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Internet Companies Invest in China

Posted on: Wednesday, 26 October 2005, 09:00 CDT

By Ashling, Jim

While Internet usage and e-commerce growth rates may be slowing in the U.S. and Western Europe, China's booming growth and 100 million Internet users have caught the attention of major Internet companies. This summer, several IPOs, joint ventures, and rumored takeovers have primed the country for its share of the latest Internet services.

Baidu (http://www.baidu.com), the leading Chinese search engine company, made its debut on NASDAQ on Aug. 5. Its shares were initially $27, and they were trading at $154 by the second day. After the company released its first post-IPO quarterly results, however, prices fell sharply. In late August, shares were trading in the low $80s. Apparently, after a massive 53 percent growth in 2Q 2005, predicted growth rates of 19 percent for 3Q 2005 did not meet investors' expectations. Nevertheless, Baidu still expects to earn a net revenue of $32 million this year.

Baidu has been described as a "Chinese Google." The search engine's name means "hundreds of times" and represents the persistent search for the ideal. It was inspired by an 800-year-old poem that states, "hundreds and thousands of times, for her I searched in chaos ..." Baidu's most distinguishing feature is its Chinese-language search capabilities. Users can alternate between Chinese characters (Pinyin Romanization) and standard English. They also can search for MP3 music files, a feature that's not popular with music publishers.

Some see Baidu as a possible acquisition for Google, which has recently raised $4 billion through a second stock offering and already has a significant stake in the company.

In July, Google announced that it not only planned to open a product research and development center in China in 3 Q 2005 but that it had hired respected computer scientist and industry pioneer KaiFu Lee to lead the operation and to serve as president of the company's growing Chinese operations. In the meantime, Microsoft, Lee's former employer, is contesting that Lee violated a no-compete clause in his contract by joining Google.

Yahoo! Partners with Alibaba.com

Yahoo! already made a commitment to China by announcing a partnership with Alibaba.com (http://www.chma.alibaba.com), China's largest e-commerce company. Under the terms of the alliance, Yahoo! will contribute its Yahoo! China business toAlibaba.com and will invest $1 billion in cash to purchase Alibaba.com shares.

The partnership is intended to create the only Internet company in China with a leading position in business-to-business e- commerce, consumer e-commerce, online payments, communications, and search. Two brand names will gain greater recognition through the deal: AliPay (http://www.alipay.com), an online payment service, and Taobao (http://www.taobao.com), a popular e-commerce Web site. These services are roughly equivalent to PayPal and eBay, respectively.

Until this deal, eBay held the No. 1 e-commerce spot in China with EachNet, a consumer online service that the company purchased in 2003. eBay is expected to increase its marketing efforts in China in response to Yahool's deal with Alibaba.com.

Amazon also has a foothold in China. In August 2004, the company bought Joyo.com, Ltd., a British Virgin Islands-registered company that runs the Joyo.com Web site (China's largest online retailer of books, music, and videos).

Television via the Internet

Consent providers are also looking closely at the Chinese market. A report issued by Informa Telecom & Media (http:// www.informatm.com) in August predicted that China will be the world's largest market for Internet Protocol Television (IPTV) by 2010. Hong Kong currently has the largest number of IPTV subscribers (475,000), ahead of the U.S. (273,000) and France (184,000). The Informa report said the global subscriber numbers will increase tenfold in 5 years, with China expected to have 4.871 million subscribers and the U.S. likely to have 3.415 million.

IPTV is the distribution of live TV and stored video signals over a broadband Internet connection. Combining TV, data, and voice delivery in one package is known as Triple Play. Quadruple Play is when mobile is added to this bundle.

Hong Kong's leading IPTV supplier today is PCCW. The number of people subscribing to its Now TV service (http://www.now.com) increased in the first 6 months of 2005 by 22 percent to 440,000. The company recently announced agreements with HBO and STAR that will last well into the next decade. Two more suppliers, HKBN Digital TV and SuperSUN, are also available in Hong Kong.

Consultations are under way in Europe over the potential regulation of digitally distributed multimedia content. The EU has released six issues papers concerning a future legislative framework for audiovisual content services. A draft directive is scheduled to be created by the end of the year. Such a directive, which will revise and update the Television Without Frontiers Directive of 1989, has been initiated because of the technological changes that have made TV distribution via the Internet possible. The six issues papers (which are available at http://europa.eu.int/comm/avpolicy/ revision-tvwf2005/consult_en.htm) cover:

* Rules for audiovisual services

* Rights to information and short extracts

* Cultural diversity

* Commercial communications

* Protection of minors and human dignity, right of reply

* Media pluralism

Since TV transmitted via the Internet is now unregulated in Britain, attempts to apply broadcast TV regulations to Web sites carrying video clips are expected to be opposed.

Intel Announces Digital Communities Initiative

On Aug. 18, Intel Corp. announced an initiative designed to help communities use wireless technology and innovative applications to expand and improve services for municipal governments, businesses, and citizens. Working with a group of international companies, the Digital Communities initiative (http://www.intel.com/pressroom/kits/ digitalcommunities) will set up 13 pilot projects in Cleveland; Corpus Christi, Texas; Philadelphia; Portland, Ore.; Mangaratiba, Brazil; Dusseldorf, Germany; Gyor, Hungary; Jerusalem; Monaco; Seoul, South Korea; Taipei, Taiwan; Osaka, Japan; and Westminster, U.K.

According to Intel, the initiative seeks to help local governments use wireless technology to lower their operational costs, enhance public safety and security, provide equal and affordable broadband access, and promote growth and competitiveness within communities. The applications of wireless technology range from providing mobile workers with information while they are on the job to enhancing parent-teacher collaboration for improved student success.

Taipei, with a population of 2.63 million, is using its extensive wireless infrastructure to enhance education and government services. The city created an online e-university program that offers citizens nearly 700 classes in management, language, and humanities. A numher of government efficiencies are also being seen, including paperless administration, security surveillance, and automated transportation systems. The administrative e-paper exchange system, which is used citywide by 500 agencies (including land registration and building management), handles 400,000 documents every month and eliminates the need for paper certificates. The wireless technology also allows Taipei's transportation information system to quickly collect traffic information and helps plan traffic control strategies.

Westminster City Council plans to transform the heart of London into a wireless city. Starting from a pilot project in Soho, the wireless project extends and links hotspots throughout the city. Councilor Simon Milton, leader of Westminster City Council, said:

The concept of the Wirefree City is potentially one of the most exciting developments in Westminster's history. It will allow us to offer opportunity to our residents through community education schemes on our housing estates and integrated social service provision across the city. We will be better able to reduce the threat and the fear of crime through a flexible approach to community safety, cleansing, and CCTV (closed-circuit television) [and be able to react] to events and developments as they happen. It will also help us maintain low taxes through the savings that the scheme can offer.

The Joys of DAISY

London's Natural History Museum in Knightsbridge (http:// www.nhm.ac.uk) is a must-see for many international visitors. With 70 million specimens-ranging from microscopic life to a full-size blue whale skeleton-it is one of the world's best museums. Although experts are available to help identify specimens brought in to the museum by collectors, meeting the classification demands and ensuring accuracy has been tough.

In August, the museum launched DAISY (Digital Automated Identification SYstem), a new technology to assist specimen identification. DAISY uses artificial intelligence and computer vision technologies to produce virtual collections of authoritatively identified specimens. By sampling electronic images, digitized sounds, or digital representations of DNA sequences, DAISY is able to identify an organism's species. Specimens, including fossils, can even be identified via pictures taken with mobile phone cameras.

The Naked Librarian

What does a librarian do during the summer? Relax with a good book, or get away from it all? Although Great Britain does not have the best possible climate, one adventurous U.K. librarian has joined former U.S. \Marine Stephen Gough and his girlfriend, Melanie Roberts, in an 874-mile trek from Land's End to John O'Groats. While that in itself may not be unusual (many others have made the journey between Britain's extreme points to raise money for charities), this trio is doing it clothed in only their boots and backpacks.

Gough has tried this before, but he was arrested 14 times and served two jail sentences. So far this year, he and Roberts have been held and released from custody several times, but as of this writing, no charges have been filed. Naturally, there is a Web site (http://www.nakedwalk.org), complete with photos, that charts the daily progress of the walkers.

Jim Ashling runs Ashling Consulting, an independent consultancy for the information industry. His e-mail address is jashling@aol.com. Send your comments about this column to itletters@infotoday.com.

Copyright Information Today, Inc. Oct 2005

Source: Information Today

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