers, and flash-memory chips that store data in mobile phones, digital cameras and MP3 players. Hynix, the world's second-largest maker of computer memory chips, said it would sell 6.7 million of its own shares and would buy back shares from shareholders who opposed the sale of the nonmemory unit.

China

Internet

- Eachnet and Taobao.com are squaring off in a battle of the business models, with each laying claim to the potentially lucrative internet auction market in China. Eachnet, backed by eBay, the world's biggest online auction house, believes that what works elsewhere in the world will also work on the mainland. It charges a fee for listings and takes a cut on the final sale. Taobao's listings are free, as it believes mainland consumers will not take to the eBay way of doing business. At stake is the rapidly growing number of Chinese online shoppers. According toChina Internet Network Information Center, 37.8% of the nation's 87 million internet users - or about 32.8 million - have shopped online. That number is expected to triple next year. Last year, $124 million in merchandise was traded over the company's website and the figure is forecast to climb $241 million this year. eBay recently integrated Eachnet into its global operations, giving mainland sellers access to bidders worldwide. Eachnet commands 60 to 70 percent of the mainland market, although just 6.6 percent of the Chinese internet users are registered Eachnet customers. Taobao claims it is too early to charge transaction fees because mainland Internet users are not familiar with internet auctions. Taobao has been reliant onAlibaba to stay afloat, taking $54 million from its parent.

- Mainland internet portals are rushing to tap the US market after the successful NASDAQ debut of recruitment portal operator 51job. Chinese tourist portal eLong has filed a preliminary prospectus with the Securities and Exchange Commission for a NASDAQ listing to raise between $50.4 million and $59.1 million, with Deutsche Bank handling the deal. It is offering 3.6 million American depository receipts (ADRs) while its existing shareholders will receive 761,921 ADRs at $11.50 to $13.50 each. China Finance Online, the mainland version of Bloomberg, also hopes to ride on investors' growing interest in China internet plays by selling 6.2 million ADRs at $10 to $12 to raise between $62 million and $74.4 million. 51job enjoyed a strong debut last month with a gain of 51.1% to $21.15 after it fixed the issue price at $1 higher than its offer range, or at $14, due to hot demand. China Finance posted a net profit of $1.5 million on total revenue of $2.3 million for the first six months this year.

- eBay subsidiary PayPal is expected to enter China by yearend. PayPal has kept a low profile but is busy making preparations. Paypal has posted around 10 new job openings in China for project manager and customer service staff. Although eBay acquired Chinese auction site Eachnet in September, there are still problems with logistics, tax, language and payment channels. An insider from traditional banking industry said that PayPal would not seriously affect China's traditional banking and financial institutions. The same source was cautiously optimistic about the future development of PayPal in China.

Media, Entertainment and Gaming

- China plans rating systems for online games, books and movies to protect children from violence and sexual content in the nation's latest effort to tighten controls on various media, reports said. The system for censoring online games will be introduced by the end of October. Online games would be divided into five categories: games suitable for all; those for junior high school students and older; those for highs school students and older; those for 18-year-olds and older; and those for adults. The ratings will be based on various factors such as horror, violence and sexual content. Games considered suitable for all would be known as "green" games, the report said. Most of China's 14 million online gamers are under 25, according to state media reports. The number of players is expected to soar to almost 42 million by 2007. The domestic online games industry earned revenues totaling $160 million in 2003, and contributed $1.8 billion to other industries such as telecommunications and media.

- China's online game industry could grow seven-fold to become a billion-dollar business within the next two years, following observation of industry insiders. The online game market had the potential to post revenue of Rmb9.3 billion ($1.1 billion) by 2006, up from the current Rmb1.3 billion ($157 million), the report said. China, with 200 million young people, is emerging as the world's most promising market for online games. Despite the rosy forecasts, China has announced strict curbs on the industry.

- Shanda Interactive Entertainment Limited, the largest operator of online games in China, announced that it has acquired closely held Qidian (www.cmfu.com), a leading Chinese original entertainment literature portal. In the all-cash transaction, specific terms were not disclosed. Qidian is a premier forum for independent writers to publish their original literature online, including magic fantasy works, science fiction works and works based upon the story lines on online games. Through Qidian's literature platform, readers can interact and communicate with authors as well as subscribe for access to the published works. The acquisition of Qidian helps to solidify Shanda's leading position in the Chine online entertainment market, a Shanda official said. Qidian offers a rich resource of original content online that is great strategic fit with the in-house game development strategy of Shanda, according to the official.

- Videogame giant Electronic Arts Inc. will announced plans to build a videogame studio in China, claiming a stake in what is expected to become the world's largest online games market by 2007. The studio is a cornerstone of a broader EA plan to expand further in Asia and could be a precursor to an acquisition or joint venture in the region. While EA has quickly grown into the world's largest videogame publisher, the company does not have a strong presence in Asia. EA's single largest Asian market now is Japan, where the company had revenue of $71 million in the year ended March 31. There are more than 80 million internet subscribers this year, some 16% of whom play online games, according to Dallas-based Diffusion group. The research group predicts that by 2007 China will become the largest online gaming market both in revenue and number of gamers. EA estimates China's online games market to $250 million this year, with hundreds of thousands of online gamers buying cheap subscriptions or pre-paid cards at convenience stores and from popular Web portals such as Netease.com Inc. To date Taiwanese and Korean publishers such as Webzen Inc. and Ncsoft Corp. have dominated online titles in China, although domestic developers such as Netease and Shanda Interactive Entertainment Ldt. have recently made strides. EA will be the first big American maker to jump, though many in the industry consider it a relatively late move, considering EA has no timeline for when it will begin to produce games for the domestic market.

Mobile/Wireless

- Shanghai start-up, E28, takes on giant rivals with Linux-based handsets. The firm, which has its main offices in Shanghai and Hong Kong, claims its e2800 model is the world's first Linux-based handset. In addition to saving on licensing fees, using Linux over Windows from Microsoft allows for quicker product development. Software is becoming increasingly important to handset manufacturers, especially with the advent of new applications such as mobile gaming, video download and other multimedia content. This is forcing phone makers to work more closely with operators to customize offerings.

Semiconductors

- Semiconductor Manufacturing International Corp (SMIC), the mainland's largest contract chipmaker, is ramping up to produce high-end chips for Texas Instruments. The deal involves making chips using 90-nanometer technology. SMIC, which also made chips for Samsung Electronics and Infineon, was expected to deliver its first samples of the chips in the first quarter of next year, and large-scale production could begin after that. SMIC has expanded its capacity aggressively over the past years, drawing on both international demand and growing domestic market. The chipmaker now operates plants in Shanghai, Beijing and Tianjin, and plans to build a test and assembly facility in Chengdu. Last month, the company said it expected to increase its capacity by half to 185,000 wafers by the end of next year, from a targeted capacity of 125,000 wafers at the end of this year.

Taiwan

Semiconductors

- Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest made-to-order chipmaker, said its sales in September fell 1% from August to NT$23.2 billion ($680 million) reflecting softer demand. Sales in September were up 22.5% from a year earlier but still the company's record-setting run over the previous five months. The company said some softening of customer demand has been seen over the past two months and that if this continues, the company's fourth-quarter revenue would decline slightly from the third quarter. Meanwhile, United Microelectronics Corp, the world's second-largest foundry, saw its sales hit a record NT$11.9 billion ($348.8 million) for a gain of 57.7% year-on-year. Sales for the nine months to September rose to $89.1 billion from $61.1 billion a year ago.

Telecommunications

- Taiwan's government had made no progress in plans to cut its stake in Chunghwa Telecom, the island's largest telephone operator, to less than 50% with an NT$82.5 billion (US$2.4 billion) sale. The Ministry of Transportation and Communications, which owns almost 65% of the operator, said in May that it aimed to sell about 15% of the former monopoly this year. The government should start the sale of its share because investors were interested, a ministry official stated. The shares in the company have gained 16% since January, compared with the 1% rise in the benchmark Taiex index.

Hong Kong

Media, Entertainment and Gaming

- The Hong Kong government has stepped up efforts to develop the emerging digital entertainment industry by going into partnership with Microsoft in an ambitious video games project. Hong Kong Cyberport Management and the government unveiled the Xbox Games Incubation Program, aimed at recruiting and supporting fresh local talents to create games for Microsoft's Xbox video console platform. The worldwide market for video games and interactive entertainment is forecast to expand from $23.2 billion last to $33.4 billion in 2008, according to Dublin-based Research and Markets. A number of games are being designed for Sony Corp's PlayStation 2, Xbox and Nintendo's GameCube. Microsoft has also embarked on Xbox games development programs in South Korea and Taiwan. Cyberport said local interest in game software design would accelerate as firms gained in-depth knowledge of the Microsoft system. Microsoft would provide software development tools and help market the finished product.

Mobile/Wireless

- Hutchison Telecommunications International Limited (HTIL) high-profile initial public offering suffered a setback as the firm was forced to trim the price range after a lukewarm response from the investors. The Hutchison Whampoa spin-off said the price range had been cut to between HK$6.01 ($0.77) and HK$7.04 ($0.90) a share from the original indicative range of HK$6.52 ($0.80) to HK$7.55 ($0.76).Market watchers were surprised that HTIL's underwriting syndicate, led by Goldman Sachs and ABN Amro, needed to cut the size again despite the improved market sentiment. Since HTIL's offer was launched, the Hang Seng Index has risen 2.9%.

- SmarTone Telecommunications Holdings has followed rival CSL in teaming up with a Philippine mobile operator to target the 180,000 Filipinos in Hong Kong. Hong Kong's No. 3 mobile carrier has partnered with Globe Telecom - the second-largest Philippine mobile firm - to offer a service, which allows Filipino customers to buy airtime and send it to friends and relatives in the Philippines. Globe Telecom said it started selling airtime in an attempt to tap the 7.4 million Filipinos working overseas, who sent home US$7.6 billion in remittances last year. Smart's offer saw an impressive 28,000 Hong Kong-based Filipinos sign up for the service within months.

Telecommunications

- The Office of the Telecommunications Authority (OFTA) stood firm in the face of new legal threats from PCCW, despite losing a court battle to the dominant fixed-line carrier. PCCW has given the regulator a deadline to shut down Internet telephony services run by City Telecom unit Hong Kong Broadband Network (HKBN), or face possible legal action. PCCW claims the services violate terms of HKBN's fixed-line license that are designed to promote network investment. OFTA, however, reiterated its view that the license permits voice services over the Internet and would not back down, even though the High Court quashed an earlier decision by OFTA that had forced PCCW to lease its network to another company. Subscribers to HKBN's Internet service can connect through PCCW's Netvigator. PCCW describes this a "free ride" for which it says it should be paid. HKBN and OFTA argue no fee is due because the Netvigator customer has already paid for the broadband connection.

Singapore/Malaysia/Philippines/Indonesia

Information Technology

- 3COM is continuing to grow its regional functions out of Singapore while working to capture a larger share of the high growth markets of Taiwan, Korea, India and Australia, the company said. 3COM makes network products like local area network (LAN) switches, routers, network interface cards and Internet access gateways. It also provides voice over Internet (VoIP) solutions. The company, explaining its 2-tiered strategy to expand in Asia-Pacific, said that Singapore remains strategic to the company. In Singapore, while it offers a full range of products to companies of al sizes, its focus is on strategic vertical market like education, government and the finance industries. 3COM had a joint venture with Hong Kong-based Huawei Technologies, which enabled 3COM to get a solid foothold in China. Huawei's contribution to this joint venture was is enterprise networking business assets, including LAN switches, routers, engineering, sales/marketing resources and personnel, and licenses to its related intellectual property.

Internet

- Singapore Telecom has signed an agreement with Virtela Communications Inc, a global network solutions company, to provide seamless Internet Protocol (IP) network services to its customers who need Internet access while operating outside Singapore. Through its worldwide network infrastructure, Virtela - headquartered in Denver, Colorado - delivers its suite of wide-area network (WAN) services to more than 190 countries. Singtel will tap into this network to expand worldwide coverage for its IP network services. This is a business Internet access service catering to organizations with officers in different countries that require Internet connectivity and support through a single service provide.

Semiconductors

- SSMC (Systems on Silicon Manufacturing Company) is ramping up its capacity as it aims to boost manufacturing capacity up to 40,000 wafers a month, up from 33,000 now, by the second half of 2005. In January this year, SSMC said it will invest $250 million to boost capacity to make 33,000 wafers of 200mm width a month in the short term. Since entering the foundry industry, the company has been profitable for several quarters and expects to continue that trend in the future. US-based research house, IC Insights, forecasts SSMC's revenues to cross $270 million this year, up 74% over 2003. After growing twice as fast as the total IC market in 2003, pure-play foundry sales are forecast to increase 52% in 2004 to $17.7 billion, compared to 31% for the entire chip industry, the research firm said.

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