Flextronics tenders friendliness to Taiwan’s ODMs

By Jason Tan

Flextronics, the world’s top electronics manufacturing services (EMS) provider, is attempting to turn rivalry with Taiwanese manufacturers of original design (ODMs) into partnership.

“We are trying to work with major companies here and our business is growing well in Taiwan,” stated Michael Marks, its chief executive officer, at a press briefing yesterday.

Marks, who has announced to retire in next January and assume the post of chairman of board of directors, is reportedly in town to meet with local technology players for possible partnerships.

One high-profile client includes Asustek Computer, Taiwan’s largest computer motherboard maker, Chinese-language newspapers here reported. Marks, however, declined to comment and said that it was purely media speculation.

In its fiscal 2006 ending next March, Flextronics is eyeing to achieve US$400 million in business sales with Taiwan’s companies.

This figure is four-fold from the US$100 million recorded in fiscal 2005, and a drastic leap compared to merely US$15 to 20 million in 2004.

According to Marks, Flextronics does not have plans to compete head-to-head with Taiwan’s ODMs in the PC space, such as motherboards, where Taiwanese vendors have built a firm foothold. It however intends to work with them and supply mechanical components to these vendors.

Currently, handset assembly is the largest revenue driver to Flextronics, contributing around 33 percent to its total revenues. Sony Ericsson is one of its largest customers, he revealed.

The EMS giant bought Finnish GSM handset design house Microcell in 2003 and Korean-based CDMA handset outfit G-Tran a year later. With the acquiring of both handset communication platforms, the company is slated to ship CDMA/GSM dual-mode phones this year, informed Peter Tan, Flextronics Asia’s president and managing director.

Recent reports from Business Week indicate that Foxconn, the brand name of Fletroxincs’ closest competitor Hon Hai Precision Industry, is voted as the world’s No. 2 IT company. The rivalry between Hon Hai and Flextronics is getting intensive nowadays to compete for the EMS pie.

“It is not a zero sum game between Flextronics and Hon Hai. Most of our products do not overlap with each other and we have different areas we excel at,” Marks stated.

He added that the two companies should not be compared based on revenues growth. Though Flextronics’ revenues are comparatively lower, it has posted higher profit growth.

Flextronics expects to reap total revenues of US$16.5 billion in fiscal 2006, a slight increase from US$15. 9 billion of the previous year. It achieved 50 percent of profit growth in fiscal 2005, and is aiming for 30 percent growth in 2006.

On the contrary, Hon Hai’s revenues jumped 34 percent to NT$541.6 billion last year, with profit growing 18 percent year-on-year.

Spyware is here to stay: IDC analyst

By Jason Tan
The China Post

The worldwide spyware market is expected to grow to US$305 million in revenues in 2008, a huge leap from US$12 million in 2003.
According to the latest statistics from technology research firm International Data Corp (IDC), spyware has become the fourth greatest threat to enterprise network security, after virus, human errors and Internet worms.
Spyware is expected to climb up its ranking and become one of the top threats to enterprises, if more people are involved in Internet transactions in the future, informed Alan Tsao, IDC Taiwan's senior analyst.
"Spyware happens to everyone and every organization, regardless of the size and industry, as long as they connect to the Internet," he said.
He added that its survey has revealed that as high as 67 percent of all computers have some forms of spyware, but even that number only reflects users that are aware of its existence.
Spyware has become more rampant in the second half of last year. It is software that covertly gathers user information through the Internet without their knowledge, usually for advertising purposes.
These applications are typically bundled as a hidden component of free or share software programs that can be downloaded from the Web.
"Spyware is here to stay. It is not a serious hacking challenge for most programmers and it is a profitable revenue source for legitimate corporations such as online marketing and advertising firms," noted Tsao.
In view of the rising threats of spyware, a number of security solution providers are expected to jump onto the rush to introduce anti-spyware products.
According to Tsao, the total industry value of anti-spyware solutions will amount to US$300 million in 2008, increasing drastically from a mere US$26 million of last year.
And more vendors will introduce integrated security solutions with anti-spyware feature into the market, instead of just standalone spyware products.
"Enterprises will find that integrated solutions are able to offer them a lower cost of ownership, as well as lower management and maintenance efforts. These products will present them central consoles to manage multiple security products across a network," he continued.
Trend Micro, a provider of antivirus and Internet security software and services, announced in early May that it has entered into an agreement to acquire the developer of antispyware solutions InterMute.
InterMute's technology will further enhance Trend Micro's antispyware solutions for business customers and consumers, the latter said in a press release.
It added it plans to offer InterMute's standalone antispyware products under the Trend Micro brand. It will also integrate InterMute's antispyware capabilities into its solutions for enterprises, small and medium-sized businesses, as well as consumers.
Meanwhile, Computer Associates, a management software company, also bought privately owned vulnerability management firm Pest Patrol last year.
The company said that increased chatter from corporations regarding spyware had prompted Computer Associates to purchase Pest Patrol, which has solutions protecting against such applications, among other threats.

Geant focuses on pricings, restructuring to grow

By Jason Tan
The China Post

Geant, the nation's third largest hypermarket operator, is currently focusing on pricing strategy and restructuring exercises to ensure survival in the competitive retailing industry.
As a start, it is forgoing NT$60 million in profit for its recent mid-year discount extravaganza, informed Geant president Pascal Billaud, at a press briefing yesterday.
The discounts, which will be over 40 percent, will be applied to 2,000 items in total.
"We started to implement price reductions on merchandises since last month and have seen some improvements," he added.
Billaud, who just came on board in March, said that hypermarkets are now faced with stiff competition in Taiwan and the operators are only now earning two percent margins.
Geant is thus turning into restructuring exercises in a drive to streamline operations and increase profitability.
Among them is an interactive solution capable of offering auto replenishment of products and facilitating connection of store outlets and suppliers.
The new system will reduce its logistics costs and enable it to maintain sufficient stocks. It is currently under trial and will go "live" for the first store in September, with others following suit by the end of the year.
In terms of business performance, Billaud revealed that its first quarter revenue results are on track.
He, however, refused to reveal the exact numbers, and added that Geant's breakeven plans are not likely to happen this year.
In terms of store expansion, it is slated to open up a store in December and another one in 2006.
Meanwhile, RT-Mart, the second largest hypermarket chain in the island, plans to set up a drive-through store in Taoyuan in the second half of the year.
This drive-through store will enable a quick shopping experience to buyers as they can just place and get their orders in the car without stepping out, informed Josie Lee, RT-Mart's public relations specialist.
According to Lee, this new store will be comparatively smaller in size compared to its other 23 stores. However, consumers will be guaranteed efficient shopping time and discounted daily necessities.
RT-Mart had just launched its "Thailand Week" extravaganza on Wednesday.
The chain store imported 500 items such as ingredients, food, fashion or accessories from Thailand, with values totaling NT$120 million. Simultaneously, it is holding related prize drawings and activities with performers traveling from Thailand to entertain crowds.
The retailer said that this is a way to reward customers while at the same time bringing Thai culture to the locals.
RT-Mart experienced two-digit growth in revenues in the first quarter over the same period of last year. "We expect to maintain the stable growth momentum for this year," Lee stated.
Meanwhile, the nation's largest hypermarket, Carrefour, started reshuffling 18 of its total 34 stores since late 2003. There will be five more stores to be remodeled this year.
The move includes renovation, as well as incorporating food courts and shopping outlets into the conventional hypermarket.
Carrefour hopes to expand the total stores from the current 34 to 50 by 2008.
The hypermarket industry reported NT$120 billion of turnover in total last year. Carrefour totaled NT$50 billion of revenue, translating to around 43 percent of market share.
It said in March that it aims to grab over 50 percent of share and achieve single-digit revenue growth this year.

Mio Technology aims to sell 80,000 units of handheld devices

By Jason Tan
The China Post

Mio Technology is gunning up to sell 80,000 units of its handheld devices by end of the year in the Taiwan market alone.
According to its marketing director of brand marketing division Michael Hsu, the company estimates to have sold 13,900 units of its handheld devices, which are personal digital assistants (PDAs) with the global positioning system (GPS) feature, in the first quarter of this year.
This translates to it being the top leader in the local market, beating other prominent players such as Acer or Hewlett Packard, he claimed.
"Our company's handheld devices are experiencing over 100 percent growth currently, which is in line with the worldwide increasing demand on GPS devices," he said.
GPS enables people with ground receivers to pinpoint their geographic location with the help of satellites. The system is currently widely adopted in cars, PDAs, or standalone handheld products.
According to Hsu, these gadgets are not targeted only at high-tech professionals or white-collar workers, but also at those who are not that technical savvy.
This includes cab drivers, who will find it handy on the roads, he added.

Portable gadgets merging with GPS
It is widely expected that more portable devices including handsets or MP3 players, will be incorporated with the GPS feature in days to come, according to Hsu.
He added that mobile phones with GPS will most likely be introduced in the market in the second half of this year.
"What I can say now is that we won't be absent in this field," Hsu said, refusing to reveal the company's possible launch dates or plans.
"GPS is an important technology to us and we will continue to invest more into this technology in future," he said.
The company said it will study consumers' needs and listen to their requirements, at the same time launching new offerings every six months.
Mio Technology is a subsidiary of Mitac International Corp set up in 2002 to distribute latter's Mio-branded products. Currently, Europe is its largest export market in terms of quantity for handheld devices.
"Sixty percent of the largest GPS market falls in Europe," he said, adding that the mature market is the reason why Mio Technology has a firm foothold in.
On the other hand, Taiwan and Korea are the single markets showing the highest performance to the company.
Hsu quoted technology research firm International Data Corp's data by saying that Mio Technology was the No. 1 player in the handheld device market in Korea last year.
Earlier reports said that the company acquired 49 percent of the Korean PDA market share last year after rolling out its first product in the first quarter.
Even though it attempts to gain a firmer grip in the China's market, its expansion was limited due to the immature GPS market and lack of good map systems, added Hsu.

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Side bar:

Mio Technology to highlight Mio268 at Computex Taipei

This will be the first showing by Mio Technology at Computex Taipei, the second largest computer show in the world to be held from May 31 to June 4, at the Taipei World Trade Center.
"With this event, we will not only talk to the distributors, but will also interact with the consumers to find out what they have in mind," informed Michael Hsu, its marketing director of brand marketing division.
With a sleek, smooth, flat body and fully integrated GPS antenna, Mio268 is a GPS device fitting in a user's pocket.
No installation is required and users can just put the included memory card with maps into the SD card slot to operate the gadget.
It uses MioMap CE navigation software, which is based on Navigon's Mobile Navigator 4. The user-friendly interface, with both touch screen and hardware buttons, has been created with simplicity in mind, said the company.
When users are not using the Mio268 to navigate, they can use it to tune into their favorite music. MP3 player software comes pre-installed, all users have to do is pop in an SD or MMC card with their MP3 files and press "play".
Ideal for cars, it is equally effective whether users travel on foot, by cycle or even on a motorbike. And thanks to its large battery, Mio268 provides 4.5 hours of navigation on a single charge.

TAITRA targets to set up 5 procurement sites

The Taiwan External Trade Development Council (TAITRA) is aiming to put up at least five procurement websites for international buyers on AMPA Online by the end of
this year.
According to Donald Lu, director of Trade Net Center, the council will target large-scale international buyers attending TAIPEI AMPA this year to sign up for the service.
These potential buyers include Delphi Automotives Systems from Brazil, Kirchhoff and Johannes J. Matthies from Germany, Inter Cars from Poland, Auto
from the U.S., as well as REPCO, Air International Seating and Air International thermal from Australia.
They are giving procurement seminars throughout the four-day AMPA.
According to Lu, TAITRA has similar procurement sites set up for 3C and electronics industries in the past. It has successfully facilitated the procurement needs for American 3C chain stores and Japanese electronics vendors.
As such, TAITRA intends to replicate these successes to the auto accessories industry in Taiwan as well.
He informed that a top-five online after sales player in the U.S. will the first buyer to sign up for this service, and discussions are currently underway.
AMPA Online (http://ampa.taiwantrade.com.tw) is an electronic marketplace formed by TAITRA and Taiwantrade, Taiwan's national trade e-portal, for information exchanges between overseas buyers and Taiwanese suppliers.
Registered members can retrieve suppliers' details, make private quotation inquiries, request product clarification and post public offers on the website, all for free.
For the international buyers registering for the extra service, TAITRA will set up a dedicated procurement website for them on AMPA Online.
These buyers can post their specific procurements needs, and TAITRA will play a role of filtering out the most suitable Taiwanese suppliers. It will then send the product specifications, quotation and other information of the suppliers to the buyer for further selection.
"This will be a great platform to promote local suppliers to the global buyers," stated Lu.
The service is free till the end of the year, however, local suppliers will have to pay a small fee starting from next year.
For more information, please email ampaonline@taitra.org.tw.

Kingston pushing digital media products for expansion

By Jason Tan
The China Post

Kingston Technology Company Inc. is aiming to double its digital media product volumes in the Asia-Pacific this year.
The company started to venture into the digital media business in 2003 and launched related products last year.
Kingston's digital media offerings consist of compact flash cards, secure digital cards, multimedia cards, universal serial bus and others.
Though only new to the field, it managed to achieve US$400 million of revenues and 350 percent year-on-year growth last year, informed Scott Chen, vice president of APAC business division of Kingston.
"We have been in the memory module business for the past 18 years and we entered the digital media market at the right timing. We hope to achieve solid lead in this field as in the memory business that we did," he said.
Kingston is said to be the world's largest manufacturer of memory modules, which can be applied to personal digital assistants, digital cameras, laser printers, routers, workstations, servers or more.
Currently, memory module business still contributes a big chunk of 70 percent to the company's total sales; whereas, digital media lineup offers 30 percent.
However, Chen estimates that over the next two to three years, digital media products will be able to catch up and both business units will be reaching a 50:50 ratio.
As such, Kingston will not stop going after the entire digital media market for expansion, he added.
"The market is big enough for players. We will stand out with good quality, services and competitive pricings as a whole package," Chen claimed.
He added that Kingston will thus utilize existing resources of the memory business, including channels, facilities and sales, to further push the digital media business to increase business growth.

Potential in China, India

In terms of the whole Asian region, Kingston sees that as Southeast Asia has been performing steadily, more expansion potential will be coming from China and India.
To date, China supplies 40 percent to its Asian revenues as the huge market has a large consumption demand. Whereas India is a market it just started and intends to make further inroads.
Kingston, which stepped into Asian market some five years ago, will have its largest manufacturing plant scheduled to operate in Shanghai this June or July.
"The old factories simply can't accommodate the demand. The new plant will boost a total capacity in China to five to six million units per month," he informed.
After the operation, the Shanghai plant will be assigned with tasks of manufacturing around 60 percent of Kingston's worldwide parts.
And the company's ambition does not stop here.
For this year, it expects to achieve worldwide growth of 25 percent. "We expect to continue the momentum and get more market share," Chen summed up.



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Side bar:

Kingston to unveil products at Computex Taipei

Kingston Technology is slated to present a full range of memory products that reflect its technologies at Computex Taipei, from May 31 to June 4, 2005.
The product lineup will showcase Kingston's proprietary memory, ValueRAM and digital media products.
Its memory products which will be showcased include DDR2 667MHz, 533MHz 2GB Kit and the 400MHz 2GB Kit.
Kingston's HyperX product line targets gaming enthusiasts and expects to deliver faster, better action and higher performance of computer gaming devices such as HyperX DDR2 533MHz, 675MHz and 750MHz.
In terms of digital media products, Kingston will highlight MMCmobile and MMCplus cards, larger-capability and higher-speed standard MMC, SD and Reduced-Size MMC cards, and other best-selling products.

Yahoo! Kimo aims for more ad growth this year

2005/3/26
By Jason Tan
The China Post staff

Yahoo! Kimo, the island's largest Web portal in terms of traffic and membership, expects its online advertising business will further grow 40 percent this year.

One of the drivers lies in the pay-search business model, where advertisers will have to pay fees to get their Web pages listed on top positions of the search results, said Rose Tsou, its managing director.

The company has already been one of the top 15 advertisement firms in Taiwan, and it has geared up to further increase the ranking.

According to Tsou, Yahoo! Kimo's e-commerce business, which consists of online shopping and auction activities, will also report promising results this year.

Its total value of transactions was NT$15 billion in 2004, and is slated to further expand 40 to 50 percent in 2005.

In addition to the popular online shopping and auctions, Tsou said that e-commerce segment can be further tapped onto as people will also start buying digital products in future.

"Our goal is to differentiate Yahoo! from the competitors with an leading set of products that are easy to use, personalized and community-centric," said Yahoo! chief operating officer Daniel Rosensweig, in a media gathering marking Yahoo! 10th anniversary yesterday.

Asia is the fastest growing region of Internet users, and Yahoo! aims to set a stronger foothold in the Greater China region, he informed.

Currently, Taiwan is its third largest market, after China and India.

With this in view, he said that Yahoo! will continue to invest "heavily" in Taiwan as well as recruit top talents over the next few years.

Tsou added that the company looks set to hire 40 more staff this year, especially demanding quality engineers. This will make the Taiwan's staff strength reaching around 340.

Meanwhile, another online portal, PC Home Online, foresees that its e-commerce segment will continue to be its main revenue driver this year.

E-commerce contributed 88 percent to PC Home Online's overall revenues last year and it is expected to be the same in 2005, its marketing director Vicky Tseng told the China Post.

She said there are now over two million Internet shoppers--a fifth of the total Internet population, thus the market has more room to grow.

Since last August, the portal recorded over NT$0.2 billion revenues for e-commerce business nearly every month. Online shopping forms the largest base of its e-commerce segment as it does not charge fees for the auction activities.

PC Home Online recorded total revenues of close to NT$2.5 billion last year. Its January and February's sales were growing compared to the same period of last year, added Tseng.