Taiwan's MIC Prescribes Manufacturing-to-Service Upgrade to Sharpen Edge

Despite the global economic downturn, the Ministry of Economic Affairs in Taiwan and its Industry & Technology Intelligence Services (ITIS) have been sponsoring a series of seminars themed "Discovering Taiwan 2008: Building Future Industries." As part of this program, the Market Intelligence Center (MIC) of the Institute for Information Industry (III) has been exploring, based on tapping opportunities within the information and communication technology (ICT) sector, various issues, including "the developmental trends of Taiwan's IT sector; building new superiorities in Taiwan's IT sector by tapping green concepts and values; and the outlook on the ten key IT software issues in 2009."

The MIC believes that it is critical for Taiwan to upgrade its industrial competitiveness by shifting from manufacturing to offering service-oriented products. Besides offering its views on the future development of sustainable, new service-inclined business opportunities globally based on innovative know-how, green values and IT technologies, as well as possible high value-added products and services to be realized by such new opportunities, the MIC also casts a positive light on Taiwan's ICT sector: the island has maintained its global lead in 12 ICT product categories in 2008, including dominating, about 99%, of the global netbook (mini-note PC) segment, though conceding that Taiwan has stumbled, as many have worldwide, amid the global credit crunch.

Global Leader in IT Products

The statistics compiled by the MIC show the 2008 global ICT faltered due to a series of negative factors that seemed at times to bring about economic Armageddon, whose interactions involve complex analysis to decipher precisely, including surging fuel prices, sub-prime mortgage crisis in the U.S., sharp depreciation of the greenback, plummeting global stock markets, currency-market crisis, global inflation, material-price hikes, rising unemployment rates, and spending contractions, etc.

Taiwan, however, still basked in its aura as a globally leading supplier of IT products, including netbook PC, motherboard, notebook PC, LCD monitor, color display tube (CDT) monitor, digital still camera (DSC), cable modem, wireless local area network (WLAN) network interface card (NIC), digital subscriber line (DSL) customer-premises equipment (CPE), voice over Internet protocol (VoIP) router, IP phone, IP set-top-box (STB).

The MIC predicts that, once all the figures will have been tallied, Taiwan's hardware production value in 2008 would total US$115.6 billion, a 9.7% annual increase, with such figure to exceed US$150 billion by 2012.

The 2008 production value of networking/communication products and services is expected to reach US$10.89 billion, a 15.1% increase from the previous year, with major growth fueled by Worldwide Interoperability for Microwave Access (WiMAX) CPE and opto-telecom related products. In 2009, MIC says WiMAX CPE and E. VoIP gateway are the two categories expected to bear explosive annual growth potential, predicted to be 180.2% and 116.3%, respectively.

With opportunities always generating challenges, the MIC points out that IT and multimedia entertainment products in the future have to feature upgraded performance, formats to meet new application requirements. New product development in the future will focus on Internet connection, communication/inter-connection capability with peripheral products, content-sharing, and enhanced storage capacity, stresses the MIC, for all the upcoming computing, communication, and consumer-electronics would be integrated into new ICT gadgets driven by the Mobile Internet Device (MID) application concept.

Green Spawns Business Opportunities

The MIC says that lucrative business opportunities will continue to be generated as long as green issues remain top-priority with consumers in industrially advanced nations.

The Center also urges local ICT makers to, the sooner the better, focus on global warming, energy-saving, resource recycling, non-toxic materials, eco-friendly manufacturing etc., as well as recommending suppliers on the island to market with "green" brands to build image and win more business in the future, which calls for setting up eco-friendly IT manufacturing and supply chains.

MIC senior industry analyst W.C. Huang says that the U.S. and EU, besides having drafted various green regulations, already require ICT product imports to meet WEEE, RoHS, EuP standards, a trend that Taiwan-based counterparts would be well-advised to follow. Taiwan, the leading ICT producer, owes itself to catch up to global standards, developments to generate new opportunities as it rides the next wave of industry and market changes.

Taiwan-based ICT makers, MIC says, have in fact built up certain levels of green IT know-how: Most local OEM/ODM (original equipment/design manufacturer) ICT makers have already developed considerable green IT capabilities to meet global customers' requirements, as well as upgrade competitiveness. The MIC also suggests the Taiwan government to offer more encouragement, subsidization as incentives to help local ICT makers in global promotion of green brands and image.

In addition, the MIC adds, local ICT makers should be working on, as early as possible, impressing global consumers with the "Green IT from Taiwan" image, which would upgrade brand value while local ICT makers build, launch newer, better products to show Taiwan's green technologies and its eco-consciousness.

Top-10 IT Software Issues

After intensive investigation and interviews with companies and experts, MIC summarizes in the following the 10-top issues concerning the IT software industry in Taiwan.

1. Microsoft has announced plans to launch the Windows 7 operating system in 2010, which will help to fuel developments in version-change, upgrading of the existing Windows XP and Vista predecessors in 2009.

2. IT software developers will find it vital to focus on energy-saving, carbon-reduction in 2009, as global information-software developers try to build new products meeting such criteria to help enterprises cut energy consumption and upgrade IT equipment operation efficiency in 2009.

3. The increasingly mature business model Cloud Computing, or the Internet-based "Cloud" development and use of computing. It is computer tech that enables offering IT-related capabilities as service, allowing users to access technology-enabled services online. With such increasingly mature computing meeting the trend of businesses to streamline computing equipment, Cloud would gain more attention and stir more buzz in 2009.

4. The Software as a Service (SaaS) will become a major option for enterprises. Eliminating the need to install, run an application on customers' own PC, SaaS is a model of software deployment that offers as service customers to access, run programs online. Like the Cloud Computing, SaaS allows enterprises to better control costs for software installation, maintenance, making such option a top-choice for SMEs.

5. With SOA (Service Oriented Architecture) solutions for systems development and integration increasingly maturing, and after IT software developers' aggressive promotion, such solution will no longer be a buzzword but more widely adopted in 2009.

6. Open-code software to be used for mobile applications: After Google's promotion of Linux cellphone open software architecture and Nokia's release of the Symbian code, open-code software will be rapidly applied in mobile applications in 2009.

7. More attention will be paid to information security of smartphone applications in 2009. As smartphone applications become a major trend in mobile telecom, a side-issue will be mobile information security, with such issue to become increasingly complicated as smartphones evolve into information devices.

8. Personal Data Protection Law will prompt businesses to abide by related regulations to live up to social obligations. With personal data protection laws expected to be ratified, promulgated in more nations, more groups are to be protected. Businesses will find increasingly relevant the issue of finding ways to obey such laws to become more socially-responsible.

9. Taiwan's contract software-developers will become more professional and adjust strategies to suit the global market. With the island already globally-renowned for its ICT hardware system-integration capability, Taiwan's hardware makers will eye the global market as globalization drives them toward software development.

10. Knowledge Process Outsourcing or KPO will continue to gain momentum, with the American legal profession already adopting such model. KPO is simply having staff in a different company or subsidiary of the same firm in the same country or offshore do knowledge- and information-related work to save cost, or a form of outsourcing. The highly localized, customized KPO is the next stage in the IT-outsourcing evolution.

Senior MIC analyst W.H. Won points out that the current energy crisis and financial storm will continue to impact ICT industry development in 2009, compromising local businesses' investment in IT information software development. As software technologies are upgraded and with the rapid development of information system architecture, emerging information services as Cloud Computing, green information services, open-code software applications, next-generation operating systems, knowledge work outsourcing etc., the analyst says so will new directions for IT software development be aimed.