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December 29, 2010

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2010 proves eventful for IT industry

IT was a year of the Three As for the information technology industry in China, the world's biggest Internet market.

This year, it became clear to anyone following the industry that application, Apple and Android are changing the way people use the Internet and the way businesses structure profit and marketing models.

Application and online stores for people to download apps have become an industry standard, proving that handsets have become more powerful than many people had expected.

Apple's App Store and Google's Android Market have led the market, followed by the rest of the players, including Nokia, Motorola, and Blackberry maker RIM.

New gadgets and services - such as iPad, micro-blogging and Twitter-clone sites in China - continue to change people's lives. New technologies, including cloud computing and Internet of Things, have developed rapidly thanks to government support.

For the first time, a China-developed super computer, the acme of the nation's IT development to date, ranks No. 1 in the world in terms of calculation ability.

Some giants, like Google, Foxconn and Tencent, have faced challenges in China this year, but they have found ways to continue growing.

These are the top 10 IT developments that made the news this year.

A series of suicides occurred at Foxconn's mainland facilities

Within several months in the first half of the year, 10 Foxconn workers in Shenzhen died by jumping off buildings at the company's plants. The deaths were blamed on discontent about wages and benefits. The company, which makes laptops, handsets and other gadgets for Sony and Apple, responded by raising salaries. It also said it would move part of its operations from the southern coastal city of Shenzhen to inland cities like Chongqing and Zhengzhou.

Why and so what?

The suicides triggered a wide-ranging debate on the working conditions and incomes of Chinese workers. The wage increase may improve the situation for some Chinese workers, but it also sent a signal that China's labor cost advantage may be weakening. Google redirected its mainland site to Hong Kong

The world's No. 1 Internet search firm announced in January that it would move out of the Chinese mainland because it was unwilling to censor search results. In March, it began automatically redirecting Internet traffic to its site in Hong Kong. As a result, Google's share of the mainland market decreased dramatically, giving rivals Baidu and Microsoft's Bing a boost.

Google has received the necessary licenses to continue operations in China and will expand into mobiles, display advertising and e-commerce sectors, its top executives said two weeks ago in Beijing.

Why and so what?

The redirection of Google China makes the most popular English-language search tool unstable in the mainland. It has also left space for overseas and local rivals in an already competitive market. Application, or app, and online stores

IT company executives in China are always asked if they plan to launch online stores. The answer is invariably yes. Every one in the industry has either opened an online application store or has plans to do so.

The list includes carriers like China Mobile and China Unicom, handset makers like Nokia, Motorola and RIM, and media like Sina and even Shanghai Daily.

Obviously, the stars of the sector are Apple with the iPhone 4 and App Store, and Google with Android, which each offers more than 200,000 applications. In the "app era," people can access customized content and services through various devices, from phones and tablets to computers.

Why and so what?

The supply shortage of the iPhone 4 has lasted several months since its debut in China in September, a sure signal of the success of the new business model.

It will probably adversely affect industries like personal computers and telecommunication carriers. People will tap into the Internet and a world of applications for entertainment and business, but the main Internet access device will no longer be the PC. Mobile carriers are also losing their grip because online stores are directly accessed by consumers now.

Given that the trend isn't likely to change in near future, an alternative for carriers and device makers is to establish their own stores or to develop their own applications. Micro-blogging

Though Twitter is not available in the Chinese mainland, a similar service called Micro-blog is catching on like wildfire. The service, which allows users to upload a posting of 140 words, has attracted celebrities, including property tycoons, film stars and media publishers. By the end of this year, China's micro-blog user base is expected to hit 65 million and it will surpass 100 million at the middle of next year, which means one of every four or five Chinese netizens will be using the services, according to Sina.

Even Nokia, the world's No. 1 phone maker, held a micro-blog press conference to kick off its latest smart phone. Hundreds of journalists and chosen netizens logged onto Micro-blog to discuss the product and ask questions.

Other giants, like Tencent and Sohu, also announced recently that they plan to invest heavily in this new trend, inviting celebrities to open micro-blog accounts in an effort to catch up with market leader Sina.

Why and so what?

Micro-blogging is another channel for people to find out what's going on outside the official media. To some extent, it's a legal way for people to talk about social problems and express opinions. Through its popularity and wide coverage, micro-blogging sometimes can even change government policies or expose instances of unfair play.

Because most people access micro-blog sites through their mobile phones, it's also a catalyst to the booming mobile Internet market and a boon for handset makers and telecommunications carriers.

The popularity of micro-blogging is one successful example in the social networking sector, which is expected to take off next year, including micro-blogs, group purchase sites (tuan gou) and location-based services (LBS). Government-supported technology projects

In September, China announced its intention to promote seven new strategic industries, including alternative energy, biotechnology, new-generation information technology, high-end equipment manufacturing, advanced materials, green cars and environmental protection.

In the IT sector, cloud computing, Internet of Things and next-generation networks are seen as the beneficiaries of this policy.

Premier Wen Jiabao visited Wuxi's Internet of Things park and gave a speech there touting the development of the technology, which refers to a connected system encompassing sensors, chips and networks to revolutionize homes and businesses.

On cloud computing, or Internet-shared computing, Shanghai, Beijing, Hangzhou, Shenzhen and Wuxi have been chosen to test and develop it. In Shanghai, the government and investment firms will pump in 200 million yuan (US$29.85 million) in research and development in the next five years.

Last but not least, three-network convergence among Internet, broadcasting and mobile networks has already started nationwide.

Why and so what?

This is the first time that China has put IT on a national strategy level. For a long period, China's electronics exports, which accounted for about a third of shipments overseas, weren't value-added products. That meant the whole industry was vulnerable to international crises or the continued yuan appreciation. The new strategy is aimed at lifting national technology production to international standards and also meeting the demands of the domestic market in such areas as development of smart grids and intelligent urban-management systems.

The government was wise to target three sectors with huge domestic market demand without allowing monopolies to form. Still, Chinese firms can't compete yet with Microsoft on software and Intel on computer chips. China ranks No. 1 in the supercomputer sector

In the middle of November, China's Tianhe-1 topped the world's supercomputer rankings. The machine features thousands of graphics chips and is capable of achieving a sustained performance of 2.5 petaflops, or 2,500 trillion calculations per second. It was the first time China surpassed the United States in the sector. US-based Oak Ridge Leadership Computing Facility's Jaguar system ranked No. 2.

Why and so what?

The supercomputer, which requires high-end chips and server computing technologies, is a serious measure of a nation's advanced IT technology and research ability. A supercomputer works for both industry and public sectors.

The use of a supercomputer can help an aircraft or auto manufacturer shave up to 60 percent off the research period for developing new cars or planes, for instance. The machine will also be used to crunch population trends and environmental protection data and produce weather forecasts. Debut of the iPad

Apple started selling the iPad on the Chinese mainland in September and it has proven to be more than just "a bigger iPod Touch." The success of the iPad - shipments totaled more than 7 million by October worldwide - have attracted many rivals, including Samsung, RIM, Toshiba, Acer, Huawei and ZTE to either release iPad-like products or make plans to do so soon. Most firms have adopted Google's Android operating system for their tablet PCs.

Analysis group Gartner has forecast that tablet sales worldwide will reach 54.8 million units in 2011. And they will displace around 10 percent of PC units by 2014.

Why and so what?

The iPad is the first successful device in a third category between a laptop and a smart phone. With mobility and application store business models, Apple has helped create another product category.

A wide variety of tablet devices, with updated iOS 4.2 by Apple now have multitasking and wireless printing functions and Google's new Android 2.3 having much improved user experience, will challenge the dominance of Microsoft and Intel. Overseas IPO wave

Six Chinese stocks started trading on the New York Stock Exchange and Nasdaq this month, the most ever in a single month. The IPOs were issued by Youku, known as China's YouTube, and Dangdang.com, which has been likened to Amazon. Thirty-eight offshore IPOs this year raised US$4 billion, accounting for about 25 percent of first-time share sales in the United States, according to data firm Dealogic.

Shares of Youku rose 161 percent in the first day of trading on the New York Stock Exchange. E-commerce firm Dangdang gained 87 percent after its IPO on the same day.

Why and so what?

The successful IPOs were viewed as part of a rebound from the global financial crisis. The overseas listings bring Chinese firms huge rewards, including access to more capital and a wider investor base. The founders and investors got huge returns, which in turn should encourage more innovation in high-tech sectors.

Other firms are preparing overseas IPOs. They include Tudou.com, Youku's biggest domestic rival, and social website Renren. The battle between Tencent (QQ) and 360

In November, Shenzhen-based Tencent, China's biggest Internet firm by market value, announced that QQ, a chatting tool, will no longer operate on computers installed with software from Qihoo 360. The latter claimed that Tencent was scanning users' documents through QQ and launched a tool to block QQ plug-ins.

The battle forced hundreds of millions of web users to decide whether they wanted to keep using the country's most popular chatting tool or whether they preferred China's top Internet security tool.

The dispute was resolved, allowing both tools to co-exist on computers, after the industry regulator intervened.

Why and so what?

The cat-fight between Tencent and Qihoo 360 raised public awareness about Internet security and privacy protection. It taught many people, for the first time, how these popular "free" tools work and often "spy" on users.

QQ now has more than 1 billion registered users, and 360 has 300 million.

Though both QQ and 360 are free, users pay a price for the right to choose among convenient software, personal information and their privacy. Tang Jun's academic scandal

Tang Jun, a former Microsoft China and Shanda Entertainment president, found himself at the center of a controversy over his academic qualifications. He was not a graduate of the California Institute of Technology as he stated in his memoirs and in interviews. Rather, he holds a diploma from the less illustrious Pacific Western University in California. But that university's Hawaii branch was closed down by the United States government in 2006 for selling degrees. Tang's diploma was in electronic engineering and not computer science, as he had claimed.

Fang Zhouzi, an active online blog writer, unearthed the discrepancies in Tang's academic qualifications among a number of similar scandals this year.

Why and so what?

Tang's biography "My Success Can Be Copied" sold well in book stores before the scandal broke. The case has had repercussions because Tang was regarded as a poster-boy of China's IT industry.

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