The WAVE Report
Issue #0102------------------1/9/01

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0102.1 Hot Topics

Cell Phone Shipments to Hit 420 Million

Plantronics To Preview Bluetooth Headset

Opera Software Reports 2 Million Downloads in First



0102.2 Story of the Issue

World Cellular Subscriber Base Likely to Exceed 700



0102.3 Computers

Taiwan Ships 12.7 Million Notebooks

Taiwan's PC Output Grew 40% from 1999


0102.4 Motherboards

Taiwan Produces 101 Million Motherboards


0102.5 3D

trueSpace5 Announces 3D Authoring Tool


0102.6 Semiconductor

TSMC Predicts US$100B in 2010

NEC to Sell Eight Overseas Factories


0102.7 Information Appliances

BSQUARE and Philips Components Collaborate On Internet

Appliance Products

Taiwan’s IA Market Grows

Be Offers Home Audio Reference Platform for Internet-

Enabled Home Stereo Component




0102.1 Hot Topics


***Cell Phone Shipments to Hit 420 Million

(January 9)


According to the Japan Times, the Japanese unit of GartnerGroup has released a survey showing that worldwide shipments of mobile phones will likely reach 420 million units in 2000, far outpacing the 280 million shipped in 1999. The survey results also showed that shipments reached 104.6 million units in the July-September quarter of last year.

The high growth is attributable to a surge in new subscriptions in the Asia-Pacific region and Latin America, as well as steady demand in Europe to update models. Ranking top in the third quarter of 2000 was Nokia Group, which took 30.6 percent of the global market, followed by Motorola with a 13.3 percent share and Ericsson with 9.7 percent.


Japanese builders of semiconductor manufacturing equipment are expected to enjoy an average of 17.7 percent sales growth over the next four fiscal years, with a surge in fiscal 2000 expected recede the following year. Active demand linked to the information technology boom is expected to raise sales in the year ending in March by as much as 72.9 percent to 1.95 trillion yen, according to the Semiconductor Equipment Association of Japan.


The growth in demand will likely slowdown thereafter, however, to a 4 percent rise to 2.03 trillion yen in fiscal 2001 and a 1.4 percent fall to 2.003 trillion yen in fiscal 2002, due to a slowing U.S. economy and a fall in demand for personal computers and mobile phones. Sales in fiscal 2003 are forecast to grow by 8.1 percent to 2.17 trillion yen, however, thanks to the anticipated launch of an advanced chip production technique that uses larger silicon wafers 300 mm in diameter.


***Plantronics To Preview Bluetooth Headset

(January 5)


Plantronics, a provider of communications headsets, announced that the company will preview its Bluetooth headset in the Plantronics booth at Winter CES 2001 in Las Vegas. The lightweight headset will deliver hands-free, wireless convenience to mobile users, allowing them to communicate with other Bluetooth devices such as mobile phones, PDAs and laptops.


Plantronics Bluetooth headset is an over-the-ear style for the convenience of mobile users. The battery and controls are incorporated into the headset itself, in a lightweight, balanced design. Users can answer a call, hang up, adjust the volume and even mute the microphone with the touch of a button. The controls provide tactile feedback, so they can be operated with one hand. The user receives additional information through audible tones that indicate various conditions, such as when mute is engaged, the battery is low.


The headset has an adjustable boom and a noise-canceling microphone that reduces background noise and enhances voice clarity. For recharging, there will be a wall charging unit and a car adapter with a "Y" connection, so users can charge both a cell phone and the headset.


Plantronics has selected Philips Semiconductors as a technology partner in the development of the headsets. The headsets will use the second-generation Bluetooth chipset from Philips. The first headset is expected to be available in spring 2001, and will be fully Bluetooth compliant.


***Opera Software Reports 2 Million Downloads in First Month

(January 9)


Opera Software has announced that two million copies of Opera 5 for Windows have been downloaded worldwide since its release on December 6, 2000. This number includes all downloads from Opera's Website, as well as from reporting download partners. Opera 5.0 for Windows is the first free version of Opera's Web browser.


In addition to the 2 million downloads, Opera has signed for distribution of around 10 million copies through agreements with numerous publications worldwide. More distribution agreements are pending.


Opera has now started shipping localized language versions of the browser, lowering the barrier to access for millions of non-English speakers.


0102.2 Story of the Issue


***World Cellular Subscriber Base Likely to Exceed 700 Million

(January 9)


According to EMC estimates, at year end 2000, the total world cellular subscriber base is poised to exceed 700 million with over 213 million added during the year; this compares with 169 million additions in 1999. The year 2000 is likely to have represented a growth peak, with the absolute number of new users set to stabilize or drop slightly during the next few years. EMC expects to see a further addition of 184 million during 2001 bringing the world total to 875 million at year-end.


At year-end 2000, GSM will have accounted for 425 million users and this number will rise to 540 million by year-end 2001 representing 65% of the digital market. China accounts for 16% of the world GSM subscriber base at year-end 2000, and 11% of the world cellular market. The subscriber growth, worldwide, is largely attributable to the marketing of prepaid tariff options, and the introduction of calling-party-pays in some markets.


Indicators for cellular world at year end 2000


Indicator Year End|Year End

2000 1999


ARPU $/month 42.11 44.32


MOU outgoing/month 147 121


Monthly churn 2.56% 2.24%


SMS messages sent per 30 10

GSM subs/month


World's largest GSM China| China

market 73.3m 43.5m


World's largest CDMA USA| Korea

market 31.2m 23.4m


World's largest TDMA USA| USA

market 30.4m 18.2m


World's largest USA| USA

cellular market 100.7m 81.1m


World's largest Morocco|Botswana

cellular growth market 629% 507%

2.7m 93k subs


Highest penetrated Iceland| Finland

market (expressed in 77.4% 65.1%

terms of % of population)


Source: EMC World Cellular Database


The overwhelming requirement of users will continue to be a reliable voice service at a moderate cost. Although enhanced data modes will begin to appear during 2001, there remains little firm evidence of real growth in user demand for these services.


As some markets begin to approach or exceed the 100% penetration of population mark, there will be a determined shift in emphasis from an increase in absolute subscriber numbers to growth in airtime usage and associated revenue. In preparing for this shift, those relying on it must bear in mind that positive evidence for the take-up of transaction-based m-commerce has not been forthcoming in 2000.


Questions probably persist in the minds of consumers over the security of m-commerce solutions and whether goods and services are more conveniently bought over a mobile data interface than over the fixed Internet or indeed in a shop.


The uptake of stock-trading services in the Far East gives some indication that where real-time information and response collide, demand for mobile applications that can deliver instructions securely and near instantly does exist. This emphasis on increased usage has resulted in an almost accidental explosion in SMS traffic in the year 2000. Although an inherent feature of the GSM specification, SMS was never designed with person-to-person messaging in mind. Despite this, mature Nordic operators are reporting 7-10% of wireless revenues being attributed to SMS traffic. Based on GSM Association SMS worldwide traffic reports, EMC estimates that SMS traffic per month per GSM subscriber has tripled from year-end 1999 to year end 2000 averaging 30 SMS per subscriber per month.


Handset shortages, particularly of top-of-the-range models - will continue to have an impact on the industry. There will be some impact to planned introduction of GPRS; there will be severe impact on the dates for planned 3G launches.


Third generation chipsets are still at an early stage of development and considerable progress is required in the development of battery technology to support the planned applications. An indicator will be provided by the presence, or otherwise, of working prototype handsets as opposed to design concepts, at early exhibitions such as the GSM World Congress, CeBIT 2001, and CTIA. Nokia will continue to hold its dominant position as world market leader of the handset business.


In the area of delivery of data services and content NTT DoCoMo will continue its determined efforts to export its established i-MODE services outside Japan. Trials may be expected in various European countries, USA, Brazil, and Hong Kong.


As with fixed Internet products, there is likely to be increased emphasis on phones that support multiple microbrowsers, available to manufacturers for no license fee, such as Read HTML, c-HTML or XML compatible versions. WAP's position within the overall expansion of the field is unlikely to improve. There is little prospect of recovery from a legacy of failed user expectation and unsuccessful marketing of the technology rather than the access to content.


GPRS systems will come on stream during 2001 and have the potential to stimulate the market for wireless data. Success will depend on the ability of the operating companies to market the services in an attractive way, to ensure that performance matches expectation at a reasonable tariff level, and to secure a reliable supply of handsets.


There is continuing confusion over the level of service that will be provided by GPRS. There are still frequent references to data speeds of 115Kbps or even 171Kbps. It is clear that in a practical, operational network, data download speeds are unlikely to exceed 30Kbps; the true 'character throughput speed' has yet to be assessed. However, the ability to provide good performance at these speeds, when operating on a packet based system, should not be underestimated. Given the likely delays in widespread availability of 3G, there is scope for optimism over the market potential for GPRS.


EDGE technology has been proposed to boost network capacity and operating speeds. However, there is no real implementation commitment from any significant number of operators, and there is no indication that any user devices supporting EDGE are currently being planned. Proposals to use EDGE as a path towards 3G in TDMA systems are looking less likely to proceed, especially in light of the recent decision by AT&T to pursue a path structured around W-CDMA rather than TDMA/EDGE. Some TDMA operators, particularly in Latin America, are now looking to overlay their networks with GSM/GPRS capability so that they can offer high-level data functionality and open their networks to the advantages of worldwide GSM roaming.


0102.3 Computers


***Taiwan Ships 12.7 Million Notebooks


According to International Data Corporation (IDC), 24 million notebooks were shipped in 2000 and local manufacturers made 12.7 million units which held a 52.5% market share. IDC predicts that in 2001, global shipments should reach 27 million notebooks, and Taiwanese companies will own a market share of 56.3% with 15.2 million units. Production volume from China should contribute around 14% of Taiwan's total shipments and 7.4% of the global total.


Taiwanese manufacturers have been racing to buy land and rent factories in China. The restrictions still stand, but notebook companies such as Acer, Arima, Asustek, Compal, Inventec, Mitac, Quanta, and Twinhead have already built factories in China. If the Taiwan government lifts restrictions on local notebook manufacturers entering China, shipments from the mainland could reach two million units in 2001, the Market Intelligence Center predicted.


If production volume increases at a rate of 80% each year, then the China facilities could contribute 50% of total shipments from Taiwanese companies in 2004.


***Taiwan's PC Output Grew 40% from 1999


Taiwanese desktop PC production increased 40% by volume in 2000 over 1999, the Market Intelligence Center (MIC) reported. The MIC indicated that in 2000 desktop PC shipment levels for both the Taiwan and global markets remained stable throughout the year. But the exports are gradually shifting from the US and Western Europe to Asia.


Orders from Japan contributed 15% of total shipments, and other Asia Pacific countries accounted for 11%. In 1999, both areas generated only 9% each. Exports to Western Europe dropped from 25% of total shipments in 1999 to 22% in 2000. US shipments decreased to 38% compared to 44% in 1999. OEM and ODM business dominated 80% of the desktop PC industry in Taiwan.


China’s Legend Computer became the tenth-largest desktop PC manufacturer that attracted the domestic market and strong distribution channels. Legend now holds a 1.7% share of the global market.


Compaq still holds the number one position, with 13.7% of the market, a slight decrease from 1999 due to lower-priced PCs. IBM retreated from the retail market in Europe and North America, moving down to number 4 with a 5.8% share.


0102.4 Motherboards


***Taiwan Produces 101 Million Motherboards


According to the Market Intelligence Center (MIC), the total motherboards produced in Taiwan could reach 101 million units out of 120 million in the global market resulting in an 84% worldwide share in 2000. Top Taiwanese motherboard makers are Asustek, Gigabyte Technology and Micro-Star International. These companies also produce motherboards for their OEM clients such as HP, Compaq, Actebis, Fujitsu and many others.


MIC predicts that the local industry’s growth will drop from 21% in 2000, to 13.1% in 2001, as the high market share hinders further expansion. Taiwan's overseas production though, is rising, from 44% in 1999 and 48% in 2000 to an expected greater than 50% for 2001.


The margin of profit is getting smaller as the average price of motherboard, US$85 in 1999, dropped to US$73 in 2000. In order to maintain competitiveness, these motherboard makers like Asustek, Gigabyte Technology and Elitegroup Computer Systems are moving their production facilities into China to further reduce production cost and increase motherboard output demand.


0102.5 3D


***trueSpace5 Announces 3D Authoring Tool


Caligari has announced their 3D authoring tool, trueSpace 5, a real-time 3D modeling and animation program. In trueSpace5 Caligari adds a full complement of NURBS-based modeling tools, physically realistic rendering, and advanced surfacing features.


The product offers support for industry standard IGES, SAT and STL formats streamlines trueSpace5 compatibility with traditional CAD/CAM applications, providing a real-time authoring tool for designers that delivers the high-end modeling, rendering and animation power, at a mid-range price.


0102.6 Semiconductor


***TSMC Predicts US$100B in 2010


TSMC chairman Morris Chang has announced that Taiwan Semiconductor Manufacturing Co. (TSMC) will start to register revenue of US$100 billion in 2010. TSMC president, F.C. Tseng has also released that capacity of TSMC's 12-inch wafer fabs will exceed the combined capacity of its 8-inch fabs within three years after commencement of mass production in 12-inch fabs. Tseng said the average yield rate of TSMC's 12-inch fab has already overridden that of the 8-inch fabs since its first delivery of 300 mm wafers, and expects the company to post revenue of over US$10 billion in 2003.


TSMC is devoted to advancing from 8-inch to 12-inch technologies, and it has gradually shifted its development center to the Tainan Science Park, southern part of Taiwan. Aside from enjoying mass production on Taiwan’s first 12-inch wafer pilot line, it will continue to construct 12-inch fabs namely Fab 14 and Fab 15; and plans to build 12-inch Fabs 16, 17, and 18 at a rate of one every other year. The new fabs are slated to be completed by 2005.


Southern Taiwan’s high-tech cluster consists of the Tainan Science Park’s 538-acre first-phase construction, its 440-acre extension and the 575-acre Luchu Science Park. Construction of the Luchu Science Park will start in October 2001 and the Tainan Science Park’s extension in 2003.


***NEC to Sell Eight Overseas Factories

(January 8)


According to the WSJ Interactive, NEC, as part of a broader restructuring, is planning to sell at least eight overseas factories over the next two years. The Japanese maker of computer and communications equipment hasn't reached agreements to sell the factories, which make cell phones and other communications gear. Potential buyers for the factories include manufacturers that make electronics under contract with other companies.


The NEC plants under consideration for sale are in Australia, Mexico, Portugal, Vietnam, Thailand and the Philippines. The sales would further a wide-ranging restructuring at NEC, which over the past year has sold three overseas factories.


The talks come as a host of other Japanese manufacturers, pressed by falling profits and steep competition from Taiwan and South Korea, are searching for new ways to squeeze cash from their vast manufacturing facilities. Sony, in October said it is selling a plant north of Tokyo that makes car electronics to Solectron for an undisclosed sum.


NEC wants to consign manufacturing of low-profit and commodity products to other makers while it concentrates on high-valued products, such as semiconductors and next-generation cellular-phone technology.


0102.7 Information Appliances


***BSQUARE and Philips Components Collaborate On Internet Appliance Products

(January 5)


BSQUARE and Philips Components, a division of Royal Philips Electronics of the Netherlands, have formed an alliance to provide OEMs with a faster time to market for Internet appliances. According to a Memorandum of Understanding, BSQUARE plans to collaborate with Philips to provide its Internet software technologies for inclusion in Philips' Windows-based Net Display Modules that enable OEMs to create thin, light Web tablets, information displays, kiosks and thin clients.


By bundling BSQUARE's Internet appliance software, Philips can provide customizable, feature-rich Internet appliance solutions to their OEM customers. BSQUARE's software provides all of the components needed including remote update capability, browser technology and numerous software applications such as Instant Messaging.


***Taiwan’s IA Market Grows


According to a report released by the MIC under the Institute for Information Industry (III), Taiwan's total IA (information appliance) production in 2000 reached an estimated 6.47 million units for a total value of US$1.325 billion, 68.8% growth. By the end of 2001, the MIC projects, the output of local IA products will reach 10 million units, with the output values increasing to US$2 billion. The figure for 2003 is estimated to be more than 250 million units, which will be 30% of the global market.


According to the MIC, the four major sectors of the island's IA industry are thin-client, NetTV, screen phone, and smart handheld device (SHD). MIC Director Chan Wen Nan said that IA production in 2000 only accounted for 3% of Taiwan's total information industry production but is expected to reach 6-7% this year. This figure will continue to grow and MIC indicates that the IA industry will need more time and commitment before it can replace PCs as the driving force behind the country's economy.


***Be Offers Home Audio Reference Platform for Internet-enabled Home Stereo Component

(January 8)


Be Inc. has announced the release of its Home Audio Reference Platform (HARP) for Internet-enabled home stereo equipment. Designed for consumer electronics companies and home stereo component manufacturers, HARP takes advantage of Be's Internet appliance solution, called BeIA. HARP can function as a traditional stereo component to play CDs, tapes and LPs, but can also be used to access and broadcast Internet-based audio and services.


HARP uses standard audio connectors to playback on a home stereo and can simultaneously stream different music and audio content to any networked device in the home. With devices based on HARP, consumers can play their existing CDs, LPs and tapes and add available Internet-based subscription services. The device also connects consumers with additional information about music or a performing artist such as photographs, fan clubs and concert dates. And, since HARP stores music digitally, consumers can catalog and search their audio collection.


HARP's three major functions are:


Acquire audio:

HARP can acquire audio from CDs, tapes, LPs, handheld MP3 players, and Internet sources (AIF, Wav, MP3, RealAudio, etc.). It can stream Internet radio and Web formats. HARP links with Internet content services to deliver audio and subscription-based services for news and other non-music audio content.


Organizing audio:

HARP automatically acquires and stores music tracks and related information such as the artist's name, album title and artwork. Consumers can search and sort based on more than one criteria at a time - such as track name, artist, owner, genre and user-based labels. People can customize playlists and build themed libraries - such as jazz and hip-hop.


Experience audio:

Consumers can use HARP to play audio content on a single device or from multiple networked devices such as handheld MP3 payers and CD burners. HARP lets users customize music, adding effects such as reverb and ambience. They can also post visuals on a TV screen or create a home karaoke device by displaying song lyrics.


The HARP design is modular, allowing device providers to choose the components and capabilities they want to offer consumers in a branded, differentiated home stereo component. HARP contains Be's complete Internet appliance solution, including the BeIA Client Platform, the BeIA Management and Administration Platform (MAP) and BeIA Integration Services. It also includes relevant applications and third-party plug-ins.


Once an appliance is deployed, MAP lets device providers maintain the appliance for end users--without any end-user intervention. Appliance providers can change, update or augment any element of the device remotely, without user intervention, as new services and formats come into fashion. For example, if a new audio compression similar to MP3 becomes popular, MP3 a vendor can enable a HARP-based device to support the new format automatically.


HARP will be available for consumer electronics companies and home stereo component manufacturers to develop branded devices in Q2.


Be has also announced that in March 2000 it entered into a non-binding memorandum of understanding with Sony Electronics. Under the memorandum, Be has been working with Sony to provide Be's Client Platform, a component of BeIA, the Internet appliance solution, on Sony's e Villa Network Entertainment Center. The parties are currently negotiating an OEM license and distribution agreement whereby Sony is granted a license to pre-install and distribute the BeIA Client Platform on the Sony e Villa product.


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