China.com yesterday announced a new Internet venture with local networking specialist Accton Technology (智?科?THORN>), apparently bypassing its existing Taiwanese Internet partner, CMC Magnetics(??環).
The new venture, dubbed e-Direct, appears to duplicate many of the services offered by Taiwan.com, which CMC and China.com launched in March.
"China.com needed something more concrete than what Taiwan.com was giving them, and Accton can give them this instant base of a million free e-mail users," said Bruce Warden, an industry analyst at Jardine Fleming in Taipei.
Accton's existing Internet service -- url.com.tw (智?生活館), which will form the basis of the new joint venture -- was set up more than two years ago, and claims to have attracted over 920,000 users to its free e-mail service. The service is run separately from Accton, which is one of Taiwan's largest makers of computer networking hardware.
A total of 68,000 people are using Taiwan.com's free e-mail service, which was launched in May, according to managing director, Sun Jei-wa (
Web portals like China.com and Yahoo are seen as one of the hot spots on the Internet. The web sites offer a wide range of services -- including news, search engines, free e-mail, discussion groups and e-commerce. Currently, most revenue is earned from advertising.
Services like free e-mail are important because they encourage users to return repeatedly to the same site.
Although the web sites earn little income, and few make a profit, the market capitalization of web portal operators like China.com is measured in the billions.
According to Yimin Doo (
The new alliance will help Accton expand its business to other Asian countries, Doo added.
Peter Hamilton, China.com's chief operating officer, explained the decision to team up with Accton, rather than sticking with CMC. "We have a good relationship with CMC, but we always have multiple partners, and Accton has a lot of experience operating in this area. They have an understanding of the marketplace, not just in Taiwan, but in other Asian countries."
Hamilton said that e-Direct and Taiwan.com were aimed at different audiences. Taiwan.com is a more general portal, he said, while e-Direct provides in depth specialized news.
Analysts say China.com is emulating other high profile Internet companies, which are racing to build market share in order to justify sky-high market capitalizations. "In my opinion, China.com's under a lot of pressure to start building up some alliances and doing some acquisitions. Their interest is definitely in the e-mail users at Accton," said Warden, "they're looking at Accton for a good solid customer base in Taiwan." Taiwan's dominant Web portals, such as Kimo.com and Yam.com, have all been operating for two years or more. It is difficult for newcomers like Taiwan.com to compete against these established players, said one observer, who asked that his name not be used.
"They were late, they haven't had the time, and I'm not sure if they really have the management expertise ... to run this," he commented, "Accton's being doing it for two and a half years, and they've already got a nice built in customer base."
CMC's core competence is the manufacture of computer storage media, such as CD-ROMs and magnetic disks.
China.com's move may be unfortunate for Taiwan.com, but it should be seen in the light of market realities, said Warden.
"The crux of it is that China.com needs this now, not months from now, or a year from now, they need it now ... like yesterday -- and Accton can provide them with that."
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