PacketVideo Announces Two-Way Videophone Software for Nokia Series 60 Smartphone Platform
Posted: 25-Oct-2004 [Source: PacketVideo]
[PacketVideo announces two-way real-time video telephony for the Nokia Series 60 smartphone platform.]

San Francisco -- Responding to increasing market demand for mass-market 3G handsets, PacketVideo Corporation today announced the availability of two-way video software for the Nokia Series 60 smartphone platform. PacketVideo's software enables users to make person-to-person calls showing live video images of both callers on the screens of their phones.

PacketVideo's 2Way software is a 324M 3GPP-compliant solution for real-time two-way voice and video conversations and video conferencing. It is based on PacketVideo's fourth-generation multimedia platform, developed and deployed in millions of mobile handsets worldwide. Two-way video calling has been deployed in mobile networks in Japan, Korea, Italy and the United Kingdom, and is widely regarded as one of the signature services to be provided over 3G mobile networks.


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Qualcomm, Microsoft Join to Enable Windows Media Streaming Capabilities for Wireless
September 27, 2004 (HONG KONG) -- Qualcomm Inc and Microsoft Corp announced that Qualcomm has licensed Microsoft Windows Media technology and will integrate the Windows Media Audio and Video Codecs into Qualcomm's Qtv video decoder solution.



Consumers will be able to play back and stream Windows Media Audio (WMA) and Windows Media Video (WMV) content on wireless devices integrated with the Qtv solution. Support for this capability in the Qtv solution will be available in the first quarter of 2005, beginning with Qualcomm's MSM6250, MSM6500 and MSM6550 Mobile Station Modem (MSM) wideband CDMA (WCDMA) and CDMA2000 1x EV-DO chipset solutions.

"By enabling our Qtv solution to play content encoded with the high-quality compression efficiencies of Microsoft's Windows Media, we are providing operators with access to new revenue opportunities through the deployment of rich multimedia services and our manufacturing partners with fully tested, fully integrated, differentiated solutions," said Luis Pineda, vice president of marketing and product management for Qualcomm CDMA Technologies.

The integrated MSM solutions will enable acceleration of Windows Media Codecs to provide superior decoding performance and lower power consumption, resulting in an enhanced user experience. This agreement leverages the power of the MSM chipsets with the flexibility of Microsoft's Windows Media Codecs to provide faster time-to-market for multimedia-rich wireless handsets.

Yahoo! Message Boards: VWPT

Re: Treasure (PART 1)
by: michael_tzez
Long-Term Sentiment: Strong Buy 10/05/04 01:57 pm
Msg: 100053 of 100095

I do not understand why you continue to bring up macromedia flash? This was your opening argument and you continue to hang on to it. Vwpt is not directly competing with flash. Vwpt actually plays and delivers .swf files (flash). I told you and I will say it again the vwpt plugin is far superior to the flash plugin. It is a fact. It is capable of doing so much more. And the autoupdate feature is not easy to come by otherwise flash would be doing this. Not only is it an auto update it is a seemless autoupdate. Not like the other programs that say updates are ready to be installed. It actually does it seemlessly. So quietly that most don't even know that it is on their computer. Like I said you need to learn more about it.

You and who ever else is interested to learn could start here:

http://www.emerging.com/road_show/closeup_viewpoint1.shtml

http://www.designinteract.com/news/10742.html

Understand that macromedia flash is a program that creates .swf files. There are many that do the same. If you want to discuss pure competition you are on the wrong board.
Here are the companies directly competing with your macromedia flash:

http://www.killersites.com/articles/newsletterArchive/Newsletter_Nov24_2003.htm

Like I said you do not know what you are talking about. You came to the board comparing flash to vwpt - Obviously you are clueless to what vwpt does. No offense but it is the obvious. So go and find your bashing post copy it and then go and post it on the adobe board. Go and save them from making the biggest mistake of their lives. lol. You came to this board to bash - you just did not have the proper tools. Sorry man. Do yourself a favor and buy vwpt. You will not regret it. Although that is what I think you were planning to do. You thought you were smarter then everyone and could make the stock price go down. LOL That shit really cracks me up. Bashers & Pumpers really need to smell the coffee. No one on these boards are captains to the ship. We are not even privates. We are passengers that can get on and off the ship when ever we choose. That should be your only focus(when to get on and off). You and no one on this board could sink the ship or sail it. You need money or news to do this. Don't even try to deny that you were being a sneaky fuck - why else post what you posted? Why come to this board to deliver a message like that? "Garbage part 1" please you mental midget you are the garbage - all you are going to get for shit like that is bad karma. Do me a favor do not show me that you are an impulsive idiot and respond to me. Put yourself in check.

HDV vying with EVD to become the next-generation DVD format in China
LR Huang, Beijing; Adam Hwang, DigiTimes.com [Monday 27 September 2004]


HDV (high-definition digital video) is competing with EVD (enhanced versatile disc) to become China’s next-generation national DVD standard, according to the China-based Beijing K-City High Definition Electronic Technology, the leader of the group developing HDV.

In an attempt to promote the HDV standard in China, Beijing K-City produces HDV players and HDV-based movie discs. Currently, Beijing K-City sells its products through Suning Appliance, a large retail chain with outlets throughout China, and bundles its products with FDP (flat display panel) TVs made by Toshiba, Hitachi and local maker XOCEO. Beijing K-City expects to ship 100,000 HDV players this year.

In order to attract consumers, Beijing K-City offers 10 new movies a week on HDV disc, the company indicated. The company has also signed with local movie producers to have more than 1,000 movies issued on HDV. Currently, a pre-recorded HDV movie disc sells for 12 yuan (US$1.45) while a disc with three movies sells for 15 yuan (US$1.81).

Beijing K-City sells its HDV players at a retail price of 1,780 yuan (US$215), which is much more expensive than the 900 yuan (US$109) charged for an EVD player and 300 yuan (US$36) for a DVD player.

Beijing K-City plans to launch an Internet-access HDV recorder, which would enable video downloads onto a built-in 40GB hard disk drive. The company plans to market the product at the end of this year at a tentative retail price of 2,500 yuan (US$302). In order to avoid copyright infringement, the Internet-access HDV will limit playback to a specified number and a stored movie will automatically be deleted after its last playback.

EVD aims expansion, partnership amid challenges
The video compact disc (VCD) player was a spectacular breakthrough in the history of China's electronics industry.

The device, first invented by the Chinese firm Wanyan Electronics Systems Co Ltd in 1993, aimed to meet people's needs of watching video with high quality and ease-of-use, while DVD players were still too expensive to afford.

Shipments of VCD players reached 10 million units in 1997, and their sales amounted to 30 billion yuan (US$3.6 billion) a year in 2000 and 2001, reported China Daily.

Although DVD players began to replace the VCD format from 1999, they have become a legend - forming a huge industry and endorsed by international giants such as Philips.

Now, some Chinese firms are trying to create another miracle in the video disc player market with the Enhanced Versatile Disc (EVD).

EVD evolved from audio and video coding and decoding technologies invented by a group of companies led by Beijing-based DAVWorld Co Ltd in 2000.

The format is said to have five times higher image quality than DVD and can be connected to computer networks, a basis for digital homes in the future.

EVD is based on the currently dominant red-ray technology, so compared with other international projects in blue-ray disc formats, EVD does not need disc makers to build new production lines. It also saves the costs of upgrading, although blue-ray technology has bigger capacity in theory.

After four years of research and development with gradually increasing numbers of participants, the EDV Standard Working Group has become an organization with 25 members.

In July, the draft of the EVD standard was put forward by the Ministry of Information Industry (MII) for opinions from the public.

The usual practice in standardization is that a proposal will become an industrial standard after three months of public review, if there is no objection.

However, the EVD proposal aroused fierce challenges from two competitive domestic technologies: high-definition versatile disc (HVD) and high-definition digital video (HDV).

MII was said to be holding a contest among the three competitors in September, but there has not been a result so far.

Hao Jie, president of DAVWorld, said he was at ease about the competition and would let the market decide about it.

However, the EVD proposal may be the most favoured in the market.

Hao says four of the top five DVD makers in China - Shinco, Amoi, Malata and BBK have all joined the EVD camp.

Hao estimates that about 200,000 EVD players will be sold this year.

On the content side, four of the top five movie companies in Hong Kong and six of the top eight movie makers have authorized the production of discs in the EVD format.

The EVD group released 14 titles of movies in July and is expected to release another 50 this month.

Major retailing outlets including the country's biggest home appliance chain store, Gome Electronic Appliances have also joined the camp. Gome has begun to sell EVD players, as well as discs at just 8 yuan (97 US cents) per disc.

Besides the 25 members, further organizations are applying to join the EVD group, including three foreign firms.

Hao said the standard working group will release an upgraded version of the EVD disc soon, which will have a storage capacity of 16 gigabytes, more than three times than that of DVD discs.

He said that the EVD group would ultimately migrate to a blue-ray platform, but at the current stage, the red-ray technology would still be the basis for technology upgrading because of its low cost and smooth migration.

Although the EVD proposal may become a Chinese industrial standard, Hao said the standard working group does not intend to make it a compulsory national standard.

Many foreign companies and organizations are worried that China's efforts in developing its own next-generation laser disc standard may exclude foreign players from the market.

On the other hand, the EVD group will strengthen co-operation with international communities.

The EVD proposal, which has been submitted to the International Standardization Organization and the International Electrotechnical Commission, may be put forward as an international standard or part of one.

Hao said the EVD group is also talking about co-operation with its major international competitors the high-definition DVD (HD-DVD) led by NEC and Toshiba and the Blue-ray Disc (BD).

"We will give you a surprise soon," he said.

The Dutch giant Philips said it understood China could make up its own standard because of its huge market, but its chief executive officer Gerard Kleisterlee says that whatever standards China is setting up, they should be based on market demand and acceptance.

Source: China Daily

from PWLX 10Q filed 8/16/04
OVERVIEW

For the three months ended June 30, 2004, the Company was able to report its
eighth consecutive quarter of comparative sales growth along with several
noteworthy achievements in its quest to execute its business plan which is
focused on growth, profitability, and technological innovation.

Net Revenue increased 103% for the three months ended June 30, 2004 compared to
the three months ended June 30, 2003. It marks the 8th consecutive quarterly
sales increase on a quarterly comparative basis; and for the trailing four
comparable quarters net revenue has increased 59%.

Gross profit increased 211% for the three months ended June 30, 2004 compared to
the three months ended June 30, 2003. It continues the effects of an improved
cost structure generated from the Company's overseas sourcing. The Company has
continued expanding the sourcing of its products beyond China to include Hong
Kong, Taiwan, and Korea. The ability to source product overseas should continue
to be a major strength of the Company in an effort to improve gross profit
margins in future reporting periods.

The Company's patented power-line SecureView(TM) "Camera in a light bulb"
continues to be the primary product sold in the consumer market of our security
segment. The product is aired on a regular basis on Shop At Home Network, LLC
and Home Shopping Network. The airings maintain Secure View's initial success in
the direct television retailing arena and the exposure should provide a
continuing opportunity to educate consumers on the advantages of SecureView and
power-line technology in general. In addition, SecureView continues to be sold
via Internet and catalog retailers. In April 2004, the Company announced a
comprehensive collaboration with Cenuco, Inc. of Boca Raton, Fla., to deploy the
first integrated CCTV solution utilizing PowerLinx power line video transmission
technologies and camera systems, combined with Cenuco's mobile software
technology to transmit live CCTV video onto cellular phones, Pocket PC devices,
and remote computers. With an estimated annual $39 billion global security and
CCTV market, the PowerLinx and Cenuco combined offerings will be available for
the residential, small to large enterprise, and Homeland Security/Government
sectors. As part of this relationship, PowerLinx ordered 4,500 licenses of
Cenuco's mobile remote video viewing software, which are inserted into the
PowerLinx SecureView(TM) "Camera in a light bulb" systems. Distribution of this
combined offering will include selected internet, catalog and direct response
retailers. The Cenuco software package includes gateway access from anywhere in
the world to view live video, unlimited off-site digital video recording (48
hour increments), and unlimited access to previously recorded video, for a
monthly service fee of $19.95. PowerLinx will share in revenues derived from the
monthly monitoring fees collected by Cenuco. The revenue sharing arrangement
covers PowerLinx-Cenuco bundled products sold by either PowerLinx or Cenuco in
their respective market segments.


3
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The Company continued development of its new mid-ware security solution for the
SOHO (Small Office Home Office) market in the quarter. This product, the PLVS
Plus Pro System(TM) and PLVS Plus System(TM) will focus on the
multi-camera/alarm/recording market which according to market research expects
products priced lower than one thousand dollars for a 3-4 node system. This
product will start at a basic system price of approximately $149.00 and will
allow the customer to purchase component system devices such as baby monitors,
sensors, alarms, and outdoor video cameras with recording capabilities all
priced from $49.00 - $199.00. This product will be focused on two levels of
application; the home DIY installation and the professionally installed systems.
The professionally installed system will come with many enhanced settings,
connectivity solutions, and attachment devices while the home DIY installed
units will focus on ease of installation. As previously reported
the research and development began in July 2003 and the initial design drawings
were accomplished in the 1st quarter. The final printed circuit board and
software development was completed in the quarter. The product housing design
and packaging design phase also began in the quarter. In addition, product
sourcing, tooling, dies, and prototype testing have begun and are expected to be
completed in the 3rd quarter along with initial presentations to customers for
the product. Initial deliveries are expected to begin in the 4th quarter.

As previously discussed in the Company's 2003 10-KSB, the Company has
successfully completed the installation and deployment of its first digital
security system. This system comprises 21 total cameras, both fixed and
pan-tilt-zoom (PTZ), operating over power line, twisted pair, and coaxial
wiring. The monitoring-control-storage component allows the user to
simultaneously view, record, and control each of the 21 cameras. The system's
capacity allows storage of up to 30 days of digital recording for each camera.
To move the project forward, the customer has requested that the Company
collaborate with their current digital security provider to provide an interface
to the hard wire digital systems currently deployed to allow for seamless
installations and to eliminate the need for loss prevention personnel training
on new viewing software. The software development to accomplish this
specification began in the quarter. In addition, the Company continued its
research and development of digital products to incorporate coding and decoding
(codec) technology licensed from On2 Technologies Inc. utilizing the license
agreement completed and announced in the fourth quarter of 2003.

Sales and installations of the Company's PowerLine Vision Systems (PLVS) (TM)
continued to grow and gain traction throughout the quarter ended June 30, 2004.
The product is proving to be extremely reliable as there have been no failures
in any Company installed systems to date and loss savings have been significant
as there has not been a back-up accident reported to the Company on any vehicle
with a PLVS system installed since the initial installations began in September
2003. Initially, as communicated in previous filings, truck fleets including
Ryder, Sysco Foods, McKenzie Tank Lines, and McLane Trucking purchased and
installed test units for evaluation of performance and property loss savings. Of
these fleets, Ryder and Sysco have ordered and installed additional units while
the remaining fleets and new customers continue to purchase and evaluate the
systems. In addition to Ryder and Sysco, the Company now has approximately 26
fleet customers who have purchased and installed systems which include McLean
Trucking, US Foods, E-One, McKinsey, Integris, and Perdue. The Company also
expanded selling systems in the recreational vehicle market. Forest River, Inc.
has begun offering the PLVS systems as an option on two of their 2005 Class B/C
models. In addition to approximately 12 dealers, the PLVS system is also being
sold through the following RV wholesale distributors: Aralax (Canada),
Stagparkway, WinnTron Technologies, and RadarBusters.
However, in order to meet increasing demand, the Company enlisted the services
of Velociti, www.velociti.us, to serve as a nationwide installer of our
PowerLine Vision Systems(TM) (PLVS) in the Transportation market segment. Since
1975, Velociti has been a market leader in Transportation and Logistics by
providing mobile installation service throughout the United States. Velociti has
extensive experience in the installation of transportation technology systems
and solutions for large, medium and small fleets. The program to be implemented
by Velociti will initially focus on PLVS installations on mid-to-large size
fleets. Velociti began initial installations in late May for several fleet
customers after completing the necessary installation time studies in late
April. With the addition of Velociti to the PowerLinx Team, PowerLinx is now
poised to accomplish scalability of sales for our PowerLine Vision Systems(TM)
(PLVS) product line. Alcalde & Fay, the Company government relations firm
continues to work on the implementation of a formal study of the rear vision
safety solution. The Company is also seeking preferred vendor status with
several fleets along with continuing sales development with OEM's, distributors
and dealers.


4
<PAGE>
Also during the quarter ended June 30, 2004, the Company launched the newly
redesigned Web site at www.power-linx.com. The Company's recent name change from
Seaview to PowerLinx, as well as its redesigned Web site, reflects on its
emphasis to continually develop new powerline products for the consumer,
transportation, and commercial security markets. The Web site is very customer
focused, and is expected to greatly facilitate converting visitors to customers.
The Company's products are grouped into six product lines with animated
illustrations to communicate more details about its products. For instance, each
product line has a unique URL that appears as a separate Web site. The customer
can access the product line of interest directly, without navigating to the
corporate home page and layers of menus. At the same time, a visitor can
navigate to any part of the Web site from any product URL. This makes it easier
and faster for visitors to get the information they are looking for and purchase
the product they want. The products are segmented as follows:

o Home Monitoring
o Transportation
o Commercial Security
o Home Networking
o Hotel Connectivity
o SeaView Marine

The investor or potential investor will continue to be able to access PWLX stock
quotes, up-to-date Company news, and our SEC filings. In the future, we expect
to provide access to our annual report and investor registration for our
shareholder database and investor package requests. The architecture makes the
site much more flexible allowing PowerLinx to display new products in
development. The Company expects to introduce several new products and new
product lines this year, and the Web site will easily integrate new products
with existing products. The site will be capable of highlighting new
introductions while fitting them into the overall site in a way that is very
intuitive for users. The new site will add online product registration with a
feature for e-mail capture, supplying PowerLinx with a direct customer care and
marketing program. The Company will be able to communicate with its customers to
increase customer satisfaction and to sell product line additions as well as new
product lines. Additional enhancements planned for the future are expected to
provide easy access and improved service for our dealers and commercial
customers.

The Company launched its Hotel and Multiple Dwelling Unit business segment in
May 2004 with the announcement of the strategic alliance agreement with Choice
Hotels International, one of the largest hotel franchise companies in the world
with more than 5,000 hotels, inns, all-suite hotels and resorts open and under
development in 44 countries under the Comfort Inn, Comfort Suites, Quality,
Clarion, Sleep Inn, Rodeway Inn, Econo Lodge and MainStay Suites brand names.
The launch and agreement were facilitated through the hiring of certain
employees of Guest ISP LLC.

The Business: High Speed Internet Access (HSIA) & Video On Demand (VOD)delivery
systems for Hotels and Multi Dwelling Units (MDU's) market.

The Company has developed and designed High Speed Internet Access (HSIA) & Video
On Demand (VOD) delivery systems for the Hospitality and Multi Dwelling Units
(MDU) markets which utilize powerline communications (PLC), Cat 3 & Cat 5 ADSL,
wireless along with hybrids and combinations of these technologies. The Company
also expects to develop a coaxial cable application for our products later this
year.

Principal Products: Hotel & MDU Segment

The Company specializes in providing the most technologically advanced and fully
integrated network (HSIA) solutions for hotels and (MDU's). Power-Linx product
line is as follows:

o Powerline PLC: This system utilizes the existing electrical grid in a
hotel for total high speed Internet (HSI) coverage, anywhere there is
an electrical outlet you can have (HSIA). This can also be used as
backbone for wireless install.
o Cat 3 & Cat 5 ADSL: This system utilizes the existing telephone lines
in a hotel or MDU and uses the two free pairs to deliver ten Mbps to
each room with RJ45 connection in each room. This can also be used for
the backbone for a wireless install.
o Wireless 802.11b and 802.11g: Power-Linx can cover an entire building
with wireless signals including all guest rooms, lobby, common areas,
meeting rooms and administration offices. We use our ADSL or PLC
technology to use existing wiring for the backbone for the wireless
systems to keep our systems very affordable.

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<PAGE>

o Hybrid Systems: We can provide wireless and hardwired solutions and
can provide wireless to a hardwired connection by using our (WiFi)
bridges in the rooms that pick up wireless signals and have a RJ45
connection for hard-wired connections.

o Video On Demand (VOD): Power-Linx can provide VOD via the Internet
which until required the hotels to rely on cable providers for this
service. There is no expensive equipment to install. Now hotel
customers can purchase and watch a movie on their laptop in their
rooms. Customers can download movies on computer and watch for a
twenty-four hour period. Set top boxes for in room television are
expected to be available later this year.

The Company entered into a marketing and distribution agreement with
B2 Networks LLC to distribute the new B2 Digital Services Product
Line. The agreement also provides the Company the ability to market
and distribute the Pay-Per-View and Digital Satellite Services of
Telecommunication Products, Inc. ("Telpro") who is a strategic partner
and minority shareholder of B2 Networks LLC. The distribution
agreement complements and enhances the product offerings of high-speed
internet and connectivity to the Hotel & MDU market segment. The
agreement provides for recurring revenue sharing by all participants,
including the hotel & MDU property owner, on the services used and
purchased by customers.

Pursuant to the agreement, B2 Networks and Telpro will be supplying
Point-to-Point Wireless Local Loop internet connectivity in each hotel
room through the B2 Wireless Access Point (B2WAP) which will connect
to the in-room Hotellinktv.com for laptop users and the B2 Digital TV
set top box and handheld remote control for in-room television. These
products allow Powerlinx to market a large variety of in-room digital
services, which include making airline reservations, ordering pizza,
event ticketing, and transportation services, along with delivery of
Hollywood movies, sports and live events, and distinct genres of
Pay-Per-View content. The Company will actively market the B2Wap
service and the B2 Digital TV Broadband Set Top Television System with
our complete Hotel & MDU Connectivity products later this month
through our business-to-business marketing partner, Winn Technology
Group, Inc. These products may be viewed at the web site:
www.hotellinktv.com.

o 24/7 Call Center and Technical Support; The Company bills each
property a monthly maintenance fee on a per day per room and/or unit
basis through a system service agreement. For hotel properties, Tent
Cards are provided in each room with a toll free number for the guest
to use. The Company also utilizes its 24/7 online monitoring system to
check and maintain installed hotel/MDU systems. Franchises like
Holiday Inn, Hampton and Choice Hotels have mandated that hotels
maintain 24/7 support for their guests. This provides recurring
revenues for the Company.
o Internet Service Providers: The Company has negotiated agreements with
these (ISP's) that provide the HSI connections to the hotels to
promote their products such as DSL, cable, T1, wireless point to point
and satellite. Through these agreements the Company earns a percentage
of the monthly ISP charges to the hotel or MDU. This creates
recurring revenue for the Company on a per installation basis. The
Company is in the process of evaluating the creation of a wholly owned
subsidiary to act as an agent for these ISP providers to maximize
income opportunities for the Company. In addition, this would improve
customer service to the property owner or management company since the
Company currently provides the HSI connection specifications with a
referral to several ISP providers for the hotel/MDU to negotiate and
facilitate installation. Having a one-stop shop for the customer
should also improve the entire sales and installation process.

The Company also expects to sell and market PowerLine Security systems which
integrate into the HSI systems the Company installs as it provides a value added
product to the property owners. Further, the Company expects to develop an
installation network similar to that developed in our Transportation segment.

Principle Markets: Hotel & MDU Market

One of the most requested services in hotels today is (HSIA) and there are over
sixty five thousand hotels and nearly 30 millons units in the MDU market in the
United States plus government installations throughout the world. Over fifty
percent of all travel plans will be booked online this year and over 35% of all
travelers

6
<PAGE>
carry laptop computers. In the next five years most of these hotels will have
(HSIA) in their hotel rooms and meeting areas. Ninety two percent of travelers
who use laptops base their stay on availability of (HSIA) in the rooms. The
Hotel Franchises such as Hampton Inn, Holiday Inn have already mandated their
hotels to have (HSIA) installed in the rooms by January 2005. The Company is a
Choice Hotels Preferred Vendor, which means Choice Hotels International has
certified and recommends that its franchisees do business with PowerLinx. Choice
Hotels will release their mandate to their 4,400 hotels on or about August 16,
2004. Clarion, Comfort Suites, and Sleep Inns will be mandated to have (HSIA) by
December 31, 2004 and Comfort Inns, Quality Inns, Quality Inns Suites and
Mainstay Suites will be mandated by May 31, 2004.

The Company's principal markets are Hospitality, Multi Dwelling Units,
Hospitals, Schools and Government Facilities:
o Hospitality market is excellent because HSI is the number one amenity
asked for by hotel guests. The market is also driven by competition
between hotels and franchise mandates that require hotels to install
systems by a certain date.
o Multi Dwelling Units: This covers apartments, condos, and tenant
housing. Many apartments do not have coax cable or a method to have
HSIA to individual apartments. Half the world's population lives in
apartments. PowerLinx PLC and ADSL technologies using existing wiring
provide a viable economical and secure solution for this market.
o Hospital: Hospitals are budgeting to put in Intranet systems for
maintaining patient's records and more reliable operating systems in
addition to providing HSIA and digital services to patient rooms.
o Schools: As the Internet grows there is a growing demand for school
systems to provide HSIA to the children their school environment.
Using the existing wiring in schools is a viable, economical and
secure solution.
o Government Facilities: The Company expects to develop this market with
the aid of our government relations group, Alcalde & Fay. The United
States government is the largest owner of property in North America.

Distribution Methods: Hotel & MDU Segment

o Direct sales through a highly trained in house sales force that sells
(HSIA) & (VOD) to hoteliers on daily basis.
o Strategic partners such as Winn Technologies that tele-markets to
hotels nationwide and set qualified appointments for the HSIA & VOD
sales force. The process provides for hot leads to be directly
transferred to our in house sales force.
o Choice Hotels International provides in-house marketing that promotes
PowerLinx as a preferred vendor and also transfers those leads to the
Company. We are also listed at Choice.com, Primary Source and all
promotional materials provided by Choice Hotels International.
o The Company entered into a strategic alliance agreement with Choice
Hotels International, one of the largest hotel franchise companies in
the world with more than 5,000 hotels, inns, all-suite hotels and

7
<PAGE>
resorts open and under development in 44 countries under the Comfort
Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Rodeway Inn, Econo
Lodge and MainStay Suites brand names in May 2004.

The PowerLinx-Choice Hotels International agreement is an annual,
renewable contract which appoints PowerLinx as a Choice Endorsed
Vendor offering PowerLinx's high speed internet access and
connectivity to Choice Hotels' United States franchisees. PowerLinx
becomes one of only four Choice Endorsed Vendors offering these
products which have been mandated for enterprise wide deployment by
the end of 2007. In addition, PowerLinx and Choice Hotels
International began cooperative efforts for the marketing, advertising
and promotion of PowerLinx's internet access solution to their
franchisees prior to and through the Choice Hotels national
convention, May 12-14, 2004 in San Diego, CA.
o Outside sales partners and agents: The Company is hiring agents across
the country to sell and promote its HSIA & VOD products. We are also
partnering with companies that sell other products to the hotel market
and have previous business relationships with hoteliers such as
communication providers.

Competitive Business Conditions: Hotel & MDU Segment

The hospitality and MDU markets provide the Company a unique opportunity to
create revenues through the sales and marketing of HSIA and reoccurring revenue
from 24/7 technical support, VOD and ISP access to hotels and MDU's. Although
there is significant competition with many companies providing HSI to the
hospitality market through wireless, coax and other hardwired solutions, the
Company is positioned to garner market share. Through use of the Company
patented technologies, ADSL & PLC using existing wiring allows PowerLinx HSIA
products to be very competitive, reliable and economical for the property owner.
Also PowerLinx alliance with Choice Hotels International provides
standardization for the market along with certification of the PowerLinx product
line. The Company is actively soliciting and negotiating similar alliances with
other hotel chains to further solidify a strong market presence and to provide
stable future revenue growth for the Company.


8

<PAGE>
The Company also continues to hire associates primarily in sales and engineering
to support future sales growth and expanding research and development projects.
The Company now employs a total of 26 employees which includes 13 employees
dedicated to sales. Of these 16, 3 serve as Sales Directors while the remaining
are Account Sales Executives compensated on a straight commission or draw versus
commission pay plan. The Company also continues to add manufacture sales
representatives. To provide the expanding sales team with qualified leads,
enlisted the services of Winn Technology Group, Inc., www.winntech.net, to serve
as the marketing resource to provide business-to-business marketing campaigns,
inbound sales management, first level tech support service, dealer database
management and competitive intelligence research. WTGI has extensive experience
in fielding and processing all types of inbound response to various client
marketing campaigns which includes inbound programs similar in nature to the
program being launched by PowerLinx. WTGI has provided lead qualification
services that included inbound response for clients such as Palm, Gartner,
TruSecure, McDATA, Cisco, PeopleSoft, Siemens CN and MercuryMD. The PowerLinx
program implemented by the Winn Technology Group initially focused on
business-to-business marketing campaigns in our home monitoring, transportation,
marine and recently launched hotel connectivity/MDU business segments. We expect
to generate qualified sales leads for the sales team. WTGI will take
responsibility for managing the daily sales orders to our toll-free order
number, 1-800-POWERLX along with the initial contact for product tech support
questions. In addition, WTGI has the ability to provide PowerLinx with extensive
marketing feedback and competitive intelligence research to continually improve
the process and provide maximum sales productivity.

McIntyre and PWLX
by: whyon2 09/24/04 09:08 am
Msg: 87262 of 87313

from the PWLX board:

This is what I know..
Doug McIntyre is head of ONT. He is now on the board of PWLX (in the wake of the partnership between ONT & PWLX). For those of you unfamiliar with ONT, the company has a powerful technology but for the longest time, struggled for cash. When ONT hit a point where it was gonna run out of money, McIntyre and his officers waived their salaries to keep the company going. That is how much they believe in ONT. McIntyre is very much the cost conservative. He doesn't believe in spending money unnecessarily. PWLX has been on blowing the dough. CW: McIntyre as a board member has influenced PWLX.. helping control the spending while helping drive company towards sales. This contract today is a reflection of that. PWLX is using its powerline driven technology married with ONT's video streaming technology to create a new kind of surviellance system. McIntyre gives PWLX credibility and a conservative spending brain. CW: more contracts to come. Also.. Wal Mart and Target are 'testing' the PWLX system. There was some talk that this contract was actually related to one of those merchandisers..

That's what I know.. no hype and certainly no bashing.. just information.
http://ragingbull.lycos.com/mboard/boards.cgi?board=PWLX&read=64504&submit=Go

China To Develop Audio & Video Frequency Standard
September 1, 2004
Zhongguancun AVS Development Base is saying that part of the AVS standard, a technical standard for coding and decoding audio and video frequency has been completed by Chinese scientists and related enterprises at home and abroad.

It is hoped that, with this new standard, domestic enterprises will no longer have to worry about being controlled by foreign enterprises on account of technology and patent costs.

China's developing of the AVS standard has brought about dramatic changes--as early as November 2003, MPEGLA, an agent of the MPEG standard that has been widely adopted in China, declared that it would be changing its strategy, collecting $0.25 for each piece of coding and decoding equipment instead of charging according to time.

Large scale industrialization of the AVS standard has been initiated and AVS technology-based TV top boxes are expected to be produced in large quantities by the end of 2005.

MH-sorry, I will be traversing the mountains and shores of Santa Cruz trying to unearth banana slugs and the meaning of life. I hear you should be in for some masterful anecdotes and a lifetime of stories that are both inspirational and illuminating. The Nazz

MH--just remember every electronic device needs Micro OS; where or where would this world be w/o it?

Lawsuits Against Cornice Spotlight Severe Competition Over 1-inch HDDs
August 30, 2004 (TOKYO) -- A patent litigation broke out in the 1-inch hard disk drive (HDD) market. Seagate Technology LLC and Western Digital Corp, leading US HDD manufacturers, successively filed complaints against Cornice Inc, a US venture developing a 1-inch HDD.




Click fig to enlarge: Global shipments of 1-inch HDDs. IBM Corp of the US had been the only manufacturer up until Cornice and GS Magicstor Inc of China entered the market in 2003.
Source: Nikkei Electronics in reference to data provided by Pixie Pinnacle Corp
Behind the lawsuits is the super micro HDD market, which is rapidly expanding due to the great popularity of portable audio players, and these two companies' speculation of its use in mobile phones (Chart 1).

Before the huge mobile phone market, HDD makers, which have developed their products mainly for PC applications, are likely to enhance development in alliance with digital home appliance manufacturers.

1-In. HDD Market Likely to Grow Drastically

Seagate filed a patent infringement lawsuit on six HDD-related patents against Cornice in the US District Court for the District of Delaware on June 22, 2004.

The company sought an injunction that bars Cornice from making, selling and importing the allegedly infringing products in the US, and monetary damages. Just one week later, on June 29, 2004, Western Digital also filed a patent infringement lawsuit on seven patents against Cornice in the US District Court in California. The firm sought to prevent Cornice from illegally using its patented technology and recoup monetary damages resulting from patent infringement by products Cornice had already sold.

The controversial 1-inch HDD market on the volume basis accounts only for 0.1% of the overall HDDs shipped in 2003. However, HDD manufacturers are boosting output because they sell as many as produced.


Click fig to enlarge: Shipment volume of mobile phones is far larger than that of AV equipment. Although shipments to PC manufacturers currently account for more than 90% of total HDDs produced, the profit driver for HDD makers will be highly likely to change, if their use in mobile phones increases.
Source: Dataquest at Gartner Inc of the US, Japan Electronics and Information Technology Industries Association (JEITA) and Camera and Imaging Products Association (CIPA)
Hitachi Global Storage Technologies Inc (HGST) of the US, which is providing HDDs to Apple Computer Inc, will increase output at its plant in Thailand to several million units per quarter, nearly 10 times larger than the previous production capacity, by the end of 2004. In addition, 1-inch HDDs are expected to be loaded into mobile phones. If embedded in mobile phones, whose market is predicted to reach more than 600 million units in 2004, the HDD market can transform into a huge one at once (Chart 2).

In light of such circumstances, leading HDD manufacturers started to become frenzy. Cornice, GS Magicstor Inc of China and HGST have been the only companies providing 1-inch HDDs thus far, but fierce competition is expected to start when the number of players in the market rise.

The legal battle above is literally a prelude. Seagate had just announced its entry to the 1-inch HDD market and disclosed its 5GB model, the largest capacity in the industry, on June 9, 2004, about two weeks before the lawsuit. Its mass-production is slated to start in the third quarter of 2004. On the other hand, Western Digital currently manufactures only 3.5-inch HDDs and has not announced its 1-inch model yet, but it is highly possible that the company is waiting for the right time to enter the market.

To Eliminate Fledgling Threats Early

Some HDD officials indicate as purposes of the lawsuits by Seagate and Western Digital: (1) to nip upcoming threats like Cornice in the bud, (2) to import Cornice's technology via cross-licensing and a takeover, and (3) to put the brakes on start-up makers planning to participate in the market of 1-inch or smaller HDDs.

Cornice achieved overwhelmingly lower price in comparison with other competitors by using its proprietary interface in their products. Despite the large gaps in the market size between the leading HDD manufacturers, the number of portable audio players to introduce its product exceeds 10 models in less than one year since the firm started marketing its 1-inch HDDs. The lawsuits appear to be aimed at controlling such move and preventing other industry peers from entering the market. Though GS Magicstor is also one of the start-ups like Cornice, most HDD officials consider that "the company seems to be uneasy to take into court for its backup by the Chinese government."

The filing procedures and the patents Seagate and Western Digital pleaded as infringed also show that these companies are serious about their lawsuits. For example, Seagate took measures to quicken the injunction. On July 2, 2004, soon after its lawsuit to the court, the company filed a complaint against Cornice with the US International Trade Commission (ITC), whose deliberation period is shorter than the court's. Seagate sought an order to exclude any systems or products using or containing Cornice HDDs from entry to the United States.

In addition, the total 13 patents on which Seagate and Western Digital filed infringement lawsuits appear to include key basic patents. Both companies explain that these are all technologies concerned with general HDDs, not specialized for 1-inch HDDs. Although whether Cornice actually infringed these patents or not is left to the court to judge, HDD-related researchers estimate that it will be difficult for Cornice to prove its non-infringements, after seeing these patented technologies extend from those related to signal processing and control to others concerned with media, mechanism and chassis. They believe most HDD manufacturers, putting aside Cornice, seem to use these technologies in their products.

Upcoming Installation to Mobile Phones


Click fig to enlarge: One-inch HDDs featuring inventions in view of use in home appliances
Seagate and Western Digital persist with the 1-inch HDD market so much, because they are almost sure that mobile phones will feature a 1-inch or smaller HDD. Though no mobile phone carrier has announced its concrete plan to develop an HDD-featuring handset at the present moment, HOYA Corp, which provides disk substrates to HGST and Seagate, deposed that these firms have initiated their projects to use 1-inch HDD in their handsets.

According to some HDD officials, many other HDD manufacturers seem to be preparing to market 1-inch and smaller HDDs as well. For example, Toshiba Corp is planning to start mass-production of 0.85-inch HDDs in Fall 2004, while Matsushita Electric Industrial Co, Ltd admitted it is developing a 0.85-inch HDD, although its marketing schedule is not determined yet.

Of course, the manufacturers need to overcome a lot of hurdles such as reduction of price and power consumption, confirmation of durability against vibration and shocks, and others before adopting micro HDDs in mobile phones. However, such specs are already being polished for use in the existing mobile audio players.

China, Korea Emerging as Mobile Phone Powerhouses
August 23, 2004 (TOKYO) -- The number of mobile phone subscribers in China is the world's largest at 300 million, as of May 2004.

Although subscriber numbers surpassed 300 million, China's mobile phone penetration is still no more than 20.9%.
Also, experiments on third-generation (3G) mobile phone services have been carried out successfully in China, with its proprietary technology "TD-SCDMA" expected to be commercialized soon.

Despite a widespread view that 3G services will not penetrate broadly until handset prices decline to 2G levels, China still has a great impact because its market is immense.

Meanwhile, Korea topped the world with 7.3 million subscribers to CDMA2000 1xEV-DO phone services, its 3G commercial service initiated ahead of other countries in 2002, and its movie contents are gathering momentum, too.

China Absorbed in 3G Service Establishment Aiming toward 2008 Beijing Olympic Games

In China, preparations are underway for the commercialization of 3G services, led by the Ministry of Information Industry (MII). Experimental networks called "MTNet" are being operated in Beijing, Shanghai and Guangzhou.


China has three different 3G technologies. Most expect China Mobile to start W-CDMA and China Unicom to initiate CDMA2000 1xEV-DO commercial services.
The 3G technologies in test phases are W-CDMA, CDMA2000 1xEV-DO and TD-SCDMA. This is where European, Korean, Japanese and Chinese manufacturers are highly active. The precise circumstances are complicated, just as in the Three Kingdom Saga, when reflecting intentions of the six telecom carriers in China and the MII (Fig 2).

China Mobile Communications Corp is likely to employ W-CDMA, which is easy to shift from GSM, while China Unicom Ltd is likely to use CDMA2000 1xEV-DO, an advanced version of CDMA2000 1x, telecom industry officials said. China Telecom Corp and China Netcom Corp Ltd, which currently provide fixed-line telephone and PHS services, are also said to be eager to enter the 3G market.

The Chinese company, US UTStarcom Ltd, the largest PHS handset maker in China, is now developing a dual handset that is compatible with both W-CDMA and PHS. Therefore, either of the two companies, or even both are highly likely to introduce W-CDMA services.

Proprietary TD-SCDMA Needs to Cut Power Consumption by Handset Chip


In contrast to the combined 180MHz allotted to W-CDMA and 1xEV-DO, a broad spectrum of 155MHz was granted only to TD-SCDMA.
The third standard, TD-SCDMA, is fully supported by the Chinese government, because TD-SCDMA comprises Chinese technology, whose patents are partially owned by Datang Telecom Technology Co, Ltd of China. The ministry's enthusiasm for TD-SCDMA is evident in the light of its spectrum allocation (Fig 3).

However, TD-SCDMA has not yet reached the level to be a commercial service. Third-generation commercial services actually started within 2003, but the plan was postponed. The majority sees the government and the ministry as waiting for TD-SCDMA to become more technically mature.

If China starts 3G commercial services now, odds are high that the move will end in failure as the technology cannot compete with W-CDMA and 1xEV-DO in terms of handset performance and this is the case China wants to avoid at all costs.

However, the government cannot be so blatantly protective that it approves only TD-SCDMA after joining the World Trade Organization (WTO). Hence, China is decelerating its overall 3G commercial services.

According to industry officials, the most serious issue for TD-SCDMA is the delayed development of chips. Datang Mobile Communications Equipment Co, Ltd of the Datang Telecom Technology and Industry Group unveiled its first TD-SCDMA handset called "DTM8001" in March. However, its stand-by mode only lasts for 50 hours because the chip consumes a lot of power.

Nonetheless, development of chips that can be used for commercial applications is just a matter of time. While companies are successively announcing their development of chips for TD-SCDMA handsets, many firms are bidding for handset development.

Korea Marks More Than 6 Million Movie Delivery Subscribers

Korea appears to be ahead of Japan in many respects including the penetration rate of mobile phones, the number of subscribers to CDMA2000 1xEV-DO and the introduction of number portability, as well as movie contents.

The leading company in movie services is KTF Co, Ltd, Korea's second largest service provider. The company commenced its service called "Fimm" (First in Mobile Multimedia) in May 2002 and attracted 3.405 million users as of May 2004. Its rival, SK Telecom, the top service provider in Korea, developed "June," its movie contents service developed exclusively for 1xEV-DO, and obtained more than 2.645 million users.

The firms say that particularly popular contents are terrestrial TV programs encoded for mobile phones. "Such contents account for 40% of our total movie contents sales," according to KTF media contents team senior Sohn Chang Hwa.

"Satellite Digital Multimedia Broadcasting" (DMB) is likely to further fuel mobile movie services in Korea.

Satellite DMB is a service to deliver movie and music from a satellite to mobile phone terminals using a spectrum called S-band. It is a joint project between Korea and Japan's mobile broadcasting, and is capitalized by Japanese firms including Toshiba Corp.

SK Telecom is planning to initiate its service on September 1.

Korea Enhancing its Proprietary Technology Focusing on Global Market

While Korea is pursuing 1xEV-DO, Korea's Ministry of Information and Communication is focusing on further developments. One of such development is W-CDMA, and SK Telecom and KTF started commercial services at the end of 2003.

As SK Telecom and KTF have been successful in 1xEV-DO, they are not very enthusiastic about W-CDMA, whose communication speed shows little contrast with 1xEV-DO. However, W-CDMA is strongly promoted by the ministry. The Korean government intends to establish international roaming before W-CDMA becomes the mainstream technology of the global 3G market, and thus enable companies such as Samsung Electronics and LG Electronics to build up their technical experience.

Adding to W-CDMA, the ministry is promoting two other proprietary technologies, "Wi-Bro" and "WIPI."

Wi-Bro is a high-speed wireless Internet technology that uses 2.3GHz band, with an aim to achieve data transmission at 50Mbps (maximum) in 2006. Meanwhile, WIPI is a content platform for mobile phones, just like Java and BREW. Both contain Korean original technologies.

Behind the ministry's development of its proprietary technologies was the current circumstance that patents of core technologies such as 1xEV-DO and satellite DMB are held by overseas companies.

According to the Chosun Ilbo, Korean makers have paid a total of about 2 trillion won to Qualcomm Inc in CDMA mobile phone-related licensing fees over the last five years. As for satellite DMB, Toshiba owns a patent for the core technology. The ministry started to aim at the world's most advanced levels in terms of qualities such as next-generation proprietary technologies.

On2 Technologies, CNC International Sign Deal for Satellite Distribution of Video

On2's VP6 to Be Used for Live Streaming

NEW YORK and BEIJING, March 31, 2004 -- On2 Technologies, Inc., The Duck Corporation today announced that it has signed a contract with China Netcom Communication International Corporation (CNC International Corporation, Ltd.) for use of On2's VP6.2 video codec and TrueCast servers for the broadcast of video via satellite and the Internet for educational and cultural projects in China.

CNC International is a facilities-based broadband communications operator that provides a full spectrum of services and solutions to meet the broadband telecommunications needs of businesses and individuals.

"This arrangement expands our footprint in China from EVD, HD TV and surveillance and PVR devices to satellite broadcast of broadband content," said Douglas A. McIntyre, On2 Chairman, President and Chief Executive Officer. "We are optimistic that this is the beginning of a long relationship with CNC International," he added.

finally, i am beginning to see a
by: posyche
Long-Term Sentiment: Buy 08/25/04 01:04 pm
Msg: 84784 of 84808

much clearer picture here.

all of the pieces are not in place, to match the rhetoric.

randy, as usual, has presented this company in a fairly objective light.

the debate between the two of us, is an unanswered question,

and the belief that we will somehow garner the revs necessary to support a stock price we are all looking for, is highly unlikely in my view.

i suspect that macromedia is indeed looking at us for some type of business offering, perhaps cold fusion, in connection with conferencing, or somehing of that ilk...and not flash.
if it is their development tools, then it is possible that we will not be developing anything for anyone in the backend. they'll be doing it themselves, for the price of mx suite.

electronic arts seems to have panned out per yesterdays discovery to the likes of a kit to build your own sims movies, and thus compress with vp6 to fit them into the game.

the revs from that cannot be that great in terms of recurring revenue, and the price up front as well, somewhat prohibitive due to its use i would presume.

the other deals, we have heard nothing about as yet, and as well, macromedia despite my views still remains a big questionmark.

there to date has been no update of revenue guidance for the quarter.

it is almost as if we should be buying back shares to make the cap and float smaller at this point.

the majority of fees thus far has been for liscencing without use, and i think perhaps, engineering.

most of the deals signed seem to be a hedge for including on2 in their products for wider compatibility, should on2 score a major vod deal, or conferencing deal, and to dam's credit, they must be doing a very good job of convincing clients of its future viability.

and that use will not be driven until content is either delivered, or converted in realtime to vp6. i think at the moment, a realtime conversion mechanism would help drive the end user, and put it onto more machines/devices, while trying to develop a feasable mechanism for encoding at the back-end without the necessity to use the mpegs, at the added cost.
the mpegs are of choice simply because everyone can view them, thus they are totally necessary, and on2 royalties turn out to be additional, as opposed to savings.

a plugin for quicktime is totally necessary, and realplayer would be nice as well.
they would solve the back end content problem, i believe, and drive major acceptance.

wmv can compete as it will, and always has, but will always be hated for it's dominance, and strict proprietary adherence.

outside of that, it is advertising through java, and strictly closed loop.

even in videoconferencing, and instant messaging, a closed loop ultimately will not suffice. the need for a broader compatibility will crop up over and over again.

so the share will be there, but i am growing doubtful that in the short term that it will be there to support capitalization to any viable degree.

that said, i feel the stock price currently reflects the lower end of all these factors, with no optimism or speculation whatever.

with that i now officially move ....nah...

i'll stay at a buy...

pos

CNCI Business Overview

Currently, CNCI has already established equal and cooperative relationships with dozens of first-class operators throughout the world, including: Sprint, KDDI, NTT, KT, DACOM, FLAG, C&W, Equant, SingTel, C2C, PCCW, NT&T, CHTI and NCIC, etc. The extent of cooperation not only includes traditional voice service, but also includes more data service cooperation in IPLC, FR/ATM-VPN, MPLS-VPN, IP-TRANSIT and IDC, etc. CNC International jointly established semi-circuit sales and one-stop a sales pattern so as to bring our international service and service pattern closer to the needs of the market.

CNC has not only expanded it¡¯s international network and service capability through equal and cooperative relationships, but also made use of its own advantages in international network to establish service provision point (POP) in regions of relatively large quantities of service and relatively strong service capability. Currently such POPs have basically been established, among those that have service capability are: Hong Kong, United States, and Taiwan; POPs in the process of planning or construction are: dozens of countries and cities across Japan, South Korea, Singapore, Australia and Europe, etc.






Regional Development of CNC International Service
Focus of the international service in Greater China (China, HK and Taiwan), North Asia (Japan and Korea), North America (US) and South Asia (Singapore)
Focus of domestic service: Enterprises based in east China, south China, and HK, Taiwan, Japan or Korea-funded enterprises
Telecom investment and business cooperation with the neighboring countries of China




Overview of International Business Cooperation Model
Tier 1 regional operator
International circuit matching and providing OSS service (IPLC)
Tier 2/3 regional operator
a) Bandwidth resale (IPLC)
b) Bandwidth wholesale and small bandwidth splitting (IPLC)
International operator
a) Cooperating to build up product platform and providing OSS service (VPOP/IPLC/FR)
b) Overseas channel distribution (IPLC/IDC/DIA)

Suning Tian - President
Suning Tian is vice president of CNC Group and president of CNC International

In 1994, he set up Asiainfo with a few Chinese students in the US. In 1995, he moved Asiainfo to China by first bringing Internet core technology back to China to be engaged in Internet network system integration and software development. For less than 4 years, Asiainfo quickly grew into a international national hi-tech enterprise with 450 staff members and an annual sales volume of 600 million Yuan. In 1999, it was appraised by Intertional Economic Foreign Forum as one of the Top500 enterprises of the fastest growth; in 2000, Asiainfo was appraised by Forbes as one of the world's Top300 small enterprises. In March, 2000, Asiainfo successfully went public in Nasdaq in the US.

At the invitation of the Board of Directors of CNC, in March, 1999, he became president of the Corporation. With the approval of the State Council and Relevant authorities, China Network Communications Co., Ltd undertakes the construction and operation of high-speed Internet pilot project¡ªCNCnet. At the same time, the Corporation also shoulders the historical mission of ¡°combining institutional innovation and technological innovation, exploring the establishment of pattern of the management, development and competition of China¡¯s new generation communications corporation to strategically serve SOE reform, telecommunications institutional reform and knowledge innovation. On August 20th, 2001, CNCnet was conferred the plate of ¡°National Hi-Tech Industrialization Model Project¡±.

Suning Tian was appraised as ¡°Star of Asia¡± of the year of 2000 by Asia Business Weekly of the US. In 2001, he was also conferred the title of ¡°CCTV2000 Economic Figure¡±. At the same time, Dr. Tian is also director of Sina-US Scientific and Technological Exchange Committee, deputy director of China¡¯s Association of Youth Entrepreneurs, Member of Beijing Youths' Association, member of Beijing Municipal Political Consultative Committee, member of Advisory Board of Harvard Business School, member of Asia Pacific Board of New York Stock Exchange, and member of the World Economic Forum International Business Council.

Suning Tian received a master degree of Ecology in the Postgraduate Institute of China Academy of Sciences, and a Dr. degree for Resources Management of Texas University of the US.

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XINGCHA FAN - Vice President
Dr. Xingcha Fan is vice president of CNC International, has been responsible for formulating China Netcom's business strategy, directing equity financing activities, business development initiatives and overseeing the international operations since he joined China Netcom in April 2000.
Prior to joining China Netcom, Dr. Fan was an Associate Principle of McKinsey & Company in its Shanghai Office. In his five and half years with McKinsey, Dr. Fan helped many multinational and local Chinese companies to develop their growth and market strategy, design and implement new organization structure, turn around and improve their operational performances. As a leader in McKinsey's Asia and Pacific telecom and high-tech practice, Dr. Fan served a number of Asian and Chinese telecom, high-tech and internet/e-commerce companies. Dr. Fan also assisted two large Chinese companies to prepare their overseas IPO.
Dr. Fan received a Ph.D. degree of Computer Science from the Flinders University of Australia, and a master degree in Electrical Engineering from Southeast University in China in 1987.


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Ruoqi Guan - Vice President
Ruoqi Guan is vice president CNC International.
1978 to 1982, he studied as a major of telecommunications engineering in Beijing University of Posts and Telecommunications; 1993 to 1996, he studied in Hawaii University and acquired the degree of MBA.
1982-1989, she worked for Telecommunications General Bureau of the Ministry of Posts and Telecommunications; 1989-1993, he became deputy director of the Office of the Ministry of Posts and Telecommunications. 1996-2000, he was director of Plan and Engineering Department of China Posts and Telecommunications Bureau. 2000-2002, he was General Manager of International Optical Cable Department of China Telecom. 2002-2003, he was General Manager of the Overseas Development Department of CNC.


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Ling Sui - Vice President
Ling Sui is vice president of CNC International.
1978-1982, she studied in the Department of Finance in Liaoning Institute of Finance and Economics. 1982-1992, she was engaged in financial management, corporation financing, accounting report, tax and insurance, etc. in China National Offshore Oil Corporation, and had been staff member, deputy director and manager, etc.
1992-1993, she became Financial Manager for NCH Chemicals Co., Ltd of the US.
1993-1999, she worked for Motorola (China) Co., Ltd and had been senior Financial Manager of the Department of Cellular Mobile Phone and Senior Customer Service Manager and Customer Service Chief Financial Officer of the Department of Cellular Mobile Phone. She had been responsible for the establishment of financial accounts and the financial system; responsible for collection and analysis of the financial report, budget preparation and control; and had been responsible for the design and management of workflow. When she worked for Motorola of the US, she had joined in the design of financial system, acquisition system, stockpile management system and international control system and their implementation, and these had passed the first international control auditing of the Corporation.
During her work for Motorola (China) Co., Ltd, she had won the prize of excellent staff member of Motorola Asia region, in 1995 and 1996, she won the contribution price of the Department of Motorola Global Cellular Mobile Phone, in 1998, she won the prize as excellent management personnel of the Department of Cellular Mobile Phone of Motorola Chinese region, etc.
In1999, she joined CNC, and has been vice president for finance and vice president of shared service to be responsible for financial sharing service, human resources, information system, property management and the auditing department.


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Fan Zhou - Vice President
Fan Zhou is Vice President of CNC International, Master of Financial Management of Maryland University. In Oct.2001, he joined CNC Broadband. Previously he had been working for Citicorp as Vice President for international operation and risk management. 1993-1997, he worked for Financial Group of General Electrics, and had been Asia-Pacific investment management and auditor of the Group, etc. During his work in the US, he succeeded in the M&A of large-scale corporate assets and capital in the US, Britain, Canada, Japan, Hong Kong, Porto Rico and India, etc., and had been chief officer of the Department of Strategic Planning of Pambaty (v) Financial Corporation of Canada, and risk investor of Hass Investment, and risk fund of the US.

China Netcom Joins the List of 2008 Beijing Olympic Games Official Sponsors
(27 July 2004, Hong Kong) ¨C China Network Communications Group Corporation (¡°China Netcom¡±), a major fixed-line telecommunications services operator in the PRC, has been officially appointed by The Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) as the sole partner of offering fixed-line telecommunications services in 2008 Beijing Olympic Games (¡°Beijing 2008¡±).

Boasting advanced telecommunications infrastructure, high quality telecommunications services, vast experiences in the industry and an outstanding partnership proposal, China Netcom captivated the favour of BOCOG and won the bid in becoming an official partner of fixed-line telecommunications services in Beijing 2008.

According to the cooperative agreement, China Netcom will provide high quality fixed-line communication products and relevant services for Beijing 2008, 2008 Beijing Paralympic Games, BOCOG, Chinese Olympic Committee, and also for Chinese athletes participating in the 2006 Winter Olympic Games and Beijing 2008.

Mr. Liu Jingmin, Deputy Mayor of Beijing and Executive Vice President of BOCOG, said, ¡°The cooperative agreement which BOCOG and China Netcom entered into marked our successful marketing efforts in lining up China Netcom to join the list of Beijing 2008 sponsors.¡± Mr. Liu continued, ¡°As a backbone enterprise offering telecommunications and network services in the PRC, China Netcom has immense potential in contributing to the modernisation of the telecommunications and information technology industries in the PRC.¡±

Mr. Zhang Chunjiang, General Manager of China Netcom said, ¡°Based on its present network and business resources, China Netcom will establish 4 core platforms, namely service provision platform, network supporting platform, service security platform and collaborative development platform, after it becomes a partner of the Beijing 2008. These platforms will provide high quality and professional communication services for Beijing 2008, ensuring 100% synchronisation of all communication services and 100% user satisfaction.¡±

China Netcom is also seeking to expand its investment in other Olympic cities such as Beijing, Shanghai, Tianjin, Qingtao, Shenyan and Qinghuangdao, providing better network, technology, capital and manpower assurance. China Netcom pledges to strive for achieving ¡°Digital Olympics¡±. Its aim is to provide an affordable, diversified, multilingual and personalized data services for everyone, everywhere via a safe, convenient and highly accessible network, making the first ¡°Broadband Olympics¡± a reality.

Photo Caption: Signing Ceremony of Cooperative Agreement between China Netcom and BOCOG

CNC International formally established
The China Netcom Group International Communications Co., Ltd (CNC International)£¬held an establishment Conference on Nov. 6th, 2003 , at the same time as the Telecom Operators Summit, at the HQ of CNC International in Yizhuang, Beijing. The establishment of CNC International signifies that CNC Group has made a key step in accelerating internal integration and reorganization as well as establishing a modern corporate system. Also, it is a key strategic step by CNC in realizing their national strategy of ¡°Global Expansion¡± and institutional reforms in telecommunication. Zhang Chunjiang, General Manager of CNC Group, Yan Yixun, Chairman of the Board of CNC International and President Tian Suning delivered speeches at the meeting. Leaders of MII and the State Council¡¯s Assets Supervision and Management Committee also attended the meeting to extend their congratulations.

The Telecom Operators Summit was also held on the afternoon of the day. Representatives of Equant, NTT, MCI, Chunghwa Telecom, Asia Netcom and CNC International jointly discussed the development and cooperation of the international telecommunications market under the general heading of economic globalization.

As one of the most powerful telecom operators in China, after a certain period of planning and adjustment, and under the guidance of key the State Council documents, CNC Group decided to establish CNC International Communications Co., Ltd to comprehensively operate corresponding international network assets and operate all international business.

CNC International is a corporation that is organized with the assets, network, business and personnel related to international communication of CNC Group and CNC Holdings. Co., Ltd and dedicated to the operation of an international telecommunication service. It is one of the three major business corporations that integrates the best talents and powerful resource superiority of the CNC Group and the former CNC Holdings. It is the first and sole domestic telecom enterprise that is dedicated to the development of all international businesses. The establishment of the CNC International opened a whole new window for the operation of the CNC Group¡¯s international services. Its duty mainly lies in the operation and management of the international network asset of the CNC Group, and the operation of all domestic international services and all overseas international services targeted at international operators and overseas enterprise customers. It operates a domestic and overseas international infrastructure, all overseas international services, all data business initiated overseas and finishing in China, all international incoming calls, all international operators and overseas enterprises, all data service initiated in China and l finishing overseas and the settlement service for all international outgoing calls.

CNC International has Tian Suning as its President. It also has personnel from the Department of International Service from the HQ of CNC Group, Beijing Communications Corporation and CNC Holdings. These personnel constitute the backbone of CNC International. This promotes the management and operating system that is required by a modern corporation.

In his speech, Zhang Chunjiang, General Manager of CNC Group said, ¡°I believe, with the considerate care of CPC Central Committee and the State Council, and under direct leadership of the State Asset Committee and MII, and with the vigorous support of all social circles and the joint effort of the staff members, CNC will surely not fail in its mission and will develop a whole new basis for the reform and development of the CNC Group. I also believe that the establishment and operation of CNC International will make a greater contribution to the comprehensive construction of a well-off society!¡±

Yan Yixun, Chairman of the Board of CNC International said, ¡°The establishment of CNC International signifies that the reorganization of the CNC Group has taken another new step forward. We will continue to work hard and explore new paths for the development of China¡¯s telecom service under the conditions of opening up and reforms.¡±

Tian Suning, President of CNC International said, ¡°We know very well that the development of CNC International in the future is a very long process. We have already established the development strategy. This will use a China-centered regional network that links all major cities in Asia to provide an integrated solution to large enterprise customers, become a leading regional operator in the Pan-Asian area, and realize the strategic aim of China telecom operator¡¯s Global Expansion.

China Netcom International Corporation Ltd. (hereafter CNC International), a subsidiary of China Network Communications Group Corporation (CNC), provides international telecom services. CNC International consolidates the international assets, networks, businesses, and personnel of CNC and China Netcom (Holdings) Co., Ltd. (CNC Holdings). With China Network Northern Communications Co., Ltd. (CNC North) and China Network Southern Communications Co., Ltd. (CNC South), these are the three major subsidiaries of CNC.

Incorporated on November 6, 2003, CNC International becomes CNC's exclusive one-stop shop for international services; and centrally manages CNC's international network infrastructure and businesses. It is the entity to execute CNC's "go-out" strategy and to form joint ventures and partnerships with foreign companies.

In addition to the international systems and overseas subsidiaries owned by CNC and CNC Holdings, CNC International consolidates all the network assets of CNC, the subsidiaries in ten northern provinces, and CNC Holdings that support international services. Such supporting infrastructure and resources includes international gateways, interconnect resources, border stations, landing stations of submarine cables, and terrestrial extensions. These combine with CNC International resources and Points of Presence (POPs) outside of China to provide a reliable, one-stop, international solution.

CNC International operates its international network infrastructure inside and outside of China; offers comprehensive services to international carriers and enterprises outside of China. These services include: data services that originate outside China and terminate inside China; international inbound voice; data services that originate inside China and terminate outside China; and international outbound voice settlement.

CNC International commits to fully implement modern governance, management processes and systems. Key staff and management team have been selected from CNC, Beijing Communications Corporation, and CNC Holdings.

China Netcom Corporation Limited ("CNC" or the "Company") is a facilities-based broadband telecommunications operator in China. The Company provides a full spectrum of services and solutions to meet the broadband telecommunications needs of businesses and individuals. Its core business includes providing Internet broadband access and integrated telecom services to residential and corporate customers, and building the infrastructure for China's New Economy. Its comprehensive collection of telecom licenses, including the license to operate international gateways out of China, puts it in peer with incumbent operators such as China Telecom.
In August 1999, China Netcom was founded by four entities affiliated with the Chinese government: (i) the Chinese Academy of Sciences ("CAS"); (ii) the State Administration of Radio, Film and Television ("SARFT"); (iii) the Ministry of Railways ("MOR"); and (iv) the Shanghai Municipal Government. The company closed its first round of private equity placement in February 2001, raising US$325 million from a group of high-profile international investors, including News Corp. Digital Ventures, Goldman Sachs Private Equity, and other leading Hong Kong and Chinese financial institutions.

CNC's core competence lies in its strong shareholder support, a new generation of modern management, and best-of-breed technology. In 2000, CNC has finished the first phase construction of a nationwide fiber optic backbone network, CNCNet and metropolitan access network, which pioneered the deployment of advanced IP over DWDM transmission technology in the world. The company recently extended its last mile broadband access network to cover residential users using Fiber LAN technology.

CNC's business strategy is to:
Offer a world-class network and services.
Focus on communications-intensive corporate customers.
Differentiate with quality services and execution.
Build a solid and loyal customer base.
Become a global telecommunications player by partnering with world-class leaders.
Built a strong telecom brand and establish a reputable corporate identity.


CNC offers a unique and scarce strategic alliance opportunity for international companies who want to gain access to the China telecommunications and Internet markets and partner with an integrated facilities-based telecommunications operator in China. With regional offices in Beijing, HongKong, Shanghai, Shenzhen, etc., China Netcom is poised to benefit from the rapid growth of China's telecommunications and Internet sectors.

Mark Cuban blog..HDTV, DVD, Hard Drives and the future

I love looking for ways to screw up conventional wisdom. Right now in the entertainment world, the conventional wisdom is that both sides on the HD DVD vs Blue Ray DVD will battle it out and a standard for HD on DVD will emerge. No one is trying to rush to a compromise because the big media companies want to squeeze as much money as they possibly can out the current DVD business cycle.

Good. The longer it takes, the less chance any format of DVD has of having a place in the future of home entertainment. Don’t look now, but the price and size of hard drives have fallen like a rock, while capacities have soared, with no slowdown in site.

Which leads to the question — What is the best way to distribute content? DVDs which will be limited in capacity to 9.4gbs on a single DVD for another year, and then after that 50gbs on a single disk for years to come after that, or rewritable media that can hold 2gb already in a device half the size of a pen, or in a hard drive that can hold 200GBs plus in a drive the size of your cell phone?

Which device should content distributors like HDNet invest in ? DVD, knowing that the future standards will be locked for 7 to 10 years, or these storage devices that will grow in capacity, and shrink in size and price, not to mention the additional flexibility of being able to erase and rewrite the drives?

It’s not a question being asked in many places, but it is something we are talking about at HDNet. The choices we and others in the industry make can have a big impact on the future of your home entertainment.

Personally, I like putting content on rewritable drives. Let me tell you about how I personally made the USB Flash Drives work for me.

I had a couple DVDs that I had PURCHASED, that I hadn’t had the chance to watch. I had a couple 512mb Flash Drives that I had bought specifically to test them out for video. I took the first movie, and using an encoder with compression (not going to tell you which one, don’t want to play favorites), I encoded the movies at DVD quality and saved the output onto each of the 512mb Flash Drives. I popped those tiny little puppies into my pockets and off I went to the plane. Keys, some money and my keychain flash drives in one pocket, phone in the other. No hassle, no fuss no muss.

On the plane, I popped the first keychain drive into the USB Port. Got the ready signal, got prompted to open my video player, and watched a nice movie right from the keychain drive. On the way home, did the same thing with the other movie. I loved it. Far less space than DVDs. Could put them in my pocket instead of filling up my briefcase. I immediately went out and bought a 1gb keychain drive so I could hold 2 movies on 1 drive, in addition to my first 2 drives.

After having such a great experience with putting my DVDs on the keychain drives, I decided to test HDNet content in HD. The keychain drives, even the 1gb didn’t have enough capacity to hold a full movie, so I tried just some of our promos. They were short enough that they would fit in 512mb, but long enough to let me see if it worked.

I used a standard HDTV MPeg2 transport stream. The keychain drive wasn’t fast enough to allow me to pull the video directly. I had to copy it to my hard drive on my laptop, where it played with no prob, as it should.

Since I was getting fired up about the possibility of putting HDNet content in a format that could be transportable and work easily with MediaCenter PCs, and in the not to distant future, USB or FireWire enabled TVs, PVRs and Setop boxes and even DVDs (yes, tvs with hard drives are right around the corner, and yes, all your CE devices with a future, will have storage and expansion ability), I decided to buy a portable 20gbs USB 2.0 drive that was about half the size of a pack of cigarettes. Cost me 150 bucks. I also bought an external 80gbs FireWire Drive for under 100 dollars. I loaded a full 2 hour movie on the cig sized drive, and all the episodes I had of our HDNet Word Report.

Connected to my laptop, the cig drive couldn’t quite keep up. It had a couple hiccups, but it was close. If I had used any compression at all on it, no doubt it would have kept up no prob. After copying to my laptop hard drive, it played no problem at all.

I connected the 80gb firewire drive to my HP Media Center PC and to my PC, it was fast enough to play without any problems. I loved it.

I loved it, for a ton of reasons. Let me name a few.

I know that the price per GBs of an external hard drive is now down under 50c. That price is going to fall further. A lot further as capacities increase. This time next year we should be talking about 1TB (that’s 1,000GBS) drives at 25c per GB or less. The increased capacity means not only that I can stick more HDNet movies or TV shows on a drive and sell them to consumers, but it also means that I can increase the quality of the picture substantially.

What few people realize is that when we shoot something in HD for HDNet, the quality we capture the content at is far, far better than the picture quality that you see on your HDTV. We have to compress it to fit in the bandwidth defined by broadcast standards. That compression reduces the quality of the picture you see. Your TV can handle the quality we capture it at, but we don’t have a way to get it to your TV at that quality level — yet.

Bigger cheaper hard drives gives HDNet the ability to use that additional storage to hold our content in uncompressed quality and increase the picture quality that you can see on your TV. A bunch. We can take advantage of new cameras to capture at better and better qualities, and of new compression schemes that approach future camera capabilities, only because we have ever expanding storage. That’s something DVDs will never have. So by delivering content on Hard Drives rather than DVDs, we will be able to continue to increase the picture quality for years to come.

The other cool part is that the video playback devices that will be in your home over the next couple years will have the ability to connect via USB or Firewire to these drives. PVRs, Set top Boxes, Media Center PCs,even DVDs designed to play today’s DVDs and whatever future DVD standard is settled on, all will have the ability to connect to Hard Drives in some shape or fashion, or people wont buy them. There is going to be a big, big war to host your content in your house. Whoever does it the best, provides the most flexibility, and expandability at the best price, will win.

Next on my reasons to love this approach to distribution is that it basically kills off the “Piracy is going to kill us” threats from the big movie companies. Hard Drive storage is expanding far more quickly than upload or download speeds to our homes. The ability to use that hard drive storage to increase the quality and file size of a movie, makes it practically impossible to distribute it over the net. I have a question I always ask at speeches, and have asked for the last several years. I ask if anyone in the room has ever downloaded or uploaded a movie or TV show in HD quality to or from a P2P network. No one has ever raised their hand. That is in spite of the fact that HDTV has been in the clear, over the air since 1998. EVERY SINGLE SHOW that has ever been broadcast over the air, and continues to be broadcast today, could be picked up and copied by any of quite a few different, now under 200 dollar HD encode/decode cards and then put on the net. It hasn’t and won’t happen, because shipping around 18gbs per 2 hour movie isn’t going to be fast anytime soon. Make the file sizes bigger to accommodate better quality, and forgettaboutit.

When we get to TB hard drives for under 250 dollars, we will be able to fit 50 movies in HD quality on that drive. More than ONE THOUSAND movies in DVD quality on that drive. The keychain drives will be able to hold an entire HD movie and cost under 20 dollars. That same keychain drive I talked about earlier, in the next 2 years or so, will be able to store a DVD and cost under 10 dollars. So which is the better way to deliver a movie or movies? On a DVD with a boring, lifeless future, or hard drives?

Once the prices of a keychain drive get to a couple bucks for storage enough for a DVD quality movie, then it will be easy to distribute and sell to consumers. (Of course they will still be packaged in pain the ass plastic that no normal person can open right when they buy it, but that’s another issue.) The question will be who other than HDNet will be selling it that way. Will companies stick to DVDs because that’s the way they feel comfortable, or will they support a new medium?

That’s a little question. The bigger question, the Billion Dollar question is how to deliver content on or to hard drives, regardless of size and capacity, in a way that consumers will enjoy it, and do it cost effectively today?

Realize, that whatever happens in the next couple years, that you won’t be able to buy the newest releases and the biggest hits this way. There is no major media company who is going to disrupt their DVD cash cow to take a chance on a new business like this. The “if it ain’t broke, don’t fix it” mentally is big. But again, that’s a good thing for entrepreneurs with content. While they hope it won’t break, we can be out there trying to break it, and then they usually can’t fix it.

So without the biggest hit movies, what is the best way to deliver content to homes and for travelers?

We are looking at kiosks. Walk up to an airport kiosk, or a kiosk at a retail location. Pick the movies or shows or music they have available, pay for it via credit card, and wait a couple minutes while the content is copies from a server right there on the premises.

We are looking at customizing it per user. Go online, pick the content you want. Pay for it, the next day your hard drive with all the movies, shows, music, whatever, shows up on your doorstep. You plug it in your MediaCenter PC, your DVD, PVR, whatever, and watch, listen and play.

There is also the Netflix rental approach that could work as well. Pay 100 bucks for the first 200gbs external drive. Pay us 20 bucks a month, and we send you a new drive with the new goodies, and you send us back the one you just watched — Easy and breezy. Well, that is if consumers like working that way.

Probably the best short term solution is to work with high end home theater installers. The best belong to CEDIA (www.cedia.org). They are the folks that are most capable of integrating Media Center PCs, Hard Drive based storage systems , HDTVs and all the media devices in your house. I can only guess that they would have a field day selling hard drives full of HD quality or better movies to their high end customers who want to truly enjoy their home theater systems.

There are a lot of open ended questions and challenges in this, but that’s what makes business fun. What kind of device will be the content server in the home? Who will sell it? How will content be delivered, and by who? What will the pricing be? What will the business model be?

A ton of questions. The good news is that none of the solutions involve good ole’ fashion DVDs, other than as an interim solution. That means there is one hell of an opportunity out there for HDNet and others — as long as we can execute.

I also wanted to add just a couple of comments, questions, remarks.

1. Why haven’t the Media Center PC companies and the cable and satellite industry gotten together to put set top box capability in mediacenter PCs? People who buy media center PCs, might want to use them as media centers, and given that cable and satellite deliver the media, doesn’t it make sense to combine the two? It would cut customer costs for all involved significantly.

2. Why aren’t Media Center PCs promoting the fact that they can play HD files and shipping with Demo and samples to show them off? All of them can. I just bought a new HP Media Center PC, and it didn’t come with squat to show off what it can do. It works great, but I had to figure out all of its capabilities. A showcase would make it a far better solution.

3. The biggest decision facing HD cable and satellite distributors today is quality vs quantity. Right now most are looking at using compression to squeeze more channels into the existing space they have rather than squeeze a better picture into the same bandwidth that channels take today. The reason it’s a huge decision is that once they decide to fit in more channels, they can’t go back. You can’t all the sudden decide you need 15mbs per channel to deliver a picture that compares to a competitor’s better picture after compressing down to 6or 8mbs per channel.

4. In a world of multiple Terrabye drives, is VOD a good business? One of the things I learned at broadcast.com is that when you give thousands of choices on demand, people go to the little things that they couldn’t find anywhere else. The sailing fan will choose the show about sailing over the blockbuster movie because they can’t get the sailing show anywhere else. Or maybe they choose both. The problem is that when people all choose different things at the same time, its a huge bandwidth hog. Thousands of choices, thousands of people using different movies, particularly when the expectation is for HD quality, and there is a huge problem. The cost of delivery per movie if the system is used a lot is incredible. Unicasting DVD or higher quality video is an incredibly inefficient business. (Unicasting is where there is one connection per user to the movie being shown. Each user has to have his own bandwidth, they cant’ share streams) It’s why movie delivery over the net will never be a big business.

I know bandwidth on your own network is cheaper than the net, but when hard disk storage costs 25c per GB, and falls fast from there, unicast won’t be the best way to go.

The real solution for VOD is TIVO/PVR from the main office. PVR customers are becoming trained that when you fill up the hard drive, you have to delete something to get something. Put some PVR software on the front end, and allow users to pick from a menu of content that they can add. Then overnight, they are multicast the content , whether its via cable or satellite, it’s saved to the hard drive. If they watch it, they get billed for it and everyone is happy, and distributors maximize their revenue per bit.

Ok, I’m HD worn out — for now. Thanks for letting me core dump some of the things that have been on my mind re HD and the future.

Sims2 info
by: randy_cooper2000 (39/M/Atlanta)
Long-Term Sentiment: Buy 08/24/04 01:29 pm
Msg: 84719 of 84724

Hello all,

I try to keep up on the board, but not sure if someone might have already found this or not. To date, I haven't seen anyone with a straight answer about what On2 is doing inside the Sims 2 specifically.

An earlier post by Kevin70 regarding Sims 2 going Gold. I checked out the link and was intrigued by the section about filming Sims movies in the game (cut here):

"The Sims 2 also opens up endless new creative possibilities. Make your own Sim films with the new movie making feature. Create the cast, set the stage, take control of the camera and capture your own screenplay in action. Zoom in close with the new camera to see every last detail."

That caught my attention as a critical function that looked like something On2 could be involved in. So I did a search on Sim2 and VP6 and found the following:

http://www.simsstop.co.uk/content/view/11166/2/

excerpt:

"Codec News
Written by Barry (S ADMIN)

It appears that The Sims 2 will not save uncompressed AVI video files when creating a movie, it has turns out that EA has licensed On2's VP6.2 codec for use in The Sims 2. That means movies created from The Sims 2 will need that codec. On2 claims that their codec provides better video quality than Windows Media 9, Real 9, or H.264. You can find the trailer of The Sims 2 on the VP6 samples page. It's very likely that the necessary files will be included with the Sims 2 when you install it."

So this is very interesting. It brings up a real question for me. It sounds like in Sims 2, the player can create movie of his Sims to share with anyone else in the Sims world - sitcoms, movies, whatever. Then there would obviously be a place where other Sims users could look at all of the available movies and watch what they want - kind of like a Kazaa type place.

So here is the strange part that has me scratching my head. It's easy enough to see the VP6 codec packaged with each Sims game for decoding movies, but how do the movies get in VP6 format to start with? That would imply each game would also include a "movie producer" component that would have the VP Encoder embedded in it.

Now, did On2 give EA an open license to their encoder and decoders for one flat license fee? I sure hope not. Guess we won't know that until sales of Sims2 get moving and we see if there is a residual royalty stream that starts coming in.

Regards,

R

Curt Marvis, CinemaNow - the IBC Digital Lifestyles Interviews

Fraser Lovatt

06 August 04


We interviewed Curt Marvis, a key player in IP-based video delivery and CEO of CinemaNow.

CinemaNow have the distribution rights to the largest library of on-demand feature films available on the internet. CinemaNow's distribution model is one of the most flexible in the industry: films are available with pay-per-view, download or subscription licenses.

The company's library comprises content from more than 150 licensors, including 20th Century Fox, Disney, MGM, Miramax, Warner Brothers and Lions Gate Entertainment.

CinemaNow have not restricted themselves to films, however – their catalogue includes music concerts, shorts and television programmes.

CinemaNow's technology platform is essential to their business, and so they have developed their own proprietary content distribution and DRM system: PatchBay. They've also turned PatchBay into a product, and has licensed the platform to other content distributors. PatchBay allows distributors to manage, track and syndicate content whilst enforcing DRM solutions and territorial restrictions. CinemaNow's entire business is built around the Windows Media 9 platform, which has simplified their business model somewhat, whilst at the same time allowing them to take advantage of the sophisticated features built into Microsoft's platform.

Curt Marvis has been CEO of CinemaNow since the company was created in July 1999, arriving there from 7th Level. He was also a founder of Powerhouse Entertainment, and in the 80s and early 90s was CEO of The Company, the Los Angeles production organisation.

Digital delivery of video has been slower to arrive than many industry players predicted in the mid-90s, but with the adoption of broadband and improvements to codecs and DRM systems, it looks like mainstream is around the corner. There are still many hurdles – broadband isn't quite broadband enough, consumer rights over moving content to other devices is unclear at best, content can be lacklustre and customers are confused by the many competing codecs, DRM schemes and formats in the market.

We spoke to Curt about CinemaNow and his hope for the future of digital content delivery, and the advantages of Windows Media 9.


--------------------------------------------------------------------------------

Some of the visitors to Digital Lifestyles might not know about Cinema Now. Can you give me some background on that for our readers?

CinemaNow has been around for five years. We started the company in mid-1999, which of course was during the dot.com hayday. We started the company then do to the same thing that we continue to do today, which is to offer movies and other video content on demand over IP Networks.

What do you think has kept Blockbuster out of the part of the market in the US for so long?

Blockbuster is actually a small investor in our company and I think Blockbuster feels that when they get into a new marketplace they look for a market which is very, very big which the IP on demand marketplace still is not.

I think their philosophy is that they will enter the marketplace at a moment in time when they feel there is a sufficient amount of revenue.

You have to keep in mind as well that Blockbuster do not own the rights to distribute content in this window yet, so they have to negotiate that through a studio.

They are sort of dabbling with it in the UK, but not in a very high profile way.

Yes, I know Steve Middleton and they have had that trial in Hull. So I'm familiar with that. They are actually doing more in the UK than they are in the US market.

Tell me a little bit about your IBC session. What sort of things are you going to be covering?

We have a sort of technology platform we call PatchBay. PatchBay is the sort of central nervous system of CinemaNow, and it's a completely Windows based platform.

We deliver our movies exclusively in Windows Media format, but that's not to say that couldn't use other codecs or other players, but we chose that as our primary platform when we started the company.

We used the installed base for that choice as well as the specific functionality of the platform, for purposes of what we can do to add additional delivery and content.

Could you tell us a bit more about your Patch Bay product?

Patchbay is a versatile, user-friendly, API and tool for managing all facets of online content distribution. With Patchbay, you can manage six major tasks for successfully distributing content online including: Content Management and Distribution; Content Syndication; Rights Management; User Profiling and Ad Targeting; Pay-Per-View, Subscription and E-Commerce Management; and Comprehensive Reporting.

It's a tested, real-world application currently being used to manage millions of streams per month over disparate networks. With Patchbay's scalable infrastructure, CinemaNow maximizes its revenues while protecting and retaining control over its assets, even those syndicated to third-party websites.

Windows Media 9 it has been a terrific platform for delivering and viewing and protecting your content. What excites you most about it?

That is a big question. Is there something that Windows Media excites me?

The Windows Media Platform is directly compatible with the dominant operating systems and you know, EU concerns and other concerns notwithstanding we felt that having a player that was most used with the operating system it was running on was best. We also frankly think that beyond that specific issue the Windows Media Platform and Windows Media Player are the superior player and platforms for digital delivery. That is why we chose them.

Who is the typical Cinema Now subscriber? Who are you actually reaching?

We definitely have a male dominated audience – over 75% of our users are male. They tend to be slightly older than you might initially think. Our typical user is probably between 25 and 40 years of age. Generally speaking they have a higher than average income, higher than average education – you know that sort of thing. That is the kind of profile that we have in general, although it is changing all the time, as we have more and more of the mainstream business.

You have 455 films in your library at the moment. How many are you aiming for?

That's what you're seeing in the UK. We have territorial rights which protect our content from being viewed outside of the US for films that we do not have rights to – for example the collection of movies that you see in the UK is significantly inferior to what we offer in the US. In the US on our website right now we have almost 2000 films available. By the end of this year that will grow to probably close to 4000/5000.

In the UK, I am hopeful that we will be up well over 1000 films by the end of the year including the films from major studios.

How long do you think it is going to be before digital delivery becomes mainstream then?

Well, I think there are a number of factors that are sort of the driving part right now. One is the problem of availability; one is broadband penetration; one is hardware device availability and penetration in terms of everything from portable devices, media centre devices etc. etc.

I think there has got to be an alignment if you want to drive fast market adoption. When we started the company in 1999, we thought that by 2004 that time would have arrived. I can tell you now that is just the beginning and we will probably see this become a mass market over the course of the next two to four years – somewhere in that timeframe.

You mentioned that you don't have the rights to distribute all of your films in all territories - what kind of problems are you facing in getting rights clearances for content in different markets?

No real problems, but rather an issue of needing to be set up in these countries with strong distribution partners before it is worthwhile to spend money acquiring local content and preparing it (encoding and storage) for distribution. Keep in mind that content is distributed on a territory by territory basis and with each version comes new contracts, payments and prepping.

Are you considering a global pricing model or will you be pricing the same content differently on a market by market basis?

We will try to keep it as consistent as we can, but we will definitely need to follow pricing schemes that are consistent with differences in the traditional distribution businesses.

Many content providers are getting excited about supplying content for mobile phones -- when you do see serving media to mobiles becoming a mainstream business? Will there be a point when consumers will want to watch long media streams like films on their mobiles? Is there a maximum length that consumers will watch?

I think mobile distribution is really a business in the next few years for portable devices such as tablet PC's, Portable Media Centers, etc. Cell phones for full length content seems a long ways away, if ever.

What of the content that is being delivered to people the films and content that they are buying has quite often incompatible DRM schemes behind it. What do you think is going to happen in that space over the next four years?

Windows Media has DRM that has been adopted by a lot of different people. I think there will be a shake-up in the market very shortly and one DRM system will be adopted by 95% of the content delivery industry.

What worries you about the future of digital delivery? What keeps you awake at night?

Well, I think, I sleep very well actually. I think the biggest concern is that people will jump into the marketplace prematurely – before there is a high quality user experience to be had, and that consumers will be turned off on the concept if it doesn't work properly at first or it is not a compelling product offering.

I hope that companies recognise that this is still very much a virgin market, and that when it really begins to take off I think it'll dwarf the size of what is happening in the DVD industry, and it'll open up avenues for huge amounts of libraries, great content opportunities etc. I think you will see people consume more and more content and I think there will be plenty of room for a lot players to get into the business.


Curt is a panellist in the 'Understanding the Range of Platforms - A Multitude of Destinations' session between 14:00 and 15:30 at the IBC conference on Sunday, 12th September in Amsterdam. Register for IBC here

Movie Makers, Tech Firms Ink DVD Copying Pact

By John P. Mello Jr.
www.TechNewsWorld.com,
Part of the ECT News Network
07/15/04 9:02 AM PT

In an announcement late Tuesday, Microsoft, IBM, Intel, Matsushita (Panasonic), Warner Brothers and the Walt Disney Company said they would develop a DVD copy-protection scheme that will allow consumers to make backup copies of movies as well as share DVD content on portable devices.


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In an apparent move to avoid the mistakes made by the recording industry in managing digital forms of its intellectual property, two movie studios have cut a deal with several major technology companies -- including Microsoft (Nasdaq: MSFT) and IBM (NYSE: IBM) -- to develop a scheme that will allow limited copying of next-generation DVDs.
"They're trying to be wiser than the recording industry," Vamsi M. Sistla, director of broadband and residential entertainment technologies for ABI Research in Oyster Bay, New York, told TechNewsWorld.

Sistla explained that "In the present marketplace, consumers prefer to use their content on multiple outlets. If consumers aren't given that choice, it will backfire on the content providers' business."

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In an announcement late Tuesday, Microsoft, IBM, Intel (Nasdaq: INTC) , Matsushita (Panasonic), Warner Brothers and the Walt Disney Company said they would develop a DVD copy-protection scheme that will allow consumers to make backup copies of movies as well as share DVD content on portable devices.
That scheme, dubbed AACS for Advanced Access Content System, isn't expected to be developed until the end of this year at the earliest.

While the brief announcement by the AACS alliance of companies raised questions in the minds of many industry observers, analysts, by and large, praised the move.

Critical Development

"This is the first significant multi-industry effort in this area," Ted Schadler, a principle analyst with Forrester Research in Boston, told TechNewsWorld. "Thumbs up on the effort," he said.
"This development is critical to the growth of the industry," Rob Enderle, president and principal analyst with the Enderle Group in San Jose, California, noted.

"It's critical for the growth of the merged PC-consumer electronics industry, which is going through a painful birthing process right now," he told TechNewsWorld, "and it's also critical to the movie industry as well because otherwise they're going to lose a substantial amount of revenue to piracy."

Different Notions of Portability

Finally, some of the content creators and copyright holders are reaching across the table to the technology providers, Mike McGuire, a research director for the Gartner Group based in Stamford, Connecticut, observed.
"That's a great first step," he told TechNewsWorld from his office in San Jose, California. "However, both parties have to be cognizant of what consumers are going to expect," he advised.

"We're going to see very different notions of portability between a movie and a song," he predicted. "But we have to give these studios some credit for being a little more forward looking than the music industry," he said.

Positive Development

"If the technology companies and the movie studios can reach a common ground that allows consumers to do what they want to do, that's a positive development," Jeff Joseph, vice president for communications for the Consumer Electronics Association in Arlington, Virginia told TechNewsWorld.
However, not everyone saw the announcement in a positive light.

Fred von Lohmann, a staff attorney with the Electronic Frontier Foundation in San Francisco, labeled the AACS Alliance a new Digital Right Management (DRM) "cartel."

Bad Cartel

"A new DRM cartel is going to be bad for innovation, bad for competition and in the long run, bad for consumers," he told TechNewsWorld. He maintained that the ultimate aim of the alliance was to restrict what types of products consumers can have and the features those products can offer.
Although the movie industry argues that copy-protection schemes are needed to combat digital piracy, von Lohmann scoffed at that contention.

No Stopping Pirates
"The reality is that none of these content protection systems has had any success in stopping digital piracy," he said. "There's no reason to assume that this will be any different," he asserted.

"If this system is quickly defeated by pirates, then the only people that are going to be paying the price are legitimate consumers and innovative companies shut out by the cartel," he said.

Hollywood still wary of Microsoft
Monday, August 16, 2004 Posted: 10:41 AM EDT (1441 GMT)


LOS ANGELES, California (AP) -- CinemaNow Inc., the Internet-based movie service, is a rarity in Hollywood -- a company that eagerly embraces Microsoft Corp. technology and relies on it exclusively to transmit, protect and display the movies it rents to customers.

Then again, Microsoft is a major investor in the company, which is also owned by independent studio Lions Gate.

The majority of entertainment companies, unsure of Microsoft's motives and wary of its cutthroat tactics in the battle for the computer desktop, have preferred to maintain an arm's-length relationship with the software Goliath.

But these days, studios fear digital piracy more than they fear Microsoft and have slowly begun to make deals to use its software tools, albeit on a non-exclusive basis.

For its part, Microsoft has tried to calm Hollywood's anxiety, revealing a portion of its proprietary code for compressing large media files to a standards-setting group and offering longer-term deals to assuage fears it would hike the price of each new software version.

"They are being subtly aggressive, not like in the PC industry where they used strong-arm tactics," said Michael Wolf, principal analyst at research firm In-Stat.

Microsoft also is starting to see limited success in its efforts to work with Hollywood in the still nascent online movie market. Last week, Microsoft's MSN Internet division began linking to Blockbuster Inc.'s online rental service. MSN also offers a limited number of pay-per-view movies through CinemaNow.

At a time when studios are seeking to make higher-quality versions of movies and television shows available on everything from computers to cell phones, dealing with Microsoft has become almost unavoidable.

"Microsoft wants to be the sticky stuff in the middle between the studios and all the different platforms consumers will use," said American Technology Research analyst P.J. McNealy. "They have the chance to really enable business models that we have heard about over the past five years."

But at what price?

Two fears
Microsoft has long dallied with the media business, forming the MSNBC cable network with NBC and launching its own video game console to take advantage of the burgeoning game market.

It formed the online magazine Slate, which it recently said it would sell, and launched a number of other forays, not always successful. Its MSN service still lags America Online and it has closed a number of other ventures, including Mungo Park, an adventure travel Web site.

It has also amassed a huge amount of cash and a reputation as an aggressive and relentless competitor, willing to use its virtual monopoly power in computer operating systems to crush would-be competitors.

That power made studios highly suspicious when Microsoft came calling in the 1990s seeking to persuade Hollywood to make content available in digital form on computers and home networks.

"There was an assumption that we were out there to screw them," said Kurt Buecheler, a former executive in Microsoft's digital media division whose job included approaching studios for possible deals.

"There were two fears," Buecheler said. "One was that Microsoft could buy the companies. The reality of that was just silly. Microsoft knows how to do technology and software. They don't know how to tell a story.

"Second, they (studios) looked at the PC as a device that was almost the murder weapon of the music industry when, in fact, it wasn't."

Those suspicions still linger, even as Microsoft has struck deals with several studios to protect movies and TV shows from piracy.

Microsoft recently announced a number of licensees for its latest Windows Media digital rights software, dubbed "Janus," including The Walt Disney Co., AOL, Dell Inc., Samsung Electronics Co. and Movielink LLC, an online movie company owned by five of the seven major Hollywood studios. The licensing agreements are not exclusive, though. Movielink, the biggest Internet film provider, also offers films in RealNetworks Inc.'s format.

In July, Microsoft joined a cross-industry effort aimed at protecting content on different networked devices, including a new class of portable media players that are expected to be hot holiday season sellers.

That consortium includes Sony Corp., which promotes its own proprietary technology for viewing entertainment, including the movies and TV shows produced by its studio arm.

Microsoft views these deals as thawing its icy relations with Hollywood and eradicating old stereotypes about Microsoft software being buggy.

Yet Microsoft can't quite shake fears that its real intention is to use its monopoly position to charge Hollywood outrageous fees to access the computer desktop.

In March, the European Union fined Microsoft $613 million, finding the company guilty of abusing its Windows monopoly to squeeze out rivals in related markets for digital media players. The EU ordered Microsoft to sell a version of Windows without its media player. Microsoft is appealing.

While Hollywood needs tools that compress huge computer files -- especially digital files that contain next-generation, high-definition images -- small enough to put on a DVD or send over the Internet, studios say they need to encourage competition so they won't be held hostage by one company.

Microsoft says it has learned from its earlier, sometimes heavyhanded, dealings with Hollywood.

The company recently plucked a Hollywood veteran to run a new division to develop relationships with the entertainment and media industries. Blair Westlake, a former chairman of the Universal Television and Networks Group, will be responsible for bridging the gaps between Hollywood, consumer electronics companies and government regulators.

Amir Majidimehr, who runs Microsoft's Windows digital media division, said he understands that Hollywood is wary of ceding any of that power to a technology company like Microsoft. But he adds that recent agreements to work with Disney and Warner Bros. have helped allay Hollywood's fears.

He also notes that Hollywood holds the power in the relationship. He noted that Hollywood as kingmaker crowned the DVD format and MPEG-2 as the favored tool to compress large video files.

And now, he said, the content creators will lose if they are overcautious while ever-growing broadband Internet connections make swapping a two-hour movie as fast as a two-minute song.

"Our strategy is very simple -- we make money selling Windows and we want to sell more copies of it. The way we sell more is to add new applications to it," said Majidimehr.

"What we're trying to do is be very true to our intentions, which is to drive PC sales. We've got to play fair, we've got to play open and frankly, we think we're doing it better than any competitors."

China Emerging as a Key Player in Shaping Global Technology Standards


CHINA, Aug. 12 /Xinhua-PRNewswire/ -- China is no longer content with just
being the world's pre-eminent manufacturer: it is increasingly active in the
development of global technology standards, Deloitte finds in a study released
today. The report, "Changing China," details how China's standards
initiatives will shape global competition in the technology, media and
telecommunications (TMT sector) for years to come.
China's current position as the leading consumer and producer of many
technology products -- along with its healthy long-term growth prospects --
puts it in a strong position to influence standards in both its own and global
markets. As China's standards become more widely accepted, Chinese firms will
increasingly direct the global technology sector.
"China is able to use the lure of its massive markets and spectacular
growth as leverage in the standards war. Global technology and
telecommunications companies need to review China's standards initiatives and
collaborate, where appropriate, with Chinese companies in standards
development," says Charles Yen, TMT National Leader for Deloitte in China.
In the report, Deloitte identified three practical strategies for China to
go about promoting its unique technology standards:

-- Offer a lower cost substitute to a standard that already exists
-- Establish a new standard in its home market, then export that standard
after achieving critical mass and economies of scale
-- Join an international coalition, using the appeal of its domestic
market as leverage

Chinese government agencies and companies are undertaking all of the above
strategies. "China's big push into standards is not without risk. Its effort
will be most effective when its standards initiatives align with market forces,
international standards, and the interests of multi-national coalitions," said
Mr. Yen.
"Technology vendors that misjudge the impact of China's standards
revolution could find themselves at a significant disadvantage, with their
position in the market increasingly over-taken or encroached upon."
Practically there are four strategies for technology firms to consider as
China's technology standards are being shaped:

-- Collaborate with standard setters
-- Compete selectively, focusing on areas where standards are harder to
mandate
-- Innovate specifically for the Chinese market
-- Seed emerging markets to encourage growth and establish early control

"Firms with a strong base of support among Chinese companies and consumers
are in the best position to promote their own standards. Those lacking
widespread support would be wise to co-operate instead of competing,"
continued Mr. Yen.
From operating systems and software applications, to storage media,
wireless communications and satellite positioning, Chinese government agencies
and companies are working to shape new technology standards for economic
advantage. Deloitte expects Chinese manufacturers to begin by building
critical mass of support at home, then exporting their technologies to
emerging markets such as Southeast Asia and the Middle East.
"Technology companies must carefully monitor China's actions, assess the
implications of Chinese standards, and amend their strategies accordingly,"
added Mr. Yen. "Companies that don't may find themselves locked out of the
world's largest and fastest growing marketplace, which is increasingly defined
by standards that originate in China."
Examples highlighting China's impact on standards include:

Technology:

Operating systems
-- The Chinese government recently announced a major commitment to Linux
and announced it was drafting a new "standard" specifically for the
Chinese market that might be made compulsory for all IT vendors and
service providers.
-- The Chinese software industry is still in its infancy and China wants
to source software or create its own software that is affordable to the
masses.

RFID
-- China established a working group to draft and develop national
standards for RFID tag technology. Some reports indicate the group is
adhering to international standards, while others suggest the group is
planning to go its own way. An incompatible RFID standard could pit
the interests of China's emerging IT industries against the interests
of major purchasers of Chinese products.

Media:

EVD
-- Chinese companies are trying to promote a successor to the DVD optical
disk standard, called Enhanced Versatile Disc (EVD), which has better
sound and picture quality than DVD.
-- Chinese companies are constrained by hefty DVD royalties, which range
from $15 to $22 on players that today often retail for less than $60.
A consortium of China's leading makers of DVD players holds the EVD
patents, and collects royalties.

Audio video coding
-- China is developing its own standard technology for compressing audio
and video. The new standard, calls AVS, is competing with MPEG-4 and
H.264 to replace the current worldwide compression standard, MPEG-2.
-- EVD is currently based on MPEG-2, but a switch to AVS is expected --
allowing Chinese manufacturers to produce state-of-the-art video
players based entirely on Chinese technology standards.

Telecommunications:

Cellular networks
-- China has its own globally approved standard for 3G and as the world's
largest market for mobile communications, is well positioned to take a
lead role in defining the 4G standard.

Satellite positioning systems
-- China recently chose Europe's Galileo system over the U.S. military's
Global Positioning System. The push into satellite positioning systems
has significant commercial and geopolitical ramifications.

About Technology, Media and Telecommunications
The Global Technology, Media and Telecommunications (TMT) Industry Group
consists of more than 5,000 partners, directors and senior managers supported
by thousands of other professionals dedicated to helping clients evaluate
complex issues, develop fresh approaches to problems and implement practical
solutions. TMT has dedicated practices in 45 countries and centers of
excellence in the Americas, EMEA and Asia Pacific. We serve nearly 80 percent
of the TMT companies in the Fortune 1,000. Clients of global TMT practices
include the world's top software company, computer manufacturer, wireless
operator, satellite broadcaster, advertising agency and semiconductor foundry
-- as well as leaders in publishing, telecommunications and peripheral
equipment manufacturing. We work across all service lines: assurance and
audit; risk consulting; tax advisory; business and technology consulting;
financial advisory and corporate finance; mergers and acquisitions and
Sarbanes Oxley compliance. Our practitioners invest vigorously in
understanding and promoting the TMT sector, generating world-class insight via
Deloitte Research; identifying upcoming industry leaders through the
Technology Fast 500 programs and polling leadership opinions via our Global
CEO survey.

About Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu is an organisation of member firms devoted to
excellence in providing professional services and advice. We are focused on
client service through a global strategy executed locally in nearly 150
countries. With access to the deep intellectual capital of 120,000 people
worldwide, our member firms, including their affiliates, deliver services in
four professional areas: audit, tax, consulting, and financial advisory. Our
member firms serve more than one-half of the world's largest companies, as
well as large national enterprises, public institutions, locally important
clients, and successful, fast-growing global companies. For regulatory and
other reasons, certain member firms do not provide services in all four
professional areas.
Deloitte Touche Tohmatsu is a Swiss Verein (association), and, as such,
neither Deloitte Touche Tohmatsu nor any of its member firms has any liability
for each other's acts or omissions. Each member firm is a separate and
independent legal entity operating under the names "Deloitte," "Deloitte &
Touche," "Deloitte Touche Tohmatsu," or other related names. The services
described herein are provided by the member firms and not by the Deloitte
Touche Tohmatsu Verein.

About Deloitte's China national practice
Deloitte's China national practice is one of the nation's leading
professional services providers with nearly 3,000 people in 10 offices located
across the most vibrant economic areas in China including Beijing, Dalian,
Guangzhou, Hong Kong, Macau, Nanjing, Shanghai, Shenzhen, Suzhou and Tianjin.
As early as 1917, we opened an office in Shanghai. Backed by our global
network, we deliver a full range of audit, tax, consulting and financial
advisory services to national, multinational and growth enterprise clients in
China.
We have considerable experience in China and have been a significant
contributor to the development of China's accounting standards, taxation
system and local professional accountants. We also provide services to around
one-third of all companies listed on the Stock Exchange of Hong Kong.
Our China national practice entity is a member of the global organisation
Deloitte Touche Tohmatsu which is one of the leading professional services
organisations delivering world-class audit, tax, consulting and financial
advisory services with 120,000 people in nearly 150 countries. Deloitte
Touche Tohmatsu is a Swiss Verein, and each of its member firms is a separate
and independent legal entity.

Issued by Deloitte Touche Tohmatsu in Hong Kong. For further information,
please contact:

Dickie Luk, Hong Kong
Tel: +852-2852-1243
Fax: +852-2541-3726
Email: dluk@deloitte.com.hk

China Is Using Its Mass Markets To Create Standards, Report Says
August 12, 2004 (1:57 p.m. EST)
TechWeb News

China is utilizing its rapid growth and massive captive markets as a means to influence next generation standards across a broad range of technologies, according to a consulting company's report.
China's policy of using standards for its own economic advantage is already evident, said Charles Yen, Deloitte Touche Tohmatsu's national leader for China. For example, China is drafting a policy that could lead to Linux becoming compulsory in the country and has established a RFID working group that could likewise recommend compulsory use of a unique Chinese tag technology, he said.

“China is able to use the lure of its massive markets and spectacular growth as leverage in the standards war,” Yen said in a statement. “Global technology and telecommunications companies need to review China's standards initiatives and collaborate, where appropriate, with Chinese companies in standards development.”

Additional areas where Chinese interests are having some success in setting standards include the EVD (enhanced versatile disc) standard, which has improved sound and picture quality over DVDs, and a Chinese successor to MPEG-H.264, which Chinese interests claim represents an improvement over that older technology. China's new compression and video standard is called AVS and it could become a global replacement for earlier MPEG standards, the report stated.

Is broadband set to make power lines sing?

By Jim Hu
Staff Writer, CNET News.com
http://news.com.com/2100-1034-5163739.html

Story last modified February 24, 2004, 4:00 AM PST



Technical limitations have long frustrated attempts to deliver broadband Internet access over power lines, but the idea is once again sparking interest as its backers tout improvements.

News.context

What's new:
Momentum is growing again for broadband over power line technology.
Bottom line:
Power lines could soon join coaxial cable, telephone lines and emerging "last mile" wireless technology as pipes to deliver data into homes.

More stories on this topic

Earlier this month, the Federal Communications Commission proposed rules for utility companies that seek to offer Internet access through their electricity grids. The FCC hopes its rules for broadband over power line (BPL) will help jump-start the use of the grid network to deliver high-speed Net access to U.S. households, especially in hard-to-reach rural areas.

"One major objective of Chairman (Michael) Powell is to find ways to encourage broadband for the entire United States," said Ed Thomas, chief of the Office of Engineering and Technology at the FCC. "The more options that are available, and the more capabilities provided, and the more diverse the entry vehicles, the better off we are."

The proposed BPL rules are limited and notably do not address major policy issues affecting the electricity industry that are under the remit of local public utilities commissions. Still, broadband providers and power companies reacted positively to the FCC move, seeing it as a critical first step toward making BPL a reality.

Less than a week after the FCC released its proposal, Internet service provider EarthLink announced it would begin testing a broadband service using power lines leased from Progress Energy, an electricity company that serves the Carolinas and central Florida.

EarthLink's test, announced last Wednesday, involves 500 homes in Wake County, N.C., and could set a major precedent for the nascent BPL industry. In the trial, Progress Energy will deliver a packet-based broadband signal through its power lines and then broadcast the signal using Wi-Fi equipment from Amperion. Test customers access the network using wireless broadband routers installed in their homes.

"This might give us the ability to have coverage where DSL (digital subscriber line) and cable might not be," said Kevin Brand, a vice president of product management at EarthLink. "We're in the very early stages now, but we see the ability for the technology to evolve to be quite competitive with DSL and cable."

EarthLink will sell the service under its own brand and will charge people $19.95 for the first three months, then $39.95 a month after.

Phase two
Progress Energy representatives said they have tested the technology enough to know it works in a laboratory environment. The EarthLink trials will determine whether BPL works in practice.

"This is our second phase" for BPL, said Matt Oja, the director of emerging technologies at Progress Energy. "The first (question) was does it even work? Now we're marketing it over EarthLink, the retail provider."

The companies expect to make a final decision at the end of the year after completing the market test.

The idea of turning to power companies as broadband purveyors has been floating around for many years, including within the FCC. Power lines are an attractive broadband delivery system because they are already in place and reach more homes than either cable systems or telephone lines.

But technology limitations, policy disputes and expensive failures have consistently left BPL hanging. Power grids were designed for the efficient delivery of electricity and so bring together a vast network or transformers to feed a myriad outputs for household appliances.

To date, BPL has mostly lighted the road to failure. In 1997, Nortel Networks, a telecommunications equipment maker, teamed up with British energy company United Utilities and formed Nor.Web, with the goal of offering broadband over an electricity grid. The venture set up a test in Manchester, England, but soon discovered a snag in its technology: Neighboring lampposts were picking up data signals and rebroadcasting them as radio waves.

The technical problems and the expense of the venture eventually were too much to bear. Nor.Web shut its doors in 1999.

"I've always been skeptical about the extreme version of broadband over power line," said Joe Laszlo, an analyst at Jupiter Research. "I think there are huge problems with the scenario. There are several impediments along the way that make it harder to transmit data over transformers."

Most of the FCC's proposed rules outline a set of technical standards to measure the quality of a BPL broadband signal and to create a public database of available BPL services.

Perhaps the most important regulation addresses signal interference--BPL's biggest stumbling block. Amateur radio operators and some federal safety agencies have raised concerns about the effect of BPL on their communications signals. Without the right technology, it could create more static on lines that people are already using.

"Any time you put a signal on top of a metallic object such as a power line, it's going to radiate and I'm going to hear it," said Jim Heynie, president of the American Radio Relay League, a national amateur radio association. "The industry has not addressed the reception problem."

The FCC itself is trying to temper expectations for BPL. After the technical issues, it faces major regulatory hurdles.

Power companies are not regulated by the FCC, but by local public utilities commissions (PUCs). The FCC just creates rules to open the door for companies to offer broadband through their wires, but doesn't create rules for the wire itself. If power companies decide to push broadband aggressively into the household, a regulatory battle would likely ensue.

"There's very serious debate between the power companies and the local PUCs," the FCC's Thomas said. "We can foresee a situation where regulations could kill the infant business before it's born."

BPL proponents counter that the technology has improved to the point that communities can safely flip the switch. If the FCC's proposed rules take off, these people argue, there's a good possibility that power lines will begin delivering data into homes.

"The only knowledge it takes is to find a wall plug," Thomas said.

Putting BPL to the test
From an industry point of view, the FCC's decision could open up a new front in the escalating war to sell broadband to households across the country. Power lines would join coaxial cable, telephone lines and emerging "last mile" wireless technology as conduits for delivering data to homes.

The testing of reworked BPL service is already under way in a handful of communities, including Cincinnati, Allentown, Pa., and Manassas, Va.

Opening the broadband access market to a third industry with considerable clout could stir up an already bubbling pot. Cable companies currently lead providers of telephony-based DSL services in broadband market share in U.S. households. However, figures from the fourth quarter of 2003 show that cable's growth rate has begun to slow, relative to DSL, according to a study conducted by Leichtman Research Group.

Even so, DSL still has a long way to go to catch up. It accounts for 36 percent of the U.S. broadband market, with the remaining 64 percent served by cable. Much of DSL's recent gains stem from low-price plans designed to compete against a more expensive, though faster, cable service.

"The FCC wants to see a third broadband provider out there, and they want it to be facilities-based," said Brett Kilbourne, the director of regulatory services at the United Power Line Council, an organization of electric companies interested in BPL.

CNET News.com's John Borland contributed to this report.

10 May 2004 -- PowerLinx, Inc. and Choice Hotels International Begin Strategic Alliance
PowerLinx Teams With One of the Largest Hotel Franchise Companies to Offer High Speed Internet Connectivity

TIERRA VERDE, Fla., May 10 /PRNewswire-FirstCall/ -- PowerLinx, Inc. (OTC BB: PWLX), the leader in power line communication products, today announced that it has entered into a strategic alliance agreement with Choice Hotels International (NYSE: CHH), one of the largest hotel franchise companies in the world with more than 5,000 hotels, inns, all-suite hotels and resorts open and under development in 44 countries under the Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Rodeway Inn, Econo Lodge and MainStay Suites brand names.
The PowerLinx-Choice Hotels International agreement is an annual, renewable contract, which appoints PowerLinx as a Choice Endorsed Vendor offering PowerLinx's high-speed internet access and connectivity to Choice Hotels' United States franchisees. PowerLinx becomes one of only four Choice Endorsed Vendors offering these products, which have been mandated for enterprise wide deployment by the end of 2007. In addition, PowerLinx and Choice Hotels International will begin cooperative efforts for the marketing, advertising, and promotion of PowerLinx's internet access solution to their franchisees prior to and through the Choice Hotels national convention, May 12-14 in San Diego, CA.

George S. Bernardich III, PowerLinx Chairman & CEO stated, "The Choice Hotels strategic alliance marks the launch of our hotel connectivity product line truly supporting our, 'Creating Solutions. Connecting the World,' motto. Becoming one of an elite group of Choice Endorsed Vendors provides PowerLinx with direct and credible access to a substantial segment of the United States hospitality market through their franchisees. The Company expects to immediately generate revenues from this alliance in the 2nd quarter and the Company expects to announce additional details regarding this exciting new PowerLinx communications application."

"The PowerLinx total broadband connectivity solution offers the price/performance our franchisees need to cost effectively deliver highly desirable service to their guests," said Daniel Rothfeld, senior vice- president of Partner Services for Choice Hotels." As free, high speed Internet access becomes a brand standard at all Clarion and Comfort Suites hotels in June 2004, we are pleased to offer our franchisees the PowerLinx communications solution and its superior performance, ease-of-installation and affordability."

Michael Ambler, President & COO of PowerLinx added, "PowerLinx's new 'PowerConnectBB' product is a perfect fit for hotel installations. It should be noted that in addition to the initial installation revenue, the Company expects to generate recurring revenue through the servicing of the system and the complementary products we expect to offer. The PowerLinx application can be installed in a couple of days without any disturbance to guests or disruption to the hotel's business operation."

About Choice Hotels International:

Choice Hotels International® (NYSE: CHH - News) is one of the world's largest lodging franchisors, marketing more than 5,000 hotels open or under development in 44 countries and territories under the Comfort Inn®, Comfort Suites®, Quality®, Sleep Inn®, Clarion®, MainStay Suites®, Econo Lodge®, and Rodeway Inn® brand names. For more information on Choice Hotels, visit the Company's Web site at www.choicehotels.com.

About PowerLinx, Inc.:

PowerLinx, Inc., www.power-linx.com, develops, manufactures, and markets, among other devices, products, and applications developed to transmit voice, video, audio and data either individually or any and all combinations over power lines, twisted pair wires and coax in AC and DC power environments, on any and all power grids. The Company has also developed, manufactured, and marketed different kinds of underwater video cameras, lights and accessories for the marine, commercial and consumer retail markets.

China released its EVD specs
18 November 2003 20:01 by dRD

Today China released the final specs of its competitor to DVD-Video disc. China calculated the timing of this week's major technological announcement very well. Currently DVD Forum is trying to solve locked situation where it has to choose either HD-DVD which is based on AOD disc, developed by Toshiba and NEC, and BD-ROM, which is based on Blu-Ray disc, developed by various consumer electronics companies, including Sony, Pioneer and Philips.

China's own digital video disc format is called Enhanced Video Disc or EVD. Format uses blue-laser discs, just like AOD and Blu-Ray do, but the exact capacity is not known at the moment. The most interesting part of the disc's specifications is in its video compression method. EVD uses proprietary video codecs developed by American On2 Technologies, called VP5 and VP6 that deliver significantly better video quality with lower bitrate levels than the MPEG-2 used in DVD-Video discs (and in proposed BD-ROM format) does and competes well (and according to various tests, also beats it at least in some cases) against MPEG-4's latest video compression method, called H.264 that proposed HD-DVD plans to use. EVD will be able to use HDTV resolution natively, which should also boost the plans to launch a nationwide HDTV service in China in near future.

China's main motivation in developing its own standard was to avoid royalty payments to American, Japanese and European consumer electronics companies that hold most of the patents involved with DVD-Video discs. However, choosing an American company to deliver the video compression method seems a bit weird against this goal, but according to On2, the deal was relatively cheap for Chinese government anyway. Manufacturers who wish to use EVD in their players have to pay $2 for each player to On2, but On2 doesn't collect any royalties whatsoever from sold EVD discs, which is a huge bonus compared to the current DVD-Video patent situation.

China exported 20 million DVD players in 2002, accounting for more than 70 percent of the world DVD player markets and it is obvious that there's a need to reduce the royalties if possible flowing out of China. Chinese government is currently negotiating about plans to set the EVD as China's national standard for digital videos and movies. However, costs are a problem; EVD players are expected to cost $230 in China and average Chinese DVD player costs only $96 in China.

China's technology standards causing friction
Steve Lohr The New York Times
Tuesday, January 13, 2004

To high-technology companies, China has been a land of seemingly pure promise in recent years. Not only is it a fast-growing consumer market, but China has also become a low-cost global workshop for assembling high-tech goods for American, European and Japanese concerns.

But as China moves to expand its own technology sector, the government has taken unusual steps that have created new trade tensions with the United States, according to U.S. executives, trade experts and government officials.

The Chinese measures include efforts to develop the country's own software standards for wireless computers, introducing exclusive technology formats for future generations of mobile phones and DVD players, even tax policies that favor computer chips made in China.

"The issue here is what path will China take as it develops its technology industries," said Bruce Mehlman, a former technology policy official in President George W. Bush's administration. "Will it take a more global, market-based approach or will it try to change the rules and disadvantage others?"

Concerns over China's strategies mounted last month when Beijing announced that foreign computer and chip makers that want to sell certain kinds of wireless devices in China would have to use Chinese encryption software and co-produce their goods with designated Chinese companies.

Foreign computer makers, led by American companies, have protested the decision by Beijing. In addition to their concern about the separate standard, foreign companies are worried about a loss of intellectual property if they are forced to work with Chinese companies that are competitors.

The quarrel over technical standards compounds the friction over a longer-standing dispute on tax policies. The semiconductor industry is protesting a Chinese tax that is as much as 14 percent higher on imported computer chips than on those designed or manufactured in China, whether by domestic or foreign companies. The higher tax rate applies to chips used in products sold into the Chinese market but not to exported products. The American chip industry contends that the tax will force companies to do more advanced manufacturing and design work in China, skewing investment and trade patterns.

The American semiconductor industry also argues that the differential tax on imports violates World Trade Organization rules that a country's tax policies must not discriminate against imports. The industry is pressing the Bush administration to file a complaint with the WTO by March unless China modifies its policy.

Chinese officials say their country is firmly and irrevocably committed to developing an outward-looking market economy, particularly since China joined the WTO in November 2001.

"We want to introduce foreign competition to help release the potential of our people and our economy," said Tian Jun, counselor for economic affairs at the Chinese Embassy in Washington. "It's a pretty open market in China."

Tian said that American concerns over technology issues were mostly misunderstandings, matters that could be resolved with further discussions, or actions China had every right to take as a sovereign country. "Chinese companies are working on their own technology and their own standards," Tian said, "but we are targeting the world market."

Some Chinese practices may not yet conform to world trading rules, he added, but those will eventually fall away as China moves toward openness. "We don't focus on short-term trade quarrels," Tian said.

So far, China has shown little interest in addressing the grievances of American technology companies, according to industry executives and government officials. It responded to complaints about the wireless encryption standard by giving companies until June to comply, and has given no indication that it plans to back off on enforcing its own standard.

The impact will probably be greatest on devices that permit short-range wireless, or Wi-Fi , connections to the Internet, which have become popular for use in homes, offices and coffee shops. The need for improved security for such data communications is widely recognized, and a task group of the Institute of Electrical and Electronics Engineers is working on it.

"Having a different standard from the rest of the world fractures the market," said Ann Rollins , director of technology and trade policy for the Information Technology Industry Council, whose members include IBM, Intel, Microsoft, Hewlett-Packard, Dell and others. "The implications of this are dangerous going forward."

The wireless encryption step, according to industry executives and government officials, is part of a broader trend of China going its own way in developing technology standards. It is a movement that promises to increase trade tensions well beyond the Bush administration's usual complaints about China's surging trade surplus and its tactic of keeping its currency fixed against the dollar, which gives it a competitive advantage in selling to the United States.

"Standards have become the new battleground, unfortunately," said Phillip Bond, undersecretary of commerce for technology policy.

How the standards issues with China will play out is uncertain. The wireless encryption standard, if unchanged and mandatory, could prompt a trade challenge from Washington. "That is both a trade concern and standards issue," Bond said. "This looks much more like a government regulation than a standard."

Encryption codes for communications have often been regarded as a matter of national security and thus rightfully determined by governments. The United States has also, in the past, tried to control computer cryptography standards.

But American critics of China's wireless encryption standard contend that Wi-Fi communications, which extend a few hundred feet, are purely commercial and not a national security concern.

Given its huge consumer market and an economy in rapid ascent, trade experts say, China will increasingly have the power to sway standards in technology, just as England set standards in the 19th century and the United States in the 20th century.

Today, the principal international standard-setting organizations have representation from many countries, including China, but American interests often have the most influence.

"We are accustomed to the United States being the biggest market and the technology leader, so the standards have largely been American standards," said Clyde Prestowitz, president of the Economic Strategy Institute in Washington and a former trade negotiator. "But China is going to be the biggest in the world for a lot of things. If the Chinese have the biggest market for mobile phones, DVD players, computers and other things, they will have a lot of power to set technology standards."

China's effort to develop its own technical standards for the next generation of DVD's appears to be an effort to avoid hefty royalty payments to patent-holding corporations in Japan, the United States and Europe. About half of the world's DVD players are made in China.

The new discs will hold four to five times more digital video and audio data than those currently on the market. The next-generation discs and their players will not be widely available until at least 2005, but the world's largest electronics, computer and entertainment companies are already battling over whose technology will become part of an industry standard.

The Chinese standard, called EVD, appears to be "more an escape hatch around the patent pools of the established companies than a technology breakthrough," said Richard Doherty, president of the Envisioneering Group.

Yet the Chinese standard is not as indigenous as it might seem. The video compression software for the Chinese standard, for example, comes from a New York-based company, On2 Technologies. After more than a year of negotiations, On2 Technologies won out over software offerings from larger rivals like Microsoft, said Douglas McIntyre, the company president.

China has in fact adopted roughly 8,000 international product standards, but it also has created 20,000 national product standards. "China has national standards that are basically what we would say are regulations," said Oliver Smoot, president of the International Organization for Standardization, a federation of national standards bodies, based in Geneva. "It's totally different from the U.S. approach, which is for producers to write a document and call it a standard. Then people are free to adopt it or not."

S.

China Telecommunications, Legend Group and at least three other Chinese companies will buy $2 billion of technology equipment in the United States this week, helping to narrow a record trade gap between the two countries, according to a Chinese government official.

A delegation led by a deputy minister in the Ministry of Information Industry, Lou Qinjian, were to sign agreements in Washington on Tuesday to buy phone and computer equipment from companies including Motorola, Intel and Cisco Systems, Bloomberg News quoted Wu Xizeng, a ministry official, as saying.

Raising the Standard: China’s Rush to Develop Technology Standards (Part I)

The First Major Test

Four years ago, a group of technocrats in the robust Chinese bureaucracy decided that they could best help the country’s nascent high-tech industry by promoting China’s own encryption standard for software. The State Encryption Management Commission (SEMC) effectively enacted a standard that would have made all global businesses register with the government any products containing encryption technology. In a very short time, and with little warning, China nearly enacted sweeping restrictions on the use of technology, wreaking havoc on growing sales of foreign software, mobile phones, e-mail and other communications applications in the country.

Among many others, this new regulation was aimed directly at Microsoft, who was at the time hoping to make a handsome profit in the China market with the sale of Windows 2000. Under the regulations, anyone using Microsoft’s Internet Explorer (IE) to surf the Net would need to register with the government. The easy solution for Chinese users: Use Chinese software and browsers. Essentially, one of the world’s biggest non-tariff barriers was enacted virtually overnight.

In the end, after a year-long struggle, a powerful multinational business and government lobby including leading business associations and high level commercial officials within US, European and Asian governments, forced China to back down. Beijing agreed to enforce registration on “only hardware or software for which encryption is a core function,” so that items such as international mobile phone handsets and browser software, where encryption is an ancillary function, would not be restricted.* Market analysts the world over breathed a collective sigh of relief. Western politicians believed this showed that China would capitulate if pushed to the brink. Technology sales once again surged. The matter may have been forgotten elsewhere, but not in China.

Prepared for Battle

Fast-forward to Beijing 2004, and the issue has resurfaced – although this time China is more prepared. There are at least two main government administrations tied to several ministries and agencies, along with hundreds of technical committees and industry associations that are all directly or indirectly working to develop Chinese standards, before the world’s standards are forced on China.

Over the past few years, a dizzying array of standards advisory groups has been formed in various Chinese ministries and departments to create basic application rules for emerging technologies in any number of industries. The Chinese government bodies include the powerful Administration for Quality Supervision Inspection & Quarantine (AQSIQ), which was established in 2001 to help China meet WTO obligations. Under AQSIQ is the Standards Administration of China (SAC), which establishes and oversees all of China’s standards and sets the annual national standards agenda. After assessing conformity to standards, the China National Certification and Accreditation Commission (CNCA) coordinates issuing accreditation. All powerful ministries such as the Ministry of Information Industry (MII) or the State Administration of Radio, Film and Television (SARFT) guide their thousands of affiliated engineers and employees to develop standards in their own image for the good of China. Hundreds of technical committees (TCs) also provide users, producers and other experts a role in standards development processes, while several Chinese industry associations, closely tied to the government, are usually involved as advisors. Each of these groups seems to be redoubling its efforts to seek ways in which China can set the standard for what the Chinese Central Government sees as the future battleground of international trade – high technology.

Why all the concentration on standards now? China’s leaders realize that if China is ever to transform from being a “developing” manufacturing base for the world’s low-end products to taking its place among the world’s developed economies, it will be crucial to control new technology development. According to Ms. Zhang Qi, the director general of the Department of Electronics and IT in China’s MII, “Owning independent IPR and winning the initiatives in setting industrial standards should be top priorities for domestic manufacturers.” Putting China’s money where its mouth is, Ms. Zhang said the MII would help form various industrial alliances among domestic manufacturers to gain the upper hand against foreigners in setting industry standards.**

The Standard Plan

Fueling the push from the Chinese government is the need to move away from its former bulky socialist scientific research system, which has been draining Beijing’s already debt-ridden budget books. China’s 10th five-year plan has stated a focus on bringing research closer to industry. As China’s economy reforms, most of its 240 national labs, ministry-affiliated research institutes and university-based research centers are required to become financially independent. As a result, dozens of new companies have been formed by government-supported labs. These companies have commercial pressures to announce results, sometimes too early and with dubious scientific support. With government backing and an attempt to avoid international scrutiny, it may be easier to first create a standard that supports China, regardless of consensus on the technology benefits, and then make global companies conform.

This scenario is playing out in a number of recent disputes that have made global trade headlines. These include China’s development of its own EVD video disc standard, its own mobile 3G standard – TD-SCDMA, one of only three world standards that rivals QUALCOMM and European standards – and the new Chinese standard that has lips curling in Washington this election year – encryption. This time, the encryption battle surrounds China’s creation of its own wireless LAN standards called Wired Authentication and Privacy Infrastructure, or WAPI. The government has said that any foreign company using this technology in China must work with one of 11 domestic companies and register with the government. No doubt, you will be hearing the acronym WAPI for quite some time to come.

Besides these, many other China-centric standards will soon be announced, including everything from China’s own digital television standard (DTV) to environmental and biotechnology standards for non-organic agriculture production.

Raising the Standard: China’s Rush to Develop Technology Standards (Part II)

The Next Battleground: RFID

Apart from the politically charged issues mentioned in Part I, one of the most important looming China standards that will have significant impact on world economic and trade flows is China’s planned involvement in creating radio frequency identification (RFID) standards.

RFID is a technology that uses radio waves to automatically identify serial numbers or many other types of information stored on a microchip that is attached to an antenna, all of which is embedded into a small card or label. This information on the label can be accessed by a nearby scanner. You are already probably used to using RFID in toll-collection, public transportation and building security, but you may not have heard about its potential to revolutionize everything from global logistics to grocery shopping. The key is RFID’s ability to store, transmit, read and even write information, all through thin air, without the need for batteries. Because of the low cost and high efficiencies that this technology brings, with tags getting as cheap to produce now as 5 cents each, RFID has several industries salivating.

Apart from engineers who are dreaming in radio waves of all the possible future applications for RFID, the technology has captured media attention as some big names are already using it on a mass scale. The day when shoppers can just push carts through a door and have items tagged and charged is upon us. So too is sped-up global supply chain management whereby products are loaded, shipped and tracked all in real time with no stopping for any reason but to slap a label on a pallet. Several industry pundits predict savings in the billions of U.S. dollars.* In addition to the U.S. Department of Defense, which has required all its food rations suppliers comply with RFID standards this year, retailers such as Wal-Mart, Target and The Gap have already started demanding that suppliers label gross pallets and cartons with RFID tags in order to track everything more efficiently. IDC expects RFID spending for the U.S. retail supply chain to grow from US$91.5 million in 2003 to nearly US$1.3 billion in 2008.**

The implication for China is tremendous. Wal-Mart alone, which recently demanded its 100 largest suppliers equip all pallets with RFID, accounts for around 10 percent of U.S. imports from China – a huge number.*** When it comes to software companies like SAP and Oracle or Chinese competitors like Kingdee that are interested in tracking everything RFID, the stakes are high. That is why, as of February, the Standards Administration of China quickly created a “Working Group” with the sole purpose of creating Chinese standards for tags and other RFID technology. Fearing that China will fall behind Western governments that are driving RFID implementation, (such as the UK, which provided 9 million euros to support corporate field trials using RFID), **** the working group will surely be pressured by China’s central leadership to quickly produce a standard that can be controlled from Beijing.

As with all of these standards, foreign companies operating in China are once again wincing at the thought of having to invest in altered or new RFID products, designed specifically to comply with rules laid down by a few folks in the Chinese government, and often with little use or application anywhere else in the world.

Conclusions: The China Standard Dilemma

China’s standards are being taken more seriously this time around because, unlike the past, the world believes it can’t afford to forgo China or allow competitors to gain the upper hand here. China now knows it has the market strength to force global companies to comply, or at least find a way to deal with China’s standards. It’s all in the numbers:


China is the second-largest personal computer market in the world after the United States.*****
More than 300 million Chinese use mobile phones, making China the world’s largest subscriber base.*****
An estimated 90 million Chinese surf the Web, second only to the United States, with Chinese approaching English in eventually becoming the primary Internet language.*****
China has the largest number of television viewers worldwide, with TV sets in over 300 million households.******
Semiconductor demand in China will jump 41 percent in 2004, driven by chips used in mobile phones, personal computers, DVD players and other electronics.
Demand for semiconductors will rise to $27 billion this year from $19.2 billion in 2003, and more than double again to reach $61.9 billion by 2008.*******

China has been making great strides in the area of standards in terms of the bureaucratic process of certification, type approval and other related items. However, the standards development process continues to be unclear and lacks transparency, planning and open channels for international input. There is an unmistakable tendency on the part of the Chinese government to use locally developed standards to achieve protectionist purposes. Whether they have been playing the China game for years, or are relative newcomers, all foreign companies are being targeted, and often caught off-guard when a new standard appears. Their role in this process is usually limited to observer, and only if they are among the lucky few. As technologies like RFID and wireless communications evolve into the lifeblood of global capital flows, the world has no choice in the future but to communicate more effectively with China.

China's DVD challenge falters


China's plans to replace DVDs with a "home-developed" next-generation disc format called EVD (enhanced versatile disc) don't appear to be going too well.


"Players powered by EVD technology are expected to offer as much as five times the quality of image definition compared with DVD players that dominate the market at present, and that is EVD's biggest advantage over DVD technology," said a Xinhua News Agency report last November.


EVDs could challenge Blu Ray disc technology from founded by Sony Corp, Matsushita Electric Industrial, Philips Electronics NV and seven other major electronics companies, it said.


Blu ray is reported to have caught the eye of the US Department of Justice.


And soon after the first 1,000 EVD players went on the market, users are reporting video quality isn't good as they thought it would be, and the costly discs are hard to find.


Now read on >>>>


EVD players not selling as expected in China
People's Daily


Beijing resident Xiao Li loves listening to music and watching movies.


About one week ago, he bought an enhanced versatile disc (EVD) player, which is said to have a picture quality five times clearer than digital video disc (DVD) players and was developed in China. He paid 1,998 yuan (US$241), which is about two times higher than an ordinary DVD player.


Excited about his purchase, he slipped in a disc but was disappointed that there was little improvement in picture quality. Then he was told that he needed to buy a digital TV set to see the real difference, which is also twice more expensive than analog TV sets now dominant on the market. What was even more frustrating was that after he finished watching the four free movie discs provided with the EVD player, he found there were few discs on the market."


Fan Wenjian, a spokesman with Shinco, a major force in the nine-member EVD industrial alliance, said more than 1,000 EVD players, including 500 in Beijing, were sold in the past week across the country following the national product launch on January 1.


But the company has shipped 100,000 units to the Chinese mainland, Hong Kong and Southeast Asian markets.


SVA, the other of the two companies now providing EVD products, said it would push EVD player sales over the weekend and expected to sell 2,000 units in the first week.


The EVD industrial alliance aims to promote the new digital disc technology in China and has submitted the technology patent to the Ministry of Information Industry and the International Standardization Organization.


The EVD standard is expected to expand research and development of this technology in China so that the heavy royalties paid to foreign DVD patent owners will be avoided.


It is reported that Chinese manufacturers need to pay US$13.8 in royalties for every DVD player they make.


The Gome Electronic Appliance store, the biggest home appliances chain in Beijing, already received a shipment of EVD players on January 2, but the store was apprehensive about putting them on the shelves for fear of lack of response from customers.



Bottlenecks
The reasons for the low market response to EVD players are simple.


According to a poll conducted by the website CCDINet.com, one of the biggest information technology websites, 63 per cent of 1,940 people polled say the lack of EVD discs is the biggest obstacle to the popularization of EVD players and 20 per cent complained that the price of EVD players is too expensive.


Although Shinco's Fan says the EVD alliance has already received support from some entertainment content providers such as Metro-Goldwyn Mayer Studios and 21st Century Fox in addition to the fact that there will about 1,600 titles available this year, it is hard to say if buyers"enthusiasm will last that long and if they will be able to afford an EVD movie disc, twice the cost of a DVD disc.


What is embarrassing to manufacturers is that, due to low market reception during the initial stage, EVD players have to be compatible with DVD players, so EVD makers may still need to pay the US$13.8 in royalties, in addition to US$2 in royalties related to the EVD standard.


All these factors lead to the higher price of EVD players over DVD players.


If the cost of buying a new digital TV set is added on, EVD players become even more disadvantaged.


However, the future may not be that discouraging.


China has been pushing for its own standards for digital TVs, audio and visual compression and EVDs, so the success of one component will greatly promote the others.


As well, the government's determination will have a considerable influence on foreign manufacturers and content providers because no company can afford to ignore a market with 1.3 billion people where more than half of the world's DVD players are produced.

(Friday 30th January 2004)

Nation to Issue EVD Standard

The Ministry of Information Industry (MII) will issue the industrial standard for the home-developed EVD (enhanced versatile disc), a next-generation disc format that will hopefully replace the currently popular DVD (digital versatile disc), in November.



The launching of such a standard signals that China, for the first time, establishes what is expected to help domestic disc player manufacturers shake off their previous dependence on foreign technologies in production, experts said.



"As far as I know, the MII will issue the standard next month," said Zhang Yijun, deputy chief engineer of the Shanghai-based SVA Group.



"We are quite confident in the next-generation digital disc technology, where we will possess our own intellectual property," he said.



While being chosen as a testing base for the EVD technology, SVA has been actively involved in the development of some core components in the new technology, according to Zhang.



SVA is part of a fledgling Chinese digital disc technology alliance -- initiated by the MII -- that involves more than 10 domestic enterprises and research institutions in the industry, including a majority of China's disc player producers.



Operating under a corporate entity called the Beijing E-World Digital Technology Co Ltd, the alliance has been engaged in EVD technology development since 1999.



While the national standard of EVDs is in the near future, the new disc format is currently under the scrutiny of related global industry organizations before it will be accepted as an international technical standard, Zhang said.



He revealed that a large amount of homemade EVD chips are now available as core parts of EVD players that are expected to supply the domestic market from next year.



EVD player prices will be set around 2,000 yuan (US$240), compared with around 700 yuan (US$85) for the average cost of a domestic DVD player.



Talks with domestic and overseas filmmakers and other video program producers are under way regarding the market supplies of programs stored in the EVD format, Zhang said.



Players powered by EVD technology are expected to offer as much as five times the quality of image definition compared with DVD players that dominate the market at present, and that is EVD's biggest advantage over DVD technology, according to experts.



As it gradually matures, the technology will enable EVD players to become a platform with various multimedia functions in the future.



In that respect, EVDs will hopefully turn out to be a next-generation digital disc format choice for domestic manufacturers, whose products account for up to 70 percent of the world market.



China produced over 30 million DVD players in 2002 -- almost doubling the figure in 2001 -- and nearly 20 million units were exported last year.



For those manufacturers, the domestic DVD player market has, after six years of growth, entered a bottleneck where many competitors have to resort to price wars to take on their rivals. Even worse is that they have to pay hefty sums in royalties each year for the foreign technology patent applied in their products.



The appearance of EVDs is regarded by some as a challenge to the "Blue Ray," a next-generation disc technology, which is being jointly developed by a number of global electronics companies like Sony, Samsung and Philips.



"It (EVD technology) is a landmark achievement for us... we believe it will find its position on the domestic market," said Ding Kangyuan, vice-director of Disc Industry Promotion Committee of China (DICC) under the China Audio Industries Association (CAIA).



Ding attributed predicted market acceptance to the quickly growing domestic high-end color TV market, especially in the high definition television (HDTV) segment, which calls for complementary disc-playing equipment like EVDs.



Ding predicted that Blue Ray technology will not form its large-scale application within the next three years. If the software sources of EVDs or video programs stored in the EVD format can be guaranteed, the players will very likely first enter the high-end domestic market segment where consumers can afford costly display products like HDTV.



A number of DICC member companies, mainly current domestic DVD player producers, have been paying close attention to the EVD technology's progress, according to Ding.



"After all, it's our own technology," he said.



Analysts, however, have pointed out that it is hard to say whether EVD technology will be quickly accepted on a global basis, even though it may find its niche in the vast Chinese market.



And as future EVD players are supposed to be compatible in terms of functions to current DVD players, domestic manufacturers will still have to pay royalties on DVD technology patents owned by foreign firms.



(China Daily October 28, 2003)

Chinese companies wet their feet in digital disk player manufacturing world

Life After the DVD
11 January 2004

By NI YANSHUO

Few urbanites can imagine life without video playing machines. China’s disk player market has forged new ground that no one had imagined. While the digital versatile disk (DVD) player is still the gadget of choice among most video watchers, signs indicate that the king of the digital disk kingdom may have to answer calls to share his throne with a new generation of disk players or abdicate.


IT’S EVD: Shinco pushes its new generation of disc player after DVD to the market nationwide

New Products Show up

On the first day this year, Jiangsu Shinco Electronic Group Co. Ltd., one of China’s major DVD producers, spun its latest generation of disk players into Beijing markets. The high-definition product, deemed enhanced versatile disk (EVD) player, was developed in China with home grown intellectual property alleged to have improved upon the definition of its predecessor, the DVD, five times over.

EVD technology was developed by Beijing E-World Technology, a company established in 2000 by China’s nine major disk player producers, such as Shanghai General Electronic Digital Technology Co. Ltd., Shinco and Amoi Electronics Co. Ltd.

“So far, 10 enterprises have adopted EVD technology. These enterprises are the backbone of China’s disk player market with a combined market share of more than 80 percent,” Hao Jie, President of E-World Technology, told Beijing Review.

However, the next-generation post-DVD disk players have yet to produce a clear heir apparent. Only 16 days after EVD debuted in Beijing, Haicheng Gaoqing, another digital device manufacturer in Beijing, announced it had successfully developed a high-definition digital videodisk (HDV) player. According to the company, HDV has similar definition quality with that of EVD but is priced cheaper. Meanwhile, Beijing-based IT product supplier Tsinghua Tongfang declared they have also independently developed the IDVD (Internet DVD) player, further throwing China’s digital disk player market into uncertainty.

“I am glad to see more and more home-made products in the market. This indicates a great demand of high-definition disk players and domestic enterprises are making their own efforts to meet the need,” Hao added.

“Presently, only EVD players are available in stores. We can sell up to 150 EVD players a day in all the Gome chain stores in Beijing,” Yan Qinghai, Manager of the Information Department of Gome, told Beijing Review. Gome is one of China’s largest chain stores specialized in retail of household electric appliances. The company has invested several million yuan in Haicheng Gaoqing for HDV development, according to sina.com, one of China’s leading portal.

“The industrial standard of EVD has been drafted and submitted to the Ministry of Information Industry (MII),” said Hao, adding it is very likely to be approved and become the national standard.

Besides the 10 major DVD producers in China, EVD also gets strong governmental support. According to Liu Dan, Chief of the EVD Standard Drafting Panel under the MII, the National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Commerce, the State Intellectual Property Office and the MII had agreed to coordinate support to and guide EVD development through policy.

Out of the Shadow

China’s DVD industry develops quickly and maintains high growth in export. In 2001, China became the world’s largest DVD production base largely due to low labor costs. In 2002, the export value of China’s disk players, mainly DVD players, exceeded that of color TVs for the first time to reach $3.5 billion, making the sector a highlight of China’s electronic industry. Figures from the National Bureau of Statistics show that in the first eight months of last year, China exported a total of 34.04 million DVD players, a rise of more than 90 percent year on year. Presently, market demand for DVD players worldwide is approximately 40 million, 90 percent of which are produced in China.

The rapid development of China’s DVD industry greatly affected the interests of foreign DVD producers. In 1999, 6C (the patent protection alliance formed by six technology developers: Hitachi, Panasonic, Toshiba, JVC, Mitsubishi Electric and Times Warner) claimed that it owned the patent rights of DVD core technology and required all DVD producers worldwide to pay patent fees to it. Chinese DVD producers are required to pay $20 for each DVD player produced.

The claim greatly truncates the cost advantage of more than 100 DVD player producers though the patent fee was finally reduced to $13.8 per unit after hard negotiation.

China started its development of core technology for the post-DVD generation of disk players only half a year after the 6C imposed the patent fee on Chinese DVD player manufacturers. In 2002, E-World Technology developed the high-definition disk player, EVD, followed by HDV initiated by Haicheng Gaoqing and IDVD by Tsinghua Tongfang in 2004.

China Going Digital

The EVD player is designed to multiply by five DVD picture definition. However, high quality pictures can only be enjoyed with high definition TV sets.

“China currently has over 100 million analog TV sets and these TV sets will be gradually replaced by high definition digital TV sets in the near future. The large digital TV set market will feed the high definition disk player market,” said Chen Hua, Manager of Marketing Department of Amoi.

“Major TV producers are energetically promoting their high definition TV sets including LCD digital TV sets and rear projection TVs,” said Fan Wenjian, Deputy General Manager of Shinco, which produced China’s first EVD player. A salesman at Suning Appliance Chain in Beijing told Beijing Review that starting last August, high definition TV sets sales in his store has picked up, accounting for 60 percent of TV sets sold.

Prevalence of digitalized TV program production also adds to the consumer enthusiasm in high definition TV sets. During the 2008 Olympic Games in Beijing, high definition sport programs are expected to be broadcasted digitally. Sources from the State Administration of Radio, Film and Television say that China will stop all the analog TV programs by 2015. So it’s only a matter of time before digital TVs will replace most analog ones.

“In the near future, all TV programs will be sent by high quality digital signals and, accordingly, TV sets will be upgraded. It makes sense to have high definition disk players to go with this trend,” added Chen.

Battle of Red and Blue

EVD and other disk players in current Chinese markets still use a technological standard to read discs adopted originally in DVD players referred to as red laser. Meanwhile, nine electronic multinationals including Sony, Panasonic, Hitachi, Sharp, Samsung, LG, Pioneer, Philips and Thomson put forward a totally new disk memory format—blue laser format. The competing technologies read discs that are mutually incompatible. But the consortium hopes to apply the new one to the next generation of DVD players.

In early February, Hewlett-Packard Co. and Dell Inc. announced support of blue laser technology. Dell says it will use the technology in future products because of its superior memory capacity—six times that of DVDs. One blue-laser disk can continuously play high definition programs for 4 hours.

“It is still too early to say that Chinese customers will prefer blue laser disk players. The Chinese market will speak for itself. Gome responds to those consumer needs,” Yan Qinghai of Gome told Beijing Review.

Since blue laser technology is totally new and cannot read red laser disks, consumers would have to trash all their red laser discs based on VCD, SVCD and DVD standards and restock their video library with blue laser discs. Their choice of disks would be reduced. Producers would have to establish a totally new product line for blue-laser disk players. Costs would rise, at least initially.

“The main advantage China-made products have is their low production cost and we must give play to this,” said Hao of E-World Technology. According to Hao, EVD player producers can keep investment stable while shifting production from DVD to EVD players. Selective upgrading will enable DVD producing lines to produce EVD players.

Hao told Beijing Review that E-World Technology has successfully developed a new EVD model that has comparable memory to blue laser product [16G] but features much lower costs. The new product will be put into market according to the demands.

“Research and development of new-generation EVD players has been completed and we will gradually introduce them into the market to meet consumer demands. A product series that can meet market demand will thrive in the market,” said Hao.

Patent royalty fees for use of DVD technology in China set to decrease by two thirds if EVD technology accepted as the national standard in China

Although the development of the domestically produced EVD (Enhanced Versatile Disc) has been the subject of a lot of international controversy, its promoters have now managed to secure the support of China's Ministry of Information Industry (MII) and other relevant governmental departments in its drive to gain official status in the industry for the standard. In recent days, the head of the EVD Standard Team, Mr Dan Liu, is quoted as having said that the team is planning to hold a second conference this month, following which it will submit a draft of the Standard to the MII, which in effect means that "EVD is going to become the industry standard of the National Information Industry."

It is reported that despite the fact that the new EVD technology constitutes the latest in a new generation of media players (of which the intellectual property rights thereof are owned by a consortium of Chinese companies) those manufacturers who make up the EVD standard, will still be required to pay at least one third of the DVD licensing fees payable to those companies (mostly foreign owned) who initially developed the DVD technology, and who jointly comprise the 6C Union.

China's EVD Standard becomes the industrial one
Last Updated(Beijing Time):2004-07-21 09:49

By Zhong Jing

China's traditional DVD player industry with overwhelmingly cruel competition is now approaching its end. As the so-called substitute for DVD players, high definition disc players, such as EVD, HVD, HDV and the like, are launched successively. However, without exception, their appearance in the market incurs various questions from both inside and outside the industry circle.

Meanwhile, market feedback further manifests obviously that the substitute for the traditional DVD player does not appear in fact.

Actually, China's disc player industry, while suffering from being forced to pay foreign patent magnates billions of US dollars of patent fees, is now striving for the research and development of high definition video disc technology. Therefore, support should be given to the industry.

On July 8, the Ministry of Information Industry declared that the national standard of EVD (Enhanced Versatile Disc) for the electronic industry was officially publicized online. It is China's first standard for high definition video disc system with the independent intellectual property, indicating that a "title" is finally given to EVD as the world's first industrialized high-definition digital disc player developed by China.

On the same day, the China's Audio-Visual Industry Summit Forum was held synchronously in Guangzhou. In the forum, a keynote speech ¨C Development Tendency of High Definition Disc Player ¨C was delivered by Tian Yujing, a senior engineer with Television and Acoustics Research Institute of Information Industry Ministry and an authoritative expert in the audio-visual industry. During her speech, Tian analyzed one by one the three high definition disc formats that are based on red-laser technology, namely EVD, HVD and HDV, all of which are now speculated heatedly in the domestic industry circle.

Tian Yujing stated that in terms of the audio and video compression, there are few differences between the traditional DVD format and the current three formats that still use the present mainstream technologies of audio and video compression. It is not the best solution to the current high definition technology of red-laser disc players. In addition, the overwhelmingly high price of EVD made it difficult to be favored by the market, and the scarcity of program sources in the market leads to more difficulties on the spread of EVD.

As for HDV mainly promoted by Beijing Kaicheng High-Clarity Electronics Technology Co., Ltd., Tian Yujing analyzed that since the function of decoding MPEG-4 is added, HDV can become the decoding platform of some network videos, but "it is not the real high definition program and even has basically no relation with high definition".

In the light of HVD, Tian Yujing said that its video and audio formats are the same with those of DVD and its file system structure is similar to that of the computer.

Tian Yujing believed that in general, these three products have the additional functions based on those of DVD. If they are not compatible with DVD, the problem of serious scarcity of program sources will exist in all of the three products. In view of the market enrichment, the three products each have some advantages. However, the competition among the three has led to the market chaos.

Meanwhile, Tian indicated that before the launch of blue-laser products, red-laser high definition products are undoubtedly the focus of market research. Nevertheless, blue-laser technology will inevitably become the mainstream disc technology in the future, and thus China's enterprises should participate in the world¡¯s research group of blue-laser technology as early as possible.

As an authoritative expert in China's audio and video industry, senior engineer Tian Yujing provides a fairly sharp review. However, just as what she has said, the competition among the three formats has led to the market chaos, which is definitely not beneficial to all of the three products.

In fact, how the industry carries out the integration of systems and technologies is the key for the healthy development of products and also a tough issue that the industry has to face. In view of the whole industry in China, there is hardly a precedent of successful alliances. Almost all of the alliances are communities for temporary interests, and there were no binding force or cohesion between them. It is one of the hindrances to China¡¯s industrial development and also a problem that high definition disc industry urgently needs to solve.

Therefore, China's relevant industry circles should integrate their forces to unitedly conduct product researches and to avoid cannibalism. In addition, under the general background of global technology convergence, foreign technologies should not be completely abandoned just for the sake of pursuing full independent property rights.

China Launches its Own DVD Standard, Seeks Patents

China, which made 30 million DVD players last year, is flexing its own high-tech muscles by launching a new standard for video on optical disks called EVD for Enhanced Versatile Disk. The new standard, if China gains enough users, would help it in two ways. It would avoid paying royalties on DVD patents to foreign organizations and it could potentially rake in royalties from foreign firms if the EVD format proves popular outside China. The Chinese government said it would "attack the market share of DVDs." China makes about 60% of the world's DVD players according to Vamsi Sistla, senior analyst with Allied Business Intelligence.

Two unanswered questions remain, however:

1.Will EVD help protect content from piracy? China has promised to eradicate intellectual property theft since it joined the World Trade Organization in 2001. The EVD announcement didn't mention the piracy issue.

2.Will the studios, specifically the American ones, permit their content to be distributed on EVDs?

China's State Trade and Economic Commission and its Ministry of Information Industry has sponsored the development of the high-definition compression format since it began in 1999. Beijing E-World Technology Company did most of the work. It used video compression technologies that it licensed from US-based On2 Technologies. The consortium that nominally developed the EVD technology has applied for 25 patents, seven have been granted. Forty more are in the queue. Strange behavior for a country that openly permits pirated DVDs and CDs to be sold in its street markets.

The Chinese government says that EVD players will sell for about $240. The cost should drop as production volumes increase. A DVD player made in China sells for about $85.

The Communist Party newspaper the People's Daily said last month that EVD will let domestic disc-player makers "shake off their previous dependence on foreign technologies."

China missed the VHS videotape era. Its primary method for storing video is currently VCDs, video recorded on CDs. VCDs are lower in quality than DVDs, more like VHS-quality. DVDs are considered the high end of the market in China.
Video Technology Evolution

Nov. 24, 2003. China spins out its own video disc format
HDTV technology for domestic market

Alternatives sought to Western ways


TED ANTHONY
ASSOCIATED PRESS

BEIJING—Seeking to compete on its own terms in the lucrative entertainment industry, China has announced a government-funded project to promote an alternative to DVDs and "attack the market share" of the global video format.

The rollout of the long-planned project, known as EVD, or enhanced versatile disc, was timed to coincide with the beginning of what China calls the "golden sales" period — known elsewhere as the Christmas shopping season.

EVD would give Chinese manufacturers and technology consortiums a homegrown platform to sell and build on.

It also is aimed at relieving Chinese DVD producers from paying licensing fees to the companies that hold patents to the DVD format.

It was not immediately clear if any elements of EVD would help China battle the intellectual-property theft it has been promising to eradicate since joining the World Trade Organization in 2001.

Pirated Hollywood movies on DVD are still everyday sights on the streets of Chinese cities.

Nor did the Chinese government say whether it had contacted major film producers about eventually releasing their films and other productions on EVD. That would be a pivotal factor in any new format's success.

A spokesman for the Motion Picture Association of America did not immediately return a message seeking comment.

Development of the new, high-definition compression format has been sponsored by China's State Trade and Economic Commission and its Ministry of Information Industry, two powerhouses in the country's efforts toward high-speed economic and technological growth.

The official Xinhua News Agency said organizers hoped EVD ``would attack the market share of DVD," the acronym for digital video, or versatile, disc.

Research on EVD began in 1999. It was developed by a company called Beijing E-World Technology Co. Ltd. using video-compression technologies licensed by On2 Technologies, an American company.

Because large parts of China's economy are still controlled by the state, it is in a better position than most countries to ensure such new technology will take hold in the domestic market.

More uncertain is the international market, which has moved toward DVDs as the standard.

On the surface, it would seem that EVD's international impact could be huge, because China makes about 60 per cent of the world's DVD players, said Vamsi Sistla, senior analyst with Allied Business Intelligence, an Oyster Bay, N.Y.-based research firm.

But there is no guarantee that standards bodies and Hollywood will endorse EVD, meaning that EVD machines for the forseeable future will need to also play DVDs — thereby forcing Chinese manufacturers of such equipment to keep paying DVD royalties, Sistla said.

Also, while EVD is designed to be better than DVD at recording and showing finer-quality images for high-definition TVs, the HDTV market remains small — and already is the focus of competing standards, such as Blu-Ray and HD DVD-9, developed by leading electronics companies in Japan, Korea and Europe.

"It's too premature at this point to feel that EVD is going to change the entire ball game," Sistla said. "There is no guarantee for success.''

In China, though DVD is the upper-end standard, many people still use VCDs, or video compact discs, a differently coded format. VCDs never caught on in the United States, where a shift from VHS-formatted videocassettes to DVDs has been under way for several years.

Most DVD players play VCDs out of the box as well.

The government has said EVD players will cost about 2,000 yuan ($240), though the cost of technologies generally drop as they are widely accepted.

In comparison, a domestically produced DVD player costs about 700 yuan ($85).

EVD's emergence has not only economic but cultural roots. It is consistent with communist China's broader intentions — carving out a unique place in the global economy, whose standards it complains have been defined by the West.

As it moves further from its planned-economy roots and deeper into its market-oriented experiment, China has made a point of saying it wants to develop Chinese answers to modern problems. EVD fits that goal.

The Communist Party newspaper People's Daily said last month that EVD will let domestic disc-player manufacturers "shake off their previous dependence on foreign technologies.''

fisherguy 08 Jul 2004, Re EVD.
The Yahooers are in a tizzy because somebody found some Chinese PR's today, which, via their fuzzy logic pidgeon English Babalfish translations, purport to say that the Ministry of Infromation Industries in China today formally announced approval of the EVD standard. Because there is no direct mention of On2 VP, coupled with the BEW royalty spat, the thinking is that VP isn't part of the standard. Personally, I wouldn't draw the same conclusion. First, its not totally clear from the translations what MII may have approved, if they indeed approved anything. Second, assuming MII approved the EVD standard, I can't see where MII would make specific referenece to components of the standard either by technology descriptions or by identification of intellectual property ownership. The standard, if approved, exists in the specifications as published. "Read the spec's". That's all MII is likely to say.

Some more things to keep in mind rgarding EVD and On2 bearing on this topic:

The official submission made by BEW of the poposed EVD industrial standard to MII in China last fall contained only one high definition video compression technology - On2 VP6. Unless there was a subsequent change in the submitted standard (no public acknowledgement has ever been made by either BEW or MII that a change was made), then a reasonable assumption is that On2 remains the proposed high definition compression component until official disclosure to the contrary is made.

Nobody can point to one piece of factual evidence that says that BEW has discarded its intentions to utilize On2 VP technology. As far as I know BEW has never stated publicly that it isn't going to use VP. The only substantiated information bearing on this issue is that:
1)On2 has filed arbitration to collect on minimum royalties and the porting fees that BEW has not paid, and
2)BEW, in comments attributed to Hao Chieh, claims they do not believe they are obligated to pay until such time that they ever start making EVDs including VP.

There have been a number of very fuzzy, contradictory, and outright erroneous reports about EVD progress in China. I note for example that in today's translated PR's purporting to announce the standard approval there are murky claims about major Hollywood studios having endorsed EVD. Pure BS. There has never been a Hollywood endorsement of EVD. That's because, if for no other reason, there has never been a product for Hollyood to endorse that the Chinese could tell Hollywood actually repesents the real EVD product they plan to produce. An indication of this is the fact that as recently as just a few months ago studio folk were asking Eric Ameres for an update on EVD progress when he presented at a conference in Hollywood. Pretty clear indication that as of then Hollywood was still in the dark about EVD - yet from out of nowhere they are now onboard.

Yeah, Hollywood studios are real anxious to sign up for releasing their content for a technology they haven't been able to test, from a Chinese consortium that would appear to be totally confused in its efforts, not to mention an outfit that appears to be on the wrong side of trustworthiness in its business dealings with its originally announced principal US technlogy partner. Hmmm.... let me see if I rememeber. Time Warner is an On2 partner. Gee Time Warner caries owns a lot of content. Hmmmm.... let me see if remember. Sony is an On2 partner. Gee Sony owns a lot of content. For sure I bet these two are just ####### in their pants to let their content out for EVD - knowing, as I am sure they do, how BEW is screwing with On2. And for sure, if BEW picks a decidely inferior compression format I can see these two (TW and Sony)rushing to endorse it over the VP6 which they themselves have both licensed and know to be the best compression technology available. Yeah, right.

BEW for its part has really said very little about EVD, except that next generation EVDs will appear in early 2005 and will incorporate a higher density optical drive format. They haven't said that VP will be the compression and they haven't said it won't be. They haven't said squat. Telling might be the fact that On2 on its part has yet to request that the contract be voided. Maybe that will come, but given the time that's transpired one begins to suspect that there are things afoot which gives On2 management some basis to think that the prospect of VP remaining part of the EVD project isn't dead.

The Chinese, as the old saying goes, can be very insrcutible. In the absence of them publicly speaking to the issue of EVD and the contractual matters with On2, its anybodies' guess on the street as to what the ultimate disposition of the matter will be. Maybe the Chinese are stump stupid and think they have some homebrew compression concoction they can substitute for VP. Improbable. They might think they can utilize a hybrid MPEG4/H264 AVS product. They are mistaken. There is no way that a hybrid MPEG4/264 product (if it actually exists) can match the quality or efficiency offered by VP6. Its not possible to take two independently inferior compression technologies and glue parts and pieces of them together to produce a codec that will beat VP6. Not to mention that if whatever homebrew codec they are thinking of using is based in any way, shape or form on parts of MPEG or H26 technology, then they are on the hook to pay royalties to both of the patent pools which control those technologies. How much sense does that make? They still are going to be on the hook to On2 for minimums because they will lose in arbitration.

Bottom line, in my opinion, if BEW pursues EVD absent VP then they essentially kill EVD's prospects - certainly they do so regarding any future for EVD outside China's borders. That's because absent using VP6 they aren't going to get Hollywood endorsement for content. How many outside China want to watch English dubbed Chinese kung fu movies? 'Cause that's all the Chinese will be able to put out on EVD if it isn't using the best compression technology to be had. The studios certainly aren't going to line up to endorse EVD built around inferior technology, and without Hollywood content EVD has absolutely no future outside China.