Shipments of smartphones in Japan will surge 190 percent on the year to 6.75 million units in fiscal 2010, said the MM Research Institute. The research firm had earlier estimated domestic smartphone shipments at 4.4 million units for that year, which ends March 2011. It has upgraded the figure by roughly 50 percent because smartphone sales remain strong, with mobile phone carriers planning to release a total of nearly 20 models between year-end and next spring. Smartphone offerings will likely continue expanding in fiscal 2011. At KDDI (OTCPK:KDDIY), such phones are seen to constitute half of its new products. Domestic shipments in fiscal 2011 are forecast at 15.45 million units -- 6.6 times the fiscal 2009 figure. The MM Research Institute believes that domestic shipments of smartphones will exceed those of ordinary handsets in fiscal 2012. By fiscal 2015, smartphone shipments in Japan are projected to hit 24.1 million units. Apple's (NASDAQ:AAPL) iPhone dominated the smartphone market in fiscal 2009, with its share reaching 72.2 percent. But the institute sees the aggregate market share of smartphones running Google's (NASDAQ:GOOG) Android operating system topping the iPhone's share this fiscal year.
Kenji Kasahara, President of Mixi Inc. said its website is better suited to domestic users and personal data is more secure than Facebook. Mixi is adding games and expanding to smartphones to revive earnings after profit declined for three of the past four quarters. Facebook Chief Executive Officer Mark Zuckerberg said the company hopes to extend to Japan and Russia this year. Mixi declined 71 percent since its initial public offering in 2006. The company competes against Gree Inc. and News Corp.’s (NASDAQ:NWS) MySpace. Closely held Facebook introduced simpler privacy controls in May and said it was reducing the amount of user information that’s publicly available after lawmakers and advocacy groups complained that the service shares too much personal data.
- Toshiba (OTCPK:TOSBF) will spend around 100 billion yen (US$2 billion) to build a factory for small LCD panels, with a large portion of its output earmarked for Apple iPhones. Wholly-owned subsidiary Toshiba Mobile Display will construct the facility on a parcel owned by the Toshiba group in Ishikawa Prefecture. Using 1,100mm x 1,300mm glass substrates, the plant will churn out low-temperature polysilicon LCD panels. Production will start in the second half of 2011. Toshiba Mobile Display is already making low-temperature polysilicon LCD panels at a facility in the prefecture. Its monthly production capacity, which stands at 8.55 million units, is projected to at least double once the new factory comes onstream. Apple will fork over a portion of the roughly JPY 100 billion (US$1.2 billion) investment for the new factory.
Media, Entertainment and Gaming
- Namco Bandai Holdings Inc. (OTC:NCBDF) will shift the development of new titles back to Japan after half of its software was unprofitable last year. The company joint ventures with Capcom Co. and will develop new titles domestically after several major overseas releases failed to reach the 1 million sales mark. Namco Bandai will see overseas sales surge to half of its total in the year ending March 31, 2016. Sales of titles for Sony’s (NYSE:SNE) PlayStation 3, Microsoft’s (NASDAQ:MSFT) Xbox 360 and Nintendo’s (OTCPK:NTDOY) Wii consoles overseas will climb 56 percent to 5.9 million units in the year ending March 31. Domestic sales will decline 14 percent to 3.3 million units. Namco Bandai’s “Clash of the Titans” for PlayStation 3 and Xbox 360 sold 250,000 units as of Oct. 31, less than half the company’s target of 700,000. The game had a review score of 42 on the website Metacritic.com. Capcom will be stricter in quality control of overseas projects after its “Bionic Commando” and “Dark Void” games failed to capture the interest of the audiences. The company counts on Japan for at least 65 percent of its annual revenue.
Square Enix Holdings Co. (OTCPK:SQNXF), the Japanese creator of “Final Fantasy” game series cut full-year profit forecast by 92 percent. Net income is expected decline to 1 billion yen (US$12 million) in the year ending March 31 due to the delay in releasing “Final Fantasy XIV” online game for Sony’s PlayStation 3 and “Deus Ex” title for the PS3 and Microsoft’s Xbox. Japan’s largest maker of role-playing video games is predicting its smallest annual profit since 2003, when the company was formed after the merger of Square Co. with Enix Corp.
- KDDI Corp. has invested in U.S. Financial services firm Microfinance International Corp. to begin international remittance services. The company paid US$22.05 million to acquire 20 percent of the voting rights in the Washington-based firm. Founded and headed by Atsumasa Tochisako, Microfinance provides financial services to immigrants in the U.S. a KDDI subsidiary offering mobile phone services for immigrants in the U.S. will begin marketing a prepaid card for remittances at local grocery stores and other shops. Cardholders can use the card to request Microfinance to transfer funds to bank accounts of their family members back home. A 2 percent to 2.5 percent fee will be charged. The two firms will release similar services for foreigners in Japan, including Chinese and Latin Americans, next fiscal year.
KDDI has signed a definitive agreement to acquire Taiwanese online music provider KKBox, from Skysoft which currently owns 100 percent of the company. Under the agreement, KDDI will purchase 76 percentage shareholdings in KKbox on 24 December while the management team continues to own the remaining 24 percent of the company through Skysoft. After the completion of this acquisition, KKbox will become a consolidated subsidiary of KDDI. KKbox provides a multi-device digital music service which is accessible from such devices as PC, smartphones and mobile phone in Taiwan and Hong Kong. KKbox provides service for at least 7 million users in Taiwan and customer base in Hong Kong is on the increase.
- Jupiter Telecommunications (OTC:JUPIF) ended November with a total of 3.41 million customers, up 4.5 percent year-on-year. Combined revenue generating units (RGUs) for cable television, internet access and telephony services reached approximately 6.31 million, up 6.7 percent since end-November 2009, and the bundle ratio surged to 1.85 from 1.81 a year earlier. J:Com's television subscriber base stood at 2.675 million in November, up from 2.593 million in November last year. Of the total, 2.668 million are digital television subscribers. The number of internet subscribers surged to 1.684 million from 1.575 million, and the number of telephony customers surged to 1.95 million from 1.746 million a year earlier.
According to the Nikkei report, major foreign telecommunications equipment makers are to purchase shares in a PHS affiliate of Japanese operator Softbank (OTCPK:SFTBF). The Softbank affiliate Wireless City Planning was established to take over next-generation PHS service operations that utilize the XGP (Extended Global Platform) international standard from Willcom. At the end of the share placements, Softbank and investment fund Advantage Partners are expected to hold a 33.3 percent stake each. The five firms Ericsson (NASDAQ:ERIC), Nokia (NYSE:NOK) - Siemens (SI) Networks [joint venture], Alcatel-Lucent (ALU), Huawei Technologies and ZTE (OTCPK:ZTCOF) are to purchase the remaining interest in Wireless City Planning. The company will release a low-fee wireless telecommunications service that will offer a data speed of at least 100Mbps in fiscal 2011. The company aims to boost the service coverage to at least 90 percent of the population. Capital outlays for the service are estimated to come to around 100 billion yen (US$1.2 billion).
- LG Display Co. (OTC:LGERF) expects 3-D televisions to generate 10 percent to 20 percent of the global liquid-crystal-display TV market next year as companies unveil new, affordable models. Global shipments of LCD TVs may reach 250 million sets in 2011, Chief Executive Officer Kwon Young Soo said. Samsung Electronics Co. (OTC:SSNLF), Sony Corp. and Panasonic Corp. (PC) are anticipating the 3-D televisions will aid in reviving prices and earnings as regular televisions become cheaper. Shipments of LCD TVs might reach 185 million sets due to the demand in China, which surpassed the U.S. to become the world’s largest market this year, according to Shinhan Investment Corp.
- Youku.com Inc. (NYSE:YOKU) is planning to expand its market share by investing in content and technology and by targeting mobile video users, Chief Executive Victor Koo said. Youku leads a Chinese online video market. Analysts have forecasted this market to boom in the next few years as Internet penetration accelerates and advertisers spend more money online. But the company has yet to turn a profit and also faces intensifying competition. The China-focused company will not list outside the U.S. or to make acquisitions, Koo cited. Youku will now center on the Chinese market for the time being as it is still growing. The company may consider expanding overseas in the future, but likely not in the U.S. in the near term as the country is already home to large online video companies, he said. Youku's management will focus on the company's business and product model, not its stock price.
Tencent (OTCPK:TCEHY), one of China's largest Internet firms, launched QQ International 1.0 and aimed at foreigners living in China or people interested in becoming connected with the country. The development of the product came about due to China's growing international presence and as more foreigners have come to visit and study in the country. In China, QQ already dominates the instant messaging market, with more than 655 million active accounts, according to Beijing-based research firm Analysys International. This has given the QQ client a 76 percent share of the market. Tencent is also preparing to launch a new social network service for foreigners in China sometime in the first quarter of 2011.
China's home furnishing e-commerce web portal tg.com.cn said it received investment from Baidu Inc. (NASDAQ:BIDU), and the two would establish strategic partnership. Since its establishment in 2005, the e-commerce web portal has opened sub-websites in 28 Chinese cities. The e-commerce service provider took up 33 percent share in China's online house building material selling in 2009, and its market occupancy may reach 37 percent in 2010. Tang Hesong, general manager of the Investment Department of Baidu, said the company thought highly of the development of B-2-C in China, which has great development potential and sufficient room for growth. tg.com.cn as an industrial leader is completely in accord with the overall investment plan of Baidu (BIDU). Deng Jinhua, CEO of tg.com.cn, believes the cooperation will enhance the firm's advantages in developing users and expanding businesses, and further reinforce its leading position in the sector.
Search engine operators acquired a greater share in China's online advertising market in the first three quarters of 2010, according to market research firm Analysys International. Baidu, and Google China respectively ranked top two in the online advertising market with 30 percent and 10.7 percent share, and they were followed by Sina with 8.6 percent share. Market share of advertising operators, including Sina, Alibaba.com (OTC:ALBCF) and Sohu.com, generally kept stable. But market share of emerging Internet media, namely Youku.com, showed acceleration, and is seen to surpass that of NetEase.com (NASDAQ:NTES) and take a position in the online advertising market of China.
- China's mobile phone output might exceed 700 million and takes a 60 percent share in the global market in 2010, predicted Wang Xiang, senior Vice President of Qualcomm (NASDAQ:QCOM). The country's cell phone output peak is ignited by China's booming 3G mobile phones. The industrial added value for home mobile phone sector surged 37 percent on year in January-October of 2010, much faster than a 16 percent average for the industrial added value of national large scale industries.
China's gray-market mobile phone shipments are predicted to expand in 2011 at a considerably slower pace, according to iSuppli. China's gray-market mobile phone shipments will amount to 255 million units in 2011, surged 11.8 percent from 228 million this year. This compares to a rise of 43.6 percent in 2009. What growth there is in 2011 will be driven by demand from emerging countries as well as by declining average selling prices for gray handsets. After growing in 2011, the gray market will begin to decline in 2012. This is because gray market mobile phone suppliers will be unable to cut prices any further, even if they wish to win more customers in emerging countries. Suppliers also will find themselves competing with an increasing number of locally branded OEMs that provide better quality and after-sales service.
- According to the Chinese governments, China will continue to boost the rapid development of its telecommunications industry and construct key network infrastructure in its 12th Five-Year Program period (2011-2015). In the 2006 to 2010 period, China's telecommunications industry initiated 3G network construction and 3G business operations, promoted the industrialization and commercialization of TD technology, its own 3G standard, and moved further towards complete market competition. Main operating revenues of telecom business in China topped 860 billion yuan (US$129.2 billion) in 2009, the number of phone users reached 1.061 billion, and Internet user numbers hit 384 million. China had an 8.27 million km optical cable communications network, including 840,000 km of toll cables. The Chinese government issued the licenses for 3G mobile telecom business operation in January 2009, and 3G networks now cover the whole country. Investment in 3G services topped 160.9 billion yuan (US$24.2 million) in 2009, yielding GDP growth of 34.3 billion yuan (US$5.1 billion), and creating 260,000 jobs. A new economic paradigm based on information and telecommunications network is becoming a fresh driving force of the national economy. In 2008, the market size of Internet services approached 150 billion yuan (US$22.5 billion).
Media, Entertainment and Gaming
ZQ Game Technology secured 15.5 million yuan (US$2.3 million) in government subsidies for its three in-house developed 2D MMORPGs Xin Song Yan Yi, Meng Hui Shan Hai and Liang Jian Online, as well as for construction of an R&D center.
- The9 Ltd. introduced a 10 million yuan (US$1.5 million) dividend plan to attract the quality cell phone game developers and copyright holders. The9 said that the selected games, mainly based on Android and Java systems, will be marketed via the online shopping centers with China's three telecom giants, App Store within the numerous cell phones and other channels for mobile phone appliances. The9 will provide certain minimum dividends for developers of the games to be quoted on such online shopping stores as China Mobile's (NYSE:CHL) Mobile Market, China Unicom's (NYSE:CHU) Wostore and China Telecom's (NYSE:CHA) 189store.com. As for developers of other games selected, The9 will reward them with revenue dividends.
Amazon China Director Liu Qiang has resigned to join Shanda Interactive's (NASDAQ:SNDA) literature subsidiary Shanda Literature. Liu will be heading up Shanda's copyright operations center and its online library Cloudary.
Li Anke, formerly general manager of Kingsoft's Lijian Studio, along with 30 Lijian employees, has joined Tencent invested webgame developer and operator Beijing Manyougu Information Technology (youxigu.com). The studio was dismissed and merged into other studios earlier this year, Bianews.com cited.
- Linekong had year-to-date revenues of nearly 200 million in 2010, up 300 percent from the company's full year 2009 revenues. Linekong's in-house developed 2D MMORPG Journey to the West contributed at least half this years’ revenues, while the company's overseas game licensing segment contributed at least US$10 million. The company has licensed its unreleased in-house developed 3D MMORPG Warrior King, to operators in Europe, North America, Thailand, Indonesia and Singapore. Linekong has also licensed its in-house developed 2D kung fu-themed MMORPG Ashes of Time to a Taiwanese operator. The company is working on new webgames.
Ku6.com will supply film clips with original soundtracks to NetEase's online translation service Youdao. The company says the clips provide users with a richer visual and audio experience than existing online pronunciation services.
Baiyou Huitong Technology has secured US$10 million of first-round financing, but did not disclose the name of the investor. The company will use the capital to market new products and enlarge its development team. The company had revenues of approximately 95 million yuan (US$14.3 million) in the first eleven months of this year. The company’s games in commercial operation includeShou Xue Fei Teng, Long Teng Shi Jie and Qing Guo Qing Cheng, and the company will release novel adaptation Fanren Xiuxian Zhuan in the near future.
Shenzhen ZQ Game Technology (Zhongqingbao Network) has secured exclusive rights to operate 3D fantasy MMORPG Xuan Wu Hao Xia Zhuan, by InterServ International, in mainland China, ZQ Game cited. ZQ Game also will establish a game development subsidiary called Xueyu Network Technology in Shenzhen, Guangdong Province with investment of 9.5 million yuan (US$1.4 million).
AMD (NASDAQ:AMD) has appointed David Tang as senior vice president of AMD and president of AMD Greater China, effective 1 February 2011 and will be responsible for executing a single, integrated corporate strategy for all of AMD's business in the Greater China region. Prior to joining AMD, Tang worked as the group vice chairman of Nokia China and chairman, Nokia Telecommunications.
China is developing its own operating system similar to Microsoft’s Windows for national defense and personal computer makers. The application will “improve IT security level for China”, Chen Ying, software division director of the Ministry of Industry and Information Technology said. The operating system will be developed by Shanghai-based company, China Standard Software
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.