Virtual China: Information Technology - Press Reviews, June 14, 1999

Weekly Press Review

June 14, 1999

WorldGate Communications (NASDAQ: WGAT) announced last week it has signed a deal with Hunan Posts and Telecommunications Administration for the use of its cable-based Internet access technology. The agreement, which Pennsylvania-base WorldGate signed with Hunan PTA subsidiary Hunan Multimedia Communications Bureau (HMCB), calls for the deployment of advanced analog CFT 2200 cable TV set-top boxes, running WorldGate's "ultra-thin" client software, in the provincial capital city of Changsha as early as next month. The new service will allow Chinese to surf the Internet at speeds of 112 kilobits per second. Cable television penetration in China in much greater than telephone penetration, with total usership second only to the US.

The World Gate announcement is the latest move in China's increasingly hot Internet-access appliance market. Analysts believe many Chinese consumers interested in the Internet but unable to manage the cost of a full PC would flock to cheaper Internet appliances. The market was jump started last March when Bill Gate's unveiled Microsoft's "Venus project" during a visit to Shenzhen. The "Venus project" promises to deliver an operating system which allows for the simple integration of a web browser, low-end PC and videocompact disc (VCD) player in a single box, and boasts many major Chinese electronics manufacturers as partners, including Legend, Founder, and Haier.

Last month, New York-based MyWeb (OTC BB:MYWB) announced a major agreement with Beijing Telecom for the distribution of up to 200,000 of its set-top boxes in the capital city and elsewhere, while Chinese appliance manufacturers including Hisense Group Co, TCL, China Electronic Science and Technology Development Co, and Sichuan New Technology Digital Instruments Co, released their own "information appliances." China has 40 million VCD players and 320 million television sets, compared to some 11 million PCs.

Increased competition will no doubt put downward pressure on prices, a positive for the Chinese consumer. But as companies get into price wars to build market share, profits will become increasingly linked to e-commerce generated via the appliances after sale. And with e-commerce still largely a distant dream, expect the upcoming information appliance war to carry many casualties.

Current Review

October 22, 1999

Past Reviews

	September 10 19 24
	August 1 8 13 20 29
	July 12 19 26
	June 7 14 21 28
	May 3 10 24
	April 7 14 26
	March 3 10 17 24 31
	February 3 10
	January 6 13 20 27