A week in tech, May 26 - June 2

A round-up of all the latest tech news.

Japan
Internet
• 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.

Mobile/Wireless
• 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.

Hardware
• Matsushita Electric announced that it has secured a contract to supply mobile phones to KDDI, which the mobile operator will use for its “au” 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.

Semiconductors
• 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.

Korea
Internet
• 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
• 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.
• 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.
• 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.
• The country’s 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.
• 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.

Mobile/Wireless
• 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.

Telecommunications
• 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
• 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 – Taiwan and China – 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.

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