A week in tech

China

Internet
• Tencent Holdings, a leading provider of internet and mobile and telecom value-added services (VAS) in China, announced that its revenue for 2005 totaled Rmb1.4 billion ($174.3 million), a figure that represents a 24.7 percent growth from the previous year. Tencent said its net profit for 2005 went up by 10 percent year-on-year to Rmb485.4 million ($60.4 million). Tencent’s businesses, which are composed of Internet VAS, mobile and telecom VAS, and online advertising, contributed 99.3 percent of Tencent ’s revenue.

• IVY Worldwide, Inc. and IVY Luxe, a San Francisco-based luxury company, announced the entry of its WineSpring brand into China. The product was first launched in December 2005 under WineSpring.org as a showcase for premium California wines for the affluent Chinese marketplace, WineSpring said it will expand its focus to build an exclusive online platform for consumers of luxury lifestyle goods, services and experiences, as well as for its global network of partner companies that cater to the needs of affluent consumers. At present, WineSpring and parent company IVY Luxe are expecting to be in 30 Chinese cities, where they hope to set up their profiles and luxury partner network for the top hotels in China, including the finest restaurants and luxury travel and experience provider partners, both on the West Coast of the U.S. and in China. The new WineSpring luxury platform is expected to be out in May 2006.

• NetEase.com, Inc., one of China's leading Internet and online game services providers, announced that it would be changing its current American depositary receipt (ADR) ratio, with the firm claiming that its ADR price has increased significantly over the last several years. NetEase said the ratio would change from the current one ADR for every 100 ordinary shares to one ADR for every 25 ordinary shares. There will be no change to NetEase's underlying ordinary shares. In addition, existing ADRs will continue to be valid and will not have to be exchanged for new ADRs.

• CCID Consulting predicted China’s online gaming market to hit Rmb22.7 billion ($2.8 billion). The report said that the value of China’s online gaming market surpassed Rmb4 billion ($498.2 million) in 2005, registering a 50.6 percent increase over the previous year. Online gaming revenue accounted for more than 30 percent of China’s total Internet revenue and was higher than the revenue from search, instant messaging, e-mail, online advertising and e-commerce platforms.

• Tom Group announced that its net profit for 2005 went down by 66 percent to HK$259 million ($33.3 million), while its revenue climbed 20 percent to HK$3.1 billion ($399.5 million) over the previous year. The company attributed the fall in net profit to the lack of one-off gains. Tom Group revealed that its spin-off of Tom Online contributed HK$730 million ($94 million) to its net profit in 2004. The group said its earnings for the Mainland internet business as well as its publishing businesses in Taiwan and the Mainland posted a 39 percent and 14 percent growth, respectively, in 2005.

Mobile/Wireless
• China Unicom, China’s second largest wireless carrier, announced that the number of its global system for mobile (GSM) subscribers increased to 96.9 million at the end of February from 96 million registered in January. China Unicom said its CDMA subscribers reached 33.3 million, compared with 33 million at the end of January.

• Baidu.com Inc. announced entering into an agreement with Nokia Corp. to offer a mobile search service on several high-end Nokia cell phone models. The application will be available on the Nokia N70, Nokia N90 and other select Nokia devices. It will include news search, image search and the Baidu Post Bar, an online community developed by Baidu. The pilot application is currently downloadable for certain devices in Mainland China. Baidu stated that it considers Nokia as one of its most important collaborators in mobile search.

• Through its Motorola Ventures, Motorola announced that it has invested in three technology companies based in China. The companies are Shanghai NewMargin Venture Capital Enterprise, Shenzhen Shenxun Information Technology Development, and Legend Silicon. Motorola said China continues to be of strategic importance to the company as it disclosed that other than boosting its strength in mobile devices and network infrastructure, the company is going into new businesses aimed at providing seamless mobility solutions to its customers in China. With the deal, Motorola has become one of the largest investors of Shanghai NewMargin Venture Capital Enterprise, originally established with a US$35-million private equity fund. Motorola said the venture company said it will continue to focus on high-tech companies, high-growth or high-potential companies in China. Details of the investments were not reported.

Media, Entertainment and Gaming
• Navstar Media Holdings, Inc., a leading provider of television content in China, announced its acquisition of a 70-percent ownership of Beijing Broadcasting and Television Media (Beijing Media), a leading content and production company in China. Under the deal, Navstar will issue 2.4 million shares of its common stock to the existing shareholders of Beijing Media, including 1.5 million shares to complete the acquisition and 900,000 shares to secure a pre-Olympics 2008 Beijing Games sports mini-series featuring top Chinese athletes. The 900,000 shares will be returned to Navstar if the show cannot be secured. Together with this, Navstar said it will consolidate its television content production capabilities under the umbrella of Beijing Media to streamline and more effectively manage its operations. Aside from a record 10,000 hours of television programming, including TV series, movies and specials in the past five years, Beijing Media currently produces approximately 500 hours of programming per year for CCTV, the major broadcast television network in Mainland China.

• CDC Games announced that it will acquire a total of 52 percent of 17game, in the form of 27 percent cash and 73 percent restricted shares of China.com. The deal is valued at $18 million. Under the agreement, the founders of 17game will remain with the company and will continue to work with China.com's management team to expand the online game business and create synergy between 17game and China.com's other operating units. 17game is a leading MMORPG provider with a robust track record in launching and distributing successful online games for the China market. Its latest online game, Yulgang, was one of the fastest-growing MMORPGs in China in 2005. The game was noted by 17173.com as the second most popular MMORPG among over 50 new online games launched in China in 2005 and also named by China e-Game Industry Association as the most innovative game of 2005. Yulgang pioneered the "free-to-play and pay-for-virtual merchandise" business model for MMORPGs in China and set the trend for the move to this business model by other leading online games companies in China. Since its commercial launch in July 2005, Yulgang's subscribers have increased to approximately 15 million as at the end of Q4 2005. The increase of China.com's ownership in 17game to 100 percent is seen as an indication of a successful partnership the two companies have forged to deliver the best online gaming experience to their customers. The acquisition is expected to facilitate China.com's integration of its online game business with the existing portal and MVAS units, and solidify China.com's position as one of the leading MMORPG operators in China.

Hardware
• Dell Inc. announced its decision to expand its design centre in Shanghai in order to be more competitive. The company said it would hire some 200 people for the expanded center, which is an increase of 70 percent of its staff. Set up in 2003, the design center in Shanghai focuses on developing desktop PCs and software. According to industry sources, Dell has been concentrating on competing in the PC market in China, as the country became its third largest market last year. Dell's market share in China in 2005 went up by 0.6 percent to 7.8 percent, even as its competitor Lenovo still dominates the market with a 33.3 percent market share.

• China is looking to producing 98 million desktop and laptop computers this year, with most of these products made mostly for overseas markets, according to the Ministry of Information Industry (MII). China said it aimed to export 58 million computers, or 59 percent of the total output forecast for this year. The average export price for a desktop in 2005 was placed at $617, down from $644 at the end of 2004. The drop in the prices is ascribed to the massive exports from the country that has forced computer firms to slash down their prices to be competitive. Leading the industry’s export program is Lenovo, the nation’s largest computer maker.

• GOME Electrical Appliances, a Chinese household appliance retailer, announced a slight increase in its 2005 net profit from a year earlier. GOME said its net profit last year was Rmb499 million ($62.1 million), up 2.7 percent from Rmb487 million ($60.6 million) the previous year. GOME had 259 outlets across 69 cities in China as at the end of last year, compared with 116 outlets at the end of 2004. The company said it plans to add 120-150 outlets and three megastores in 2006. Gome’s online sales account for 1 percent of its total sales.

Telecommunications
• China Netcom Group (Hong Kong) announced a significant increase in its net profit, a performance that the company ascribed to a robust subscriber growth and stricter cost controls. China Netcom said its net profit went up to Rmb13.9 billion ($1.7 billion) in 2005, compared to the Rmb2.7 billion ($336.3 million) in 2004. The company expects the 3G licensing situation to be resolved this year, with it expecting to receive one of the 3G mobile phone licenses to be awarded. Listed in Hong Kong and New York in 2004, China Netcom Group (Hong Kong) Corp. Ltd. is the Mainland's second largest fixed-line phone operator. In a separate report, China Netcom Group Corp (Hong Kong) said it will focus on generating growth from its broadband business and the quasi-mobile phone service, which is based on the personal handyphone system (PHS), this year before it gets approval as a 3G operator. The company also admitted for the first time that it would be setting up a venture capital fund in the amount of $150 million. The fund targeting mainland broadband businesses would be supported not only by the China Netcom Group but also by PCCW and two prominent individuals – Rupert Murdoch and Jiang Mianheng, a son of the former president.

hardwareintechweek