A week in tech, June 30 - July 6

China

Internet
• Baidu.com announced it’s launching weblog services soon in a bid to compete with its rivals such as Google, Microsoft, and Yahoo. The company said the blog service is dubbed Baidu Space and is now being tested before launching. Reports indicate that the population of blog users in China is predicted to reach 60 million by the end of this year and 100 million in 2007. Google, Sina, and Sohu have already deployed their blog services in the country.

• Online games company NetEase and China's leading drinks maker MasterKong announced their formation of a reciprocal promotional partnership with the aim of boosting sales. Under the agreement, NetEase said it will plaster ads for the new games on millions of bottles of MasterKong's icy green and red teas to diversify its marketing channels. Under the deal, Masterkong will use Datang to promote its products among young gamers with in-game ads. NetEase will brand certain virtual settings, items, and characters in the game with MasterKong's bottled tea products. Industry observers see online games emerging as a preferred advertising medium in China because the country has the second-largest number of Internet users in the world, and online games play an important role. A report by Shanghai-based iResearch showed that China had 29 million online gamers, increasing 38 percent over the previous year, with the figure expected to go up to 40 million this year.

Media, Gaming and Entertainment
• China’s Ministry of Information Industry (MII) announced its launching of a training program for talented online game developers and designers, with the government body identifying the gaming college of Beijing Huizhongyizhi Tech as the first gaming talent training base under the programme. Government sources indicated that games developers are in short supply in the country. The Chinese Academy of Social Sciences predicted that the market volume of online games in China will reach Rmb8 billion ($1 billion) in 2006.

• Legend Capital announced that it is funding the expansion of Shanghai-based Virtuos, one of the world's largest outsourcing services providers for the games software industry. Legend Capital is the investment arm under the Lenovo Group owner of Legend Holdings. A top official of Virtuos stated that Legend Capital, the investment arm of the Lenovo group owner of Legend Holdings, was the only investor in its Series A shares round of financing. Legend Capital manages some $300 million involving three funds. According to Screendigest, a market research firm, the global demand for games outsourcing can be estimated as hitting $1.1 billion in 2006, and is expected to grow to $2.5 billion by 2010. Virtuous revealed that it is planning to use the new funding to triple the size of its teams in the next two years even as it stated that the company will also invest in further training, processes, security and IT. New Access Capital, a corporate finance advisory firm known to specialize in China, served as the adviser on the Legend Capital investment.

Software
• Lenovo Group announced that it has secured another deal with IBM, a move that will boost its software business. Under the deal, IBM said its Global Technology Services has obtained a three-year license to use Lenovo’s ThinkVantage Technologies. The deal includes the productivity software under the former IBM personal computer business that Lenovo acquired for some $1.7 billion in May 2005. The agreement is expected to enable the Global Technology Services of the computer giant to introduce six ThinkVantage software tools on different computers and also enhance its management of corporate customers’ non-Lenovo systems worldwide. The IBM unit provides supports to millions of PCs and users with help-desk and desktop services contracts.

Telecommunications
• Analysys International predicts that the enterprise Wi-Fi market in China will expand by 45 percent over the next four years. The report said telecom providers have already set up about 10,000 hotspots in the Asian country; a number that is expected to expand as wireless networking and fixed-mobile convergence becomes a value-added supplement to consumer broadband service. A spokesperson for the research firm said that with the expected 3G developments in China, operators will be focusing more on FMC (Fixed Mobile Convergence) services. The statement said Wi-Fi and 3G are a good choice of China carriers in the initial phase of FMC.

Taiwan

Semiconductors
• Texas Instruments (TI) announced that it will start volume shipments of its single-chip LoCosto solution for handsets in the second half of 2006, with one or two Taiwan-based ODMs planning to start shipping handsets based on the new ultra low-cost chip this year. A company official said that more handset makers are expected to adopt the 90nm-manufactured LoCosto chips, and the product should be the mainstream TI GSM/GPRS solution by the second half of 2007. According to sources at Taiwan handset makers, Compal Communications will ship handsets that incorporate the LoCosto chips to Motorola in the third quarter of this year, with Chi Mei Communication Systems (CMCS) to follow later. In addition, TI plans to begin volume production of its standard 3G chips by the end of this year or early 2007.

Hardware
• Inventec Appliances announced that it will invest about $4 million to establish a wholly-owned subsidiary to set up an assembly plant in the Czech Republic in order to meet requirements of its OEM clients. The subsidiary is tentatively named Inventec Appliances (Czech) s.r.o., according to the filing. The company spokesperson said the plant is scheduled for completion by the end of this year and will commence commercial operations in early 2007. The new assembly production line will mainly supply products to Apple Computer. Inventec Appliances reportedly makes video iPods for Apple. In a separate development, Inventec and Mitac International are reportedly completing the move of their server production lines to China by the end of 2006, following the steps of other major Taiwan-based server manufacturers such as Quanta Computer, Micro-Star International (MSI) and Arima Computer.

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