February 15, 2006

China defends Internet controls & AOL launches new Chinese site

Filed under: Regulatory — Administrator @ 9:06 pm

New York Times reporter Joseph Khan reports on comments made by Liu Zhengrong, Head of Internet affairs for the information office of the Chinese State Council, regarding China’s control over the Internet:

“If you study the main international practices in this regard you will find that China is basically in compliance with the international norm,” he said. “The main purposes and methods of implementing our laws are basically the same.”

“Major U.S. companies do this and it is regarded as normal,” Mr. Liu said. “So why should China not be entitled to do so?”

AOL launched its new Chinese portal over Chinese New Year targeting Chinese living in the US – we tried the search feature from Beijing and there doesn’t appear to be any blockage of information.

The timing of the launch is interesting – perhaps a marketing ploy set at distinguishing themselves from Google, Yahoo! and MS – the difference being, AOL servers seem to be hosted State side. No street cred there, AOL.

Most of the commentary we’ve read applauds AOL’s open search, proclaiming “…companies have choices…despite what they may claim…” but this is just ignorant and misses the bigger picture – AOL can’t make it in China and they realize this (otherwise, why they are targeting US based Chinese when ever other US portal/search is in China?)

First rule of doing business in any foreign country (for example, China) is localizing, working within the system, sticking out performance wise, yet remaining under the regulatory radar (as much as possible). AOL recognizes that if they rolled out a meaty China operation (not as Time-Warner, but as AOL the Internet play), such as Yahoo!, Google, and MS have, odds are extremely good that their search parameters and content would echo that of the big three.

(on the soap box)

We aren’t here to defend China, but rather to provide some perspective – which, by being on the ground for over a decade, is somewhat clearer than pundits across the pound. China is an amazing, frustrating, backwards, confusing, quagmire of conflicts, resolutions and more questions but at the end of the day what truly separates the success stories from the failures is sustainability and adaptability (i.e. frequent trial and error) to China’s evolving landscape and power plays. That is why a quality/gritty/grounded management team is more important than the size of the market or uniqueness of IP – other investors feel differently, but we don’t.

(off the soap box)

February 14, 2006

New congressional bill would keep servers out of China

Filed under: Regulatory — Administrator @ 12:19 pm

We have tried very hard to avoid talking about the “Google & China Issue” but in light of last night’s USA Today article about the new bill drafted by US Representative Chris Smith (R-N.J.) we couldn’t hold our tongue any longer.

Rep Smith seeks to…

…force Internet companies including Google, Yahoo and Microsoft to keep vital computer servers out of China and other nations the State Department deems…

We don’t understand the fallout over this issue — the rules of doing business in China have not changed in decades — why the sudden drama!?

If you think about it, is there any difference between what China is asking Google to do and what this new congressional bill seeks to do?

To be honest, we think the US would be better served if Congress worked to protect US corporate IP…

February 13, 2006

Popular vblogs and Internet sites using ebay to sell ad space….

Filed under: E-commerce,Social Networks,Video/Film,Web 2.0 — Administrator @ 12:51 pm

First, the creator of the MillionDollarHomepage went to ebay to auction off the last 1,000 pixels which sold for US$40,000

And, now it is RocketBoom’s turn…

Nokia expected to roll-out TD-SCDMA offering…is a decision on 3G licensing close at hand?

Filed under: Wireless — Administrator @ 11:40 am

Back in November 2005, Nokia Greater China customer service and marketing SVP Zhao told Beijing Star Daily that Nokia was considering a move into TD-SCDMA handsets. Yesterday, Sohu.com reported on Nokia’s 2006 China Strategy, specifically noting Nokia’s move into manufacturing TD-SCDMA handsets.

Obviously, this isn’t earth shattering news (Motorola and Siemens have already moved in this direction), however it does provide another piece to the 3G “when will we get a decision on licensing” puzzle — in other words, if Nokia has spent the past four months chatting up their TD-SCDMA handsets then it is a good bet they had some “information” others might not (i.e. we might be closer to 3G “go” time then we think). As such, we’re revising our 3G licensing decision timeline from Q107 to Q306.

A small ancillary benefit from Nokia’s move into TD-SCDMA is that it should expedite the development of TD-SCDMA handsets with their massive R&D teams and experience in commercializing new technologies.

It will be interesting to watch what comes out of the 3GSM World Congress over the next several days regarding the 3G licensing decision in China.

UPDATE (2/14):
Today, Sina.com noted the 3G royalty negotiation between the Chinese government and Qualcomm has run into a stalemate. This negotiation is carried out by the Ministry of Information Industries on behalf of all Chinese vendors, covering TD-SCDMA, WCDMA, and CDMA 2000.

February 12, 2006

Interview with Chris Early, Studio Manger for Microsoft’s Casual Games Group

Filed under: Gaming,Loyalty — Administrator @ 5:31 pm

Chris Early, Studio Manager for Microsoft Casual Games Group talks with gaming blog Joystix about challenges facing casual gaming and how MS is working to bridge the gap between console players and PC players.

One of the big challenges that–not just Microsoft–people have been working on for years in the online community space is “how do you allow consumers to differentiate themselves? “Because you and I, when we both log in, we are essentially the same, right? In that digital world we’re just a collection of bits.

How do we begin to establish different identities and differentiating ourselves becomes a key element to the community? One of the ways is by allowing people to pick their own avatar and self express in some forms. But another way is to allow people to earn and achieve those differentiators and have that be part of something you can be proud of and show of:

“In fact I am different because even though we may have picked the same avatar and remarkably similar name, I am clearly a much better Geometry Wars player or pick the game player because my score’s higher or I’ve earned more badges or because whichever method you want to go to.” Differentiation ends up being key.

February 11, 2006

Bye Bye Email Marketing, Hello RSS

Filed under: Direct Marketing,Web 2.0 — Administrator @ 8:52 pm

Steve Rubel is SVP at NYC based PR firm Cooperkatz agrees with us that RSS is the New New Thing in direct marketing:

That’s all folks. The door has officially closed on email marketing. Maybe this will drive more companies to start up opt-in RSS feeds and blogs that facilitate dialogue.

And so does Polarman:

Fred, please change the business models from email to RSS. It’s time Email gives way to RSS. Everything that a email delivered service can do should be done by RSS.

But, Elliott Ng, an Executive at Intuit, gave us a different opinion:

I think RSS itself is a feature, but the larger story is about how customers and companies engage with each other, and how companies have a difficult time managing those dialogues.

Regardless where you stand on the RSS v. Email marketing debate (if in fact there is one and we aren’t making a mountain out of a, well, non-issue) one thing is certain: RSS marketing will have a major impact in China where two of the largest email service providers, 163 and Sina, already block thousands of smaller email servers — some good (permission based marketing) and some evil (spammers) — getting your company off their black lists and onto their white lists reeks of favoritism…

All content will be FREE within 5 years…

Filed under: DRM,Music,Regulatory,Video/Film — Administrator @ 7:06 pm

A couple days ago, HBO (Home Box Office) petitioned the FCC (Federal Communications Commission) in the United States to prevent consumers from recording their content (Subscription Video On Demand) – either with a VCR, DVD, or TiVo device. Sure this doesn’t have a direct impact on those of us living in Hong Kong and China – where HBO doesn’t have the traction it has in the US – yet HBO is representative of the losing battle the incumbents (broadcast networks) fighting – and losing dearly.

My general thesis is that all content will be free in the very near future and that DRM (Digital Rights Management) is not a sustainable technology. I’m not supporting piracy; I just believe it will be very difficult to generate any revenue from content alone. Where the money will be made is on product placements and side promotions, for example. Listed companies, such as Tom.com are spending a lot of money in rights to content that they won’t be able to control – in other words, their business strategy is dead wrong.

The companies that will be the winners, the next Google, will be the companies that develop technologies to harness, distribute and monetize this free content. Yahoo, for example, if a big buyer of networks and page views (note its purchase of Flickr’s 8 million users); yet they are not a buyer of technology…

The reason I believe this sector (e.g. BitTorrent) is a massive opportunity for start-ups is simply because there is: (1) demand, (2) users, (3) exits. The “demand” and “users” are clearly defined, but the “exits” – how will they come? I believe “exits” will come from the major portals, such as Baidu, Sina, and Tencent. The reason is simple: these listed companies can’t develop this technology in-house, but it isn’t because they don’t have the capability, it just that they can’t be seen publicly supporting file sharing, for example.

This is why technology start-ups (in this space), especially in China and Hong Kong, are so attractive (at least to us) and why we believe the next MONSTER company will come from this space.

February 3, 2006

Pulse Points…high-speed, localized, WiFi access sites

Filed under: Direct Marketing,Wireless — Administrator @ 7:22 pm

From my hometown, Boston (USA), comes “WiFi Pulse Points”, the Boston Globe writes:

They allow individuals [with wireless] to connect to a network, but not to the Internet or e-mail. Rather, these Pulse Points connect individuals to their location—and each other. They create a “situational community” of people who are connected simply because they are in the same place at the same time.

Content, content, content…

February 2, 2006

Vblogs…getting sophisticated and “Booming” on TiVo

Filed under: Video/Film,Web 2.0 — Administrator @ 2:19 pm

Some amazing developments in video blogging (vblog) over past year. We’ve mentioned vblogs a couple times in the past months, including China based Toodou.com — the following two sites are worth mentioning:

FireAnt (it’s a portal that syncs to almost any device)

ApolloPony (suggest watching Game: On Mashima)

In fact, one vblog out of New York City, RocketBoom, has moved from the web to the TV, or rather, to TiVo

And then again, this shouldn’t be all that much of a surpirse given Yahoo’s partnership with TiVo back in November 2005…

To all the China-based entrepreneurs — we are putting you on notice: The learning curve is moving quickly, as are expectations — this time around there will be no room for excuses, such as “we are a developing country…”

Major League Baseball (USA) is using RSS feeds for direct marketing…

Filed under: Direct Marketing — Administrator @ 12:21 pm

For the record, we’ve been in favor of leveraging RSS feeds for “permission based” direct marketing for some time. This is what they’re doing at 1Diantong, a Shanghai based direct marketing/loyal start-up.

However, not everyone is happy that advertisers are piping marketing down RSS, for example, Joanna Hicks, a blogger running Empyreal Environs, is a bit, well, pissed-off at Major League Baseball (USA) for taking “advantage of RSS for advertising purposes“.

Okay, I can understand that unwanted adverts are intrusive (that’s why I don’t have any on my site), however to say RSS, as a channel, should not be used for direct marketing is going too far.

Pumping permission based marketing campaigns through RSS feeds is brilliant, especially when organized in an aggregator, such as NewsGator. Think of how an OPML Reading List is organized – same same but slightly different…

AOL, Yahoo, Goodmail, and email spam…TAKE 2!

Filed under: Direct Marketing — Administrator @ 9:04 am

Two days ago, we touched upon AOL and Yahoo’s move into paid email spam with Goodmail — as a follow-up, today, Brad Feld from Mobius Venture Capital talks about this as well — his post is a bit more detailed and insightful.

As a word of caution, Brad is an investor in Goodmail’s competitor, Return Path. Things are spicing up!

February 1, 2006

Gaming at any cost…or…at any profit?

Filed under: Gaming — Administrator @ 4:42 pm

CNN reports that the Los Angeles attorney’s office has sued the makers of highly popular “Grand Theft Auto: San Andreas” for allegedly hiding mature material inside the video game, officials said.

Since being introduced in 2004, Grand Theft Auto has sold more than 13 million units, generating about $700 million in retail sales. Compare this to China’s gaming industry (year-end 2004) which generated US$391 million, of which Shanda and Netease accounted for 39% and 19%, respectively. Morgan Stanley sees China’s gaming revenues expanding at a 3 year CAGR of 37%, eventually reaching US$1.8 billion by 2010.

Okay, so what is your point? Why bring this up? If Grand Theft Auto, a single game, can generate over US$700 million (a little less than half of Morgan Stanley’s 2010 China gaming estimate of US$1.8 billion) in less than two-years, it might be safe to say that as China’s gaming industry matures we can expect even more impressive numbers coming out of China (i.e. Morgan Stanley is low balling it) — furthermore, over the next several years, I believe the line between what is acceptable and what is not acceptable (i.e. mature content in video games) in the “Gaming Universe” will continue to blur — especially given Grand Theft Auto’s success (i.e. give the public what they want, not what is good for them)…

As a final point, I’m not condoning the mature content embedded in Grand Theft Auto, but there is no denying that this is big business, and if mature content sells, well, most likely it is here to stay (whether hidden or not). It is going to be interesting to see how this develops in China — where major Internet and mobile companies earn over 50% of their IVR revenues from mature content — from both a regulatory (the State) and a moralistic (the Investors) standpoint…

January 31, 2006

Last.fm Player – custom radio station

Filed under: Music,Social Networks,Web 2.0 — Administrator @ 10:12 pm

Last.fm is a great Web2.0 example – social networking, tagging, free, user generated playlist…

Last.fm is the flagship product from the team that designed the Audioscrobbler system, a music engine based on a massive collection of Music Profiles. Each music profile belongs to one person, and describes their taste in music. Last.fm uses these music profiles to make personalized recommendations, match you up with people who like similar music, and generate custom radio stations for each person

Truth be told, the Last.fm’s Player is a bit, well, weak, but, that aside, I’m really happy with the music I’m getting pushed, for example: Laura Pausini’s “Viveme”; Jurassic 5’s “Hey”; and Long Beach Dub All Stars’ “Kick Down”.

There’s a lot of talk about increasing royalty payments for streaming services – we’re not sure if this would be the best move given the weaker economics (at least, with early adopters) of web streaming v traditional radio – what we’d like to see would be some type of blanket licensing – thus allowing for numerous subscription opportunities/possibilities.

Are AOL and Yahoo killing off permission based marketing?

Filed under: Direct Marketing — Administrator @ 9:30 pm

Today, Kevin Newcomb wrote a ClickZ article (okay, its a press release) titled “AOL to Implement E-mail Certification Program” discussing how AOL will implement Goodmail’s cryptographic CertifiedEmail program and phase out its IP-based Enhanced Whitelist (which is, more or less, reputation based).

In October, Yahoo said they too would roll out Goodmail’s product.

This sort of gets away from the whole permission based marketing thing, doesn’t? I can only see this as a bad thing moving forward for both consumers and the industry…

January 30, 2006

What does Shanda’s and Yolo partnership reveal about China e-commerce universe?

Filed under: E-commerce — Administrator @ 1:59 pm

Last week, news hit that Shanda is partnering with Hong Kong listed electronics retailer Yolo to distribute Shanda’s EZ series of home entertainment products got me scratching my head (again) about the present and future of e-commerce in China, specifically, where is it going?

Consider the Shanda and Yolo relationship:

(1) Shanda is one of the largest web based companies in China with a hyper active — first adopters of e-commerce — and loyal customer base, and yet they’ve been unable to successfully sell their EZ home entertainment products via Shanda’s platform

(2) Shanda has structured a deal whereby Yolo will not only subsidize EZ Pod purchases (RMB200 below sticker price), but also share revenues from EZ Pod (i.e. fees generated from paid subscriptions)

So the question is, why is Shanda moving offline (and asking Yolo to subsidize EZ Pod) when they have a captivate audience, solid branding, traffic, and a solid payment platform in place (could you ask for a more fertile e-commerce environment)? And, what does this say about the future of e-commerce in China (ex-out gaming and mature content)?

I have some ideas, but I’ll leave it up you, the reader, to fill in the blanks…

January 25, 2006

Managing CEO Transition in Venture-Backed Technology Companies

Filed under: Start-up First Aid — Administrator @ 8:07 pm

Yesterday’s, Asian Wall Street Journal ran a story by Rebecca Buckman discussing the new white paper published by US-based venture capitalist Pascal Levensohn titled, “Rites of Passage: Managing CEO Transition in Venture-Backed Technology Companies”. It is definitely worth a read.

2006 not breakout year for e-payments in China says, 99Bill / SmartPay / Yide.com

Filed under: Technology — Administrator @ 11:52 am

Sage and his team from Pacific Epoch did a great job organizing last night’s talk on e-payment universe in China – unfortunately, the three panelists (99bill / Smartpay / Yide), while nice guys, were about as interesting my 5th grade Latin teacher.

In hindsight, as I review my notes, I realize that their lethargic attitudes totally reflects their universal opinion of the China e-payment and e-commerce environments in 2006 – FLAT!

To be more exact, I think the boys on the panel harmonized that “…2006 was not going to be the breakout year for e-payments in China…” and the “…e-commerce would likely not gain traction until specific regulations are relaxed and customers learn to trust online retailers…”

My general China e-commerce thesis assumes the catalyst sparking e-commerce/e-payment’s break out (i.e. fantastic rampage) will be when vendors start accepting returns and replacing broken products. If you look at the US model, for example Best Buy (who operates stores in China), I whole hearted believe their value add to the customer goes beyond “pricing” — quite simply it is customer service (including knowledgeable staff and after-service support).

This model doesn’t exist in China (or Hong Kong, for that matter) but it should — manufacturers need to make retailers more accountable for the products they sell — this would not only improve overall customer experience, but also demonstrate a certain level of “buy-in” from the vendor with regards to building a long-term relationship with their customers – (i.e. TRUST)!

With that said, there were some interesting “bits, pieces and sound bites” that are worth noting. I’ll list them in a Q&A format:

Q1. How many users has your company signed up?

(a) 99bill: 4m
(b) Smartpay: 500k
(c) Yide.com: 600k — also, 65% of all Yide transactions are conducted through an e-payment provider, this is up from 40% in 2004

Q2. What % of China’s Internet users purchase goods/services online (e-commerce)?

(a) 99bill: Latest data reveals 15-20% of all Internet users

Q3: What are the major obstacles confronting e-payment moving forward?

(a) 99bill: (i) consumer trust, (ii) logistics, and (iii) weak user experience
(b) Smartpay: (i) government regs
(c) Yide.com: (i) size of transactions limited to RMB1,000/day, yet Yide’s average order is about RMB1,200 – to process this order, Yide is must split the transaction into two

Q4: After mature content and gaming, what is the most popular good/service purchased online?

Split between clothing and jewelry

UBS Greater China Conference: Core 3G Findings

Filed under: Wireless — Administrator @ 11:14 am

Last week, I attended the UBS Greater China Conference in Shanghai. UBS does a nice job keeping this conference focused and intelligent. Ymer hasn’t touched too much on the status of 3G in China, but given the fact that all “big four telcos” (China Telecom / Netcom / Mobile / Unicom), as well as Huawei, Datang Mobile, and Spreadtrum were at the conference, perhaps this is a chance to reveal what was reported (nothing overly dramatic, mind you, hold onto your hats):

(1) Most agree China will issue 3G licenses this year — likely in 2H06.

(2) Most companies are expecting three licenses, which means some restructuring is needed among the Chinese telcos — this is old news, though.

(3) Maturity of TD-SCDMA is the biggest bottleneck today — again, the market assumed this was the case for sometime — the government’s licensing decision will largely be dependent on the maturity of this technology. The next stage of TD-SCDMA trials is critical in raising overall confidence in this technology which is expected to be completed at the end of 1Q06.

The upside — the fact that my Dopod 818pro isn’t 3G compatible won’t be an issue for at least another year…

January 24, 2006

Intellecutal Property, Starbucks, KitKats & Paula Abdu

Filed under: Marketing,Regulatory — Administrator @ 3:16 pm

Earlier this month, Starbucks won its copyright infringement case against Shanghai Xingbake Cafe Corp. Ltd. — surprisingly, Starbucks is the first international company to prevail under a 2001 Chinese law meant to protect well-known international trademarks. According to a report on Yahoo! Finance:

A Shanghai court ordered Shanghai Xingbake Cafe Corp. Ltd. to stop using the name Xingbake, the name used in Chinese by Starbucks Corp. “Xing”, pronounced “shing,” means “star” in Chinese, and “bake”, or “bah kuh,” sounds like “bucks”.

This news, while very encouraging (big thumbs up to judge Lu Guoqiang), is chronically overshadowed by daily reminders of blatant IP infringements, such as the photo I took this afternoon of my favorite candy bar, KitKat:

KaKes is manufactured by Hongyi Food — I couldn’t bring up the website so I don’t have much information to report back, my bad.

Anyhow, in the words of the incomperable American singer and dancer, Paula Abdul “…[we] take-two steps forward, [we] take-two steps back…”

January 23, 2006

NEW! Prepaid mobile numbers guaranteed for life in India

Filed under: Wireless — Administrator @ 10:20 am

Shailendra Bhatnagar, a writer for Reuters, reports that Indian mobile phone companies are taking cheap handsets and life-time prepaid services to India’s hundreds of millions of low-income earners ; the new service guarantees a number for life for just over $20. In the past, a prepaid number would cease to exist if it was not topped up after a certain period of time.

Less than 40 percent of India’s total area is covered by mobile networks, and fewer than 8 in every 100 Indians use mobiles — compare this with China where 30 in every Chinese use a mobile — sort of amazing how far China has come in such a short period of time…

What is also amazing is how fast technology becomes a commodity — even in a country like India with a lower mobile penetration than China (i.e. so much growth potential), carriers are forced to slash prices and design creative marketing campaigns — makes you rethink some of those business plans touting “breakthrough proprietary technology” as the core barrier to entry?!

So really, at the end of the day, I guess it does all come down “stuff” like controlling a proprietary network/database, branding, team and yes, execution. Funny ol’ world, ain’t it?

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