A week in tech

A round-up of all the latest tech news.

ò Softbank Corp. announced that it will invest 250 billion yen ($2.1 billion) this fiscal year with the aim of increasing the number of base stations for its 3G services from 20,000 to 30,000. Softbank, which is expected to complete the acquisition of Vodafone KK by the end of this month, also plans to introduce handsets designed for Internet use this year. Reports show that the Japanese unit of Vodafone Group has fallen behind rivals NTT DoCoMo and KDDI in 3G services and development of competitive cell-phone models. Vodafone KK's capital spending amounted to 215 billion yen (US$1.8 billion) in fiscal 2005, which means that Softbank's outlays for the cell phone business for fiscal 2006 will exceed this by nearly 20 percent. It expects to generate sufficient cash flows from the mobile phone operations to make debt repayments. In a related development, Softbank revealed its partnership with Yahoo Japan to offer distinctive Internet services for mobile phone users. The company sees this shift to 3G technology as a means to enable the company to distribute more video content online.

ò Yahoo Japan Corp. announced that its group net profit posted a 29-percent growth to a record 47 billion yen ($403 million) for the year ended March 31. The portal operator said its sales went up by 47 percent to 173.6 billion yen ($1.4 billion), while its operating profit registered a 36-percent climb to 82.1 billion yen (US$704 million). Yahoo Japan said its online advertising division registered a surge of 76 percent to 68.4 billion yen ($586.5 million). It revealed that demand for search-linked ads also posted a growth. They also reported growth at its Internet employment agency and initiated a partnership with Recruit Co., a job information magazine publisher.

ò KDDI Corp. announced that it will start the distribution of music to subscribers' personal computers, a move that makes it the first mobile phone service provider to do so. Under the offering, members of the new service will be able to not only download songs to their PCs but also forward them to their cellular phones to listen to and use as ring tones. About 20,000 titles will be available initially, priced at around 300 yen ($2.5) apiece. The firm already has a similar service for wireless phones.

ò Teaming up with 17 providers of cell phone content, Oricon Inc. announced that it will soon launch a free portal site that will enable visitors to find where they can go to download their favorite ring-tone melodies and other songs onto their mobile handsets. To do this, the company said it will work jointly with 17 providers of cell phone content. Under the partnership, Oricon said it will be paid a commission on each purchase and membership registration made via the site. It is targeting broker sales of 2 million songs a month after six months.

Media, Entertainment and Gaming
ò Square Enix, which is No. 2 to Nintendo as JapanÆs largest game publisher, reported that it cut its annual profit forecasts because of intense market competition. Square Enix is the video game developer behind the Final Fantasy hit series. The company said it forecast a 10-billion yen ($85.7 million) net profit for the year to March this year, well below its earlier estimate of 17.5 billion yen ($150 million). It also cut its operating profit estimate to 15 billion yen ($128.6 million) from 29 billion yen ($248.7 million), and its revenue forecast to 125 billion yen ($1 billion) from 136 billion yen ($1.1 billion). Square Enix also revealed a decision to look into releasing more light online game titles rather than continuing to develop complex role-playing games. Since the introduction of the first edition in 1987, Square Enix has sold more than 65 million copies of the Final Fantasy series worldwide, which has become hugely popular to game players.

ò Sega Toys announced that it will enter into an alliance with a number of other firms for the development of a game and a related animated cartoon. With this offering, Sega said it is targeting a market of about 40 countries by fiscal 2009. Under the tie-up, Sega said it will work with anime producers TMS Entertainment Ltd. and Japan Vistec Inc., Canadian toymaker Spin Master Ltd., and Canadian cable television and radio broadcaster Corus Entertainment Inc. With Spin Master, Sega Toys will develop a combat game using ball-shaped characters and cards. The cartoon is based on this game and will be created by a production team that includes three other firms.

ò The market for online job placement portals will top W60 billion ($63.4 million) this year due to its fast growth. JobKorea reported that the sale of its first quarter increased by 85.3 percent to W5.8 billion ($6.1 million), while Incruit posted a 104-percent increase from the same period last year to W4.6 billion ($4.8 million) in sales in the first quarter according to Rankey, a firm that does surveys on Internet sites. Market share in the first quarter, JobKorea accounted for 33.3 percent, Carrier and Incruit 19.8 percent and 15.7 percent, respectively.

ò Industry experts said that the country's two leading internet service providers, KT and Hanaro Telecom, are now facing negative growth. Analysts are also warning that without new service plans or business strategies, they may be facing an even worse scenario. While the number of subscribers increased, sales continued dropping. KT has maintained some 50 percent share of the market, while other firms demonstrated its aim to gain on the large rival, fueling competition for price-cutting and promotions. KT saw sales in the broadband internet area peak in the second quarter of this year, and posted minus growth for the last three quarters since then. In the third quarter of last year, KT posted a loss of W12 billion ($12.6 million) versus a net increase of 80,000 subscribers, which is a significant drop from the second quarter. In the following fourth quarter and the first quarter of this year, it saw both the number of subscribers and sales fall. Hanaro Telecom, which expanded the customer base by some 800,000 after a merger with Thrunet early this year, is also facing weak sales. The company posted a loss in the second quarter of last year despite a growing number of subscribers. It posted a slight increase in sales in the following quarter versus a drop in the customer base. Hanaro is expected to maintain sales growth in the first quarter of this year on the merger with Thrunet and modest spending on marketing. Powercomm, which launched broadband internet service in September last year, is expected to increase the number of subscribers to 450,000 in the first quarter of this year.

ò A survey of 8 listed firms and 2 non-listed firms in the internet media and game service area conducted by the Electronics Times found that the top 10 firms' cash reserve stood at W1.1 trillion ($1.1 billion) in March this year. These firms are NCsoft, NHN, Webzen, Neowiz, CJ Internet, Daum Communication, Empas, Nexon, KTH and Yahoo! Korea, the last two being unlisted. Industry analysts describe these ten firms as driven by financial power, pushing them to seek new growth engines in both domestic and international market. The firms are reportedly using two approaches in their growth: either through mergers and acquisitions or through an expansion into overseas markets which include North America, Europe and its neighbours China, and Japan.

Mobile/Wirelessò KTF disclosed that it will invest around W780 billion ($824.4 million) to build an upgraded wireless communications network across the nation. The investment is higher than KTF's earlier plan to spend over W500 billion ($528.6 million) on building such networks in 45 cities by the end of June this year. The move is aimed at seeking to accelerate its transition from 2G- to 3G-telephony in the local market dominated by SK Telecom. As of the end of February, KTF held 32.2 percent of the local mobile service market, making it the second-largest company among three mobile carriers. SK Telecom has 50.8 percent, while data showed the smallest LG Telecom Ltd. has 17.1 percent of total subscribers. In a bid to keep a step ahead in the emerging 3G markets and avoid competition in already-saturated sectors of the market, KTF has been pursuing the promising W-CDMA market.

ò Mobile phone users in South Korea will be able to replace their handsets with new ones based on W-CDMA technology without giving up their phone numbers, according to the countryÆs Ministry of Information. Under the so-called number portability system, mobile phone users will be able to retain their phone numbers even if they change their handsets into W-CDMA phones. The ministry said the regulatory change will be enforced soon but did not disclose any more details.

Media, Entertainment and Gaming
ò Blizzard Entertainment, a leading game developer, announced that it cut the monthly fee by 20 percent for its flagship online game "World of Warcraft," a move that is expected to touch off a new round of price-cutting campaigns by South Korean players. Blizzard, which remains third in the country's online multi-user network game rankings, announced it will charge W19,800 ($20) for a 30-day package, down from W24,750 ($26). The game giant's move is interpreted as a signal that the countryÆs online gaming industry will see major developers switch to the pricing policy favouring less than W20,000 ($21) per month. But the price-cutting pressure is forecast to undercut smaller, cash-strapped game developers.

ò HanbitsoftÆs new multi-player online role playing game "Granado Espada (GE)" is already enjoying phenomenal popularity in Japan, with more than 100,000 members within seven hours after the launch of open service, according to Hanbit Ubiquitous Entertainment, the local subsidiary of the game firm.

ò SK Telecom, the Korea's biggest mobile operator, announced the launching of a pilot service of WiBro, a South Korean variant of mobile WiMAX next month, with the commercial service to follow soon. SKT said that the main service area will be Seoul even as it plans to set up 10 hot zones around colleges and subway stations by the end of this year and broaden the service area to 84 cities across the country by 2009.

ò Samsung Electronics revealed the development of 2GB MMCMicro. It is said to possess the worldÆs largest capacity as a memory card for mobile handsets. MMCMicro is a micro memory card for the next generation mobile handsets at a quarter of the standard MMC, the size of a fingernail. The product is able to store 1000 pictures, six movies of high quality, and 500 songs for MP3. Its particular feature is diverse vital functions for mobile devices like high-speed data transmission, which is 3 times faster than same-sized memory cards, and uses a sixth of the energy and dual voltage consumption. Samsung Electronics, producing a variety of MMCMicros from 32MB to 512MB, is to start mass-production of 1GB and 2GB memory cards having developed in early this year.

Information Technology
ò The world's first next-generation communication-broadcasting convergence service test bed adopting Wi-Bro and terrestrial DMB will be built in Jeju-do, according to the Jeju government and KT. The local government and the country's largest telecom carrier announced their plan to build a high-tech IT city with ubiquitous service capabilities in the island by the end of this year, combining Wi-Bro features to the existing next-generation mobile research testbed the Jeju government opened in January this year.

ò CDC Corp., the software and technology services company formerly known as China.com, reported a 24-percent growth in its revenues from CDC software and a 27-percent increase in online game users compared to the same period the previous year. During the first quarter, China.comÆs online game, Yulgang, went beyond 330,000 peak concurrent users, a 27-percent growth from the previous quarter. Average concurrent users per day totaled 182,000 and registered users totaled 22 million. Average virtual merchandise sold per day amounted to 82,000 units. China.com also increased its shareholding in 17 games to 100 percent in a bid to boost the growth of its online gaming business.

ò eLong, a leading online travel service provider in China, reported sales revenue of $26.3 million, representing a 57-percent increase over the previous year. The company ascribes this growth to an increase in revenue from hotel commissions and air ticketing. Despite this, elong still posted a net loss of $7.7 million for 2005, compared to a net loss of $2.2 million in 2004.

ò China launched its first copyright music website, called Aigomusic.com. The site allows users to download and also receive music via other mobile platforms such as mobile phones and PDAs. The internet company is reputedly the only one in China granted the rights to sell music online by virtue of the agreements it signed with Sony BMG, EMI, Universal Music, and Warner Music. Other than music, Aigomusic also has copyright to Music Videos (MVs), which are also available for download.

ò UTStarcom announced its signing of a deal with China Netcom, which will allow the Chinese firm to use its internet protocol television technology in Harbin in northeast China. UTStarcom did not disclose the amount paid by China Netcom but it disclosed that the deal could be the largest deal ever inked yet in China. UTStarcom's technology lets network operators like China Netcom sell and deliver television over Internet Protocol networks.

ò A report from Analysys International indicates that there will be 78 million 3G users in China by the year 2008. The report from the internet-based provider of technology business information said that telecom operators are set to begin the construction of 3G networks and purchase of 3G devices as soon as 3G licenses are issued in China in the second half of this year. The report also says that some 440,000 users will be using 3G mobile devices by the end of 2006 while half of the new mobile telecom subscribers will be 3G users by 2008. Analysys International states that out of this figure, 3G subscribers will form about 13.7 percent of the total mobile telecom subscribers in China in 2008.

Media, Entertainment and Gaming
ò Cgogo Technology announced the launching of the Mobile Beijing Technology Newspaper, a mobile newspaper with its own independent domain name on a WAP network. Cgogo and Beijing Technology Newspaper established the mobile newspaper. It is considered the first-ever mobile newspaper focusing on technology. According to the company, the Mobile Beijing Technology Newspaper is to be based on CgogoÆs Mobile Search WAP site, and is expected to provide extensive coverage for domestic users. At present, the mobile newspaper is available for free to mobile subscribers.

ò A study called the Survey on the Development of China Media Industry 2006 disclosed that China's media industry achieved output of Rmb320.5 billion ($40 billion) in 2005, which represented a growth of 11.9 percent year-on-year. The survey indicated that print publications accounted for 36 percent of the total output of the industry, putting it at No. 1 in all market segments of the industry. Occupying the slot from No. 2 to No. 5 in terms of output value were TV advertising, mobile short message services, revenue of advertising companies, and magazine publishing. With a sales revenue growth of over 40 percent, mobile short message climbed from No. 6 in 2005 to its current No. 3 position. The study explains the present position of newspaper publishing in No. 6 as caused by the sluggish growth in newspaper ads.

ò The Haier Electronics Group disclosed that it posted a net loss of HK$432.9 million ($55.8 million) for 2005, compared to a profit of HK$119.4 million ($15.3 million) in 2004. The company disclosed that its revenue for 2005 saw a decline to HK$4.9 billion ($631.8 million) from HK$5.8 billion ($748 million), ascribing its performance to the intense competition in the mobile phone business.

ò China Telecom announced a net profit of Rmb5.9 billion ($735.9 million) in the three months ending last month. With the announcement, China Telecom said it added 2.6 million fixed lines in the three months ending last month. The company announced that broadband growth was strong, adding 2.1 million customers to a total of 23.1 million.

ò China Mobile reported its first-quarter results, with its net profit posting a 27.6-percent climb to Rmb14.3 billion ($1.7 billion) from Rmb11.2 billion ($1.3 billion) a year ago. Analysts took note of its operating revenue, which went up by 18.5 percent to Rmb65 billion ($8.1 billion) even if it missed the analystsÆ forecast. In another development, China Mobile is reportedly offering $4 billion for Millicom International Cellular, a Swedish company that operates wireless phones in developing nations. If China Mobile acquires Millicom, it would give the company a presence in 16 nations in Latin America, Asia and Africa.

ò Industry observers note that the first part of what is seen as the consolidation process in Taiwan's competitive LCD industry has begun, a development that was seen earlier as mere speculation. AU Optronics, the world's third-biggest maker of TFT liquid crystal displays, announced earlier this month its plan to acquire Quanta Display, a local rival, in a deal valued at about US$2 billion in stock. It has been rumored that Quanta Display was in talks with TaiwanÆs third-biggest flat-panel supplier Chunghwa Picture Tubes. Once completed, the deal will make Quanta, with about 6 percent of AU Optronics, the second-biggest shareholder after BenQ, a holder of a 9-percent share. Most analysts stated that the agreement is expected to bring about synergies because AU Optronics and Quanta Display have little overlap among their customers. Through the merger, AU Optronics is predicted to become a supplier for flat-screen TVÆs, which is to be set up reportedly by Quanta and Sanyo. Despite overtaking South Korea as the world's largest manufacturer of LCD panel, TaiwanÆs industry has always been exposed to sudden price drops given the fragmentation of the industry. This is the scenario that observers say will be changed by the deal AU Optronics is considering. Chi Chi Mei Optoelectronics is also described now as under pressure to find a takeover target. Whether by Chi Mei or AU Optronics, two firms that are seen as targets for takeover are Hannstar Display and Chunghwa Picture Tubes.

ò Quanta Computer, the world's largest notebook manufacturer, said it had won a contract to make up to 15 million notebooks, starting at the end of the year. The contract, however, is for laptops dubbed the $100 laptop. Even if the size of the order is the equivalent of almost a third of the number of laptops shipped worldwide last year, observers are noting that it may not be a cause for celebration given the low price that characterizes such products. These low-end machines are part of One Laptop Per Child (OLPC), a United States non-profit organisation launched by the Media Lab at the Massachusetts Institute of Technology. The idea is to provide low-cost laptops for children and students in developing countries. The contract should give Quanta plenty of work, but whether the order will significantly boost profits is the big question. According to Nomura Securities, Quanta posted for 2005 revenue of NT$403 billion ($12.4 billion) with earnings of NT$10.9 billion ($337.4 million), a net profit margin of just 2.7 percent down from 3.7 percent in 2004. The small profit has been attributed to the fact that Quanta makes machines for brands like Hewlett-Packard and Dell, firms known for cost-cutting measures. The project will use a microprocessor from Advanced Micro Devices (AMD), rather than from Intel.


ò Mitsui & Co. revealed its plans to acquire an 11-percent stake in PT Agranet Multicitra Siberkom (Agrakom) one of Indonesia's leading internet portal operators and cellular phone content providers. Agrakom already delivers news to cell phones, as well as images, ringer melodies and games developed by other firms. Mitsui intends to supply Agrakom with content-delivery software. Under the acquisition plan, the Japanese company said it will make an investment of about 87 million yen ($746,000) in Agrakom. Mitsui forecasts the popularity of cell phones and related services to spread rapidly in Indonesia.

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