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Street Signs in Beijing August 20, 2006

Posted by NoWires in China, Technology, User interface, Wierd but true.
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traffic-sign-1.jpgThis is one of the most famous logic-defying street signs in Beijing near the 2nd Ring Road that started to circulate on the Web a few months ago. Good luck finding your way to make a right turn. Numerous tales of drivers got lost or fined by the police for making a wrong move have filled BBS’s.

01.jpgThen I came aross this accompanying image on the left. Trace the yellow line to make a right turn. Avoid the red line – it’s a sure way to get booked by the cops. Clear now? Bloggers are surely a resourceful bunch, aren’t they?

I was rather intrigued and went on Flikr for more strange street signs. Well, I wasn’t disappointed. Here, here, and here.

UI designers of the world, unite!

Online Video Regulation in China: Limiting Free Speech or Turf War? August 18, 2006

Posted by NoWires in China, Web.
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A recent proposal by the State Administration of Radio, Fild and Television plans to issue new regulation limiting online video sites to obtain certificates before they can release contents has stirred up a lot of attention. This looks like yet another attempt by the government to choke off outlet for free speech.

Here is another angle: There are two main ministries in China with regulatory power over internet: the Ministry of Information Industry (MII), which covers mostly telecommunications, and the Ministry of Radio, Film and Television (SARFT), which oversee the media industry. Guess what guys, the transition of old media onto Internet everyone is raving about has created a bit of tug of war between these two ministries. Last year MRFT shut down several IPTV trials conducted by telcos owned by MII.

To read events in China, I always keep one thing in mind: since so much of the economy is still state owned, many of the activities conducted by private enterprises or organizations in this country are carried out by the government in China. So we constantly encounter stories like these where a government agency issues regulations to protect the monopolistic status of industries under its watch. Of course, “decency” is a word all censors use defetly when it comes to curbing freespeech.

Fire in Dell’s Yard? August 17, 2006

Posted by NoWires in China, Web.
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News report this morning that Lenovo, the fierce rival of Dell, just hired two Dell executives in its Asian operation to head up Lenovo’s AP and Japan operations. Just a few month ago, Lenovo has hired another former Dell exec to be its CEO.

This must be a bitter sweet moment for Dell. The old saying is that imitation is the highest form of flattery. Dell should take pride that its execs are highly valued by its rivals. However these departing execs clearly saw better opportunities elsewhere. In quick succession Dell has lost its key players in AP, China and Japan. The Asian market will be the next battle ground for the PC makers with sales in India expected to explode. This can’t sit well with Dell.

dellfire.jpgJust earlier this week, Dell announced recall of four million laptops to replace batteries that are prune to catch fire.

How much more pressure CEO Rollins will take?

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Prepaid Phones and Walled Gardens August 16, 2006

Posted by NoWires in China, Wireless.
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The Wall Street Journal reported a story (subscription needed) about people buying up cheap prepaid cell phones and resale them for quick profit. After years of pushing for annual contracts, US mobile carriers suddenly discovered the benefits of pay-as-you-go services and started pushing it by handing out heavily subsidized cell phones. It is rather odd that marketers at these carriers were caught by surprise since the arbitrage opportunity is quite obvious.

Pay-as-you-go services have been popular in Asia for years. In my previous life I needed to travel to China and HKryt08010091.jpg frequently. The choices for were either to pay the $2.5/minute Cingular slapping on me for international roaming, or to give up on the idea of using cell phone all together. Luckily, the local carriers in those places offered me an alternative: I would buy a SIM card at the airport with a local phone number, pop it into my GSM phone and ready to go. I buy minutes in chunks which costs me about $0.2/minute depending on which country I am in. Considering my local friends and colleagues can reach me on a local instead of an international number, it is a bargain all around.

What’s interesting about the WSJ article is the carriers are selling a handset for this service. So I would have to buy a phone if I wanted this service here. This is a direct result of the “walled garden” approach these carrier practiced for years. In the US market, carriers wield enormous power over phone manufacturers. Carriers decide which models can be used, and in many cases which features can be turned on. Most of the handsets are locked – it works only on one carrier’s network.

This walled garden approach will hurt the carriers, as the article illustrates. Ultimately, man-made barriers make developing applications for cell phones a mini water torture. (I know because I am in the thick of it.) You are forced to deal with one carrier, one platform, one manufacturer, even one model at a time. Speaking of choking off the innovation.

China Mobile’s Market Value August 15, 2006

Posted by NoWires in China, Wireless.
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chinamobilelogo.jpg Woke up to the news that China Mobile is now the world’s largest telecom carrier in terms of market value, surpassing former leader Vodafone. Although China Mobile has had more subsribers than Vodafone for a while, it has less revenue $31B vs. $45B, and until recently is an almost exclusively Chinese market operator whereas Vodafone has a more global foot print. A closer look at some other KPIs, such as ARPU (Average Revenue per User), China Mobile trails Vodafone ~$25/month vs. ~$36/month in the latest quarter. And majority of China Mobile’s revenue comes from voice services, not the new sexy data services. So what gives?

Many attributed this high valuation to the growth expectations of the Chinese telecom market. This certainly is a factor – cell phone penetration rate in China is about 25%, comparing to >60% rate of the developed countries in which Vodafone operates. However I think investors have already learned to avoid the trap of multiply whatever revenue by 13 Billion to estimate the Chinese market: the 300 million cell phone users in China today represents most of the urban affluent population. In terms of total addressable market, there is not a vast void as the 25% penetration rate suggests.

The main driver for this high valuation is the strong competitive position China Mobile occupies in the Chinese market. Although there is a second mobile operator in China (China Unicom), China Mobile is by far the dominate player in China. It has been pushing others around with ease, be it competitors, content providers or value-added service proviers (SP). One clearly indication of this market power is the extremely high margin China mobile maintains: EBITDA margin of 54% vs. Vodafone’s 36%. As the flagship operator of the Chinese government, China mobile also enjoys strong backing of the government. This virtual monopoly is what the market paying the premium for.

However backing from the government is not without its drawbacks: top management of Chinese telcos are subject to frequent shuffling. For example, current CEO of China Mobile was the CEO of China Unicom, its main competitor, until he was re-appointed to his current post. Although they are independent companies in their own right, in the eyes of the administration, China Mobile and China Unicom are more like two departments of a single organization. Management talents are on a rotation program and can be freely moved among different telcos.

What competition?