Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
KITA Q3 Seminar September 12th ,2006 Sheraton Cerritos Hotel
Jong-Hoon Lee Chief Executive Officer iPark Silicon Valley [email protected]
New Information Technology Paradigms and Korean IT
Competitiveness…
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
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Silicon Valley is the Center of VC Investment
TOTAL VENTURE CAPITAL FINANCING IN SILICON VALLEY FIRMS
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
What’s going on IT Market Battle Field?
• Economic indicators: a “mixed bag” -- positive but still cautious about high tech & impact of interest rate hikes, high oil price and War on terror in 2006
- North American IT spending grew 5.4% in 2005 reaching $892B - Silicon Valley 150 record 2004 profits of $31.4B (up 170%) and sales of $336B (up 14%) - VC’s are optimistic and are beginning to invest again. 117 IPOs in 2005 quintupled the 23 IPOs in 2004. Mobility, Web 2.0 and recently Video are hot areas - Signs of slow “Jobless recovery”. The trends of “Outsourcing IT” to China & India. The job market for IT specialists will shrink 40% by 2010
• Convergence between computing devices and appliance will be in full swing: - Personal utility: cell phone + PDA + MP3 + digital camera; - Home Digital Appliance : wireless networking + appliance/security controller + remote
access) - Video streaming and broadcast appearing in increasing number of devices - The Consumer Market becoming a larger part of IT industry
• Telecom industry is stagnant, but major consolidation/M&As is going on: - Cable & Phone co’s fighting for control of the home: phone, broadband & TV packages - Smart phone/Digital Camera markets are growing fast but still waiting for killer
applications - Broadband & VOIP gaining market momentum. Fixed-line carriers face pressure from
VoIP
• The margins for electronic commodity products are thinner than ever forcing large resellers to restructure to stay afloat. Major challenges ahead from Chinese Manufacturers along with the impact of the weak dollar in 2005
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
Silicon Valley has been a driving force of IT revolution for the last 50 years
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
The Valley garners a third of all U.S. venture capital funding, according to the National Venture Capital Association (NVCA). 4000 IT companies with IT related revenue about $200B
Silicon Valley led IT evolution with disrupting technologies..Can it continue the same trend in 2000’s and beyond?
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
Traditional Paradigms of Silicon Valley Before Dot-com burst (1960-2000)
• Huge focus on R&D: 8-20% of total revenue
• Hi-technology, Hi-technology – Epicenter of disrupting technologies– Disrupting Technologies: Semiconductor, Microprocessor, PC, Software, Internet…– Core Competitive advantage of America: Genius Scientists/Architect level engineers vs Mfg/Design Engineers– High Profit margin
• Lead the world with breakthrough IT products– Product Concept – Proof – Design – Mfg – Worldwide distribution all by Silicon Valley
• Soft-landing to the higher industry value chain: – Collapse of manufacturing – 90’s– Soft landing to high paying engineering job: Software, Network $100K+– Lack of hi-tech engineers – Foreign engineering talents. IC = India, China
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
New IT Paradigm: Beyond 2000 The Impact of Internet and Globalization is Changing Silicon
Valley Past Silicon Valley=Tech
InnovationFuture Convergence, Globalization
◈ Silicon Valley is the epicenter of disruptive technologies (Semiconductor, CPUs, PC, S/W …) . Technology Centric . Long R&D Cycle . Big R&D investment, 8-20% of Rev
◈ Major revenues from enterprise-driven products: . Mainframe, PC, Unix Servers..
◈ SV Leads the world with Technology leadership . Concept- Engineering –Mfg - Marketing
◈ Manufacturing moved away ◈High-paying engineering jobs
◈ Digital Convergence is the new trend Mobile phone, Digital TV, Ubi-network .Biz model Centric – Google, Dell, MS..
.Speed becomes more critical . Barrier to entry is relatively low
◈ Consumer Electronics Centric
◈ Asia come with trendy products faster . Mobile, Contents, Conumer Electronics . Korea, Asia become major test bed
◈ Selective outsourcing – Offshore R&D◈ Focus on core technologies/integration◈ Foreign born work force majority in SV
► The next Gold Rush will be in Digital Convergence ► Asia will be a major driving force
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
What does this Paradigm Shift mean to Korean IT Industry?Korea wants to be a center of innovation in Digital Convergence
Korean Business culture is a perfect match for the “new world”
- Speed, Risk-taking, Ongoing product enhancement Korea is best positioned to develop Digital convergence products
- Excellent Industry positioning, RND & Production facilities- Optimum test-bed for new technologies (users & infrastructure)
Conglomerates like Samsung, LG will continue its dominance in the short runNew Internet culture, Tech-Savvy consumers
Korean Business culture is a perfect match for the “new world”
- Speed, Risk-taking, Ongoing product enhancement Korea is best positioned to develop Digital convergence products
- Excellent Industry positioning, RND & Production facilities- Optimum test-bed for new technologies (users & infrastructure)
Conglomerates like Samsung, LG will continue its dominance in the short runNew Internet culture, Tech-Savvy consumers
Worldwide competitors in commodity products -China: Technology, manufacturing, India: Software, Labor …
How to move to a higher country value chain?Need innovative core technologies to stay ahead of commoditization How to foster the development of SMEs
-Most lack international sales experience-Often RND driven instead of market driven
Worldwide competitors in commodity products -China: Technology, manufacturing, India: Software, Labor …
How to move to a higher country value chain?Need innovative core technologies to stay ahead of commoditization How to foster the development of SMEs
-Most lack international sales experience-Often RND driven instead of market driven
Huge Opportunities Ahead
… And Major Challenges
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
Next Steps for Korean IT Industry: Key questions that need to addressed
• What’s the Next Business Model for Korea? - 60-70’s: Labor Intensive Industry, 80-90’s: Heavy Industry, 2000’s: ????
• Long-term IT Strategies * How to create Core Technologies?
- Issue of Education Infrastructure, Biz Culture - DMB/Wibro can be a first test case for Korea’s new challenges
• Short to Mid-term IT strategies * China Strategy
- MFG take over by China - How to create high-paying job in Korea?
- How to differentiate with commodity based Chinese products? New Cash Cow industry -- IT 8-3-9….
* How to boost small to medium-size IT companies?
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
2005 Worldwide IT Export
$78B
2004 Worldwide IT Export
$74B
PRODUCT CATEGORY
Mobile Communications $27,857M
Memory – RAM/Flash $16,248M
Semiconductor - components $20,855M
LCD/CRT Display $6,319M
Storage (Optical, HDD) $2,045M
Digital TV $1,432M
Digital Media $1,092M
Set Top Boxes $740M
Rechargeable Batteries $471M
Laptop $203M
Printers $259M
PC/Servers $434M
Packaged Software $62M
2005 Worldwide IT Export $78B
’05 Worldwide IT Exports By Korea
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
Games Online Mobile Network
Next Gen. Wireless/Mobile DevicesIntelligent Home NetworkAppliance servers, Post PC IT SoCConsumer Electronics
Vertical Solution S/WD/T Utility S/WLinux based packaged S/W
US
MA
RK
ET
Op
portu
nitie
s
Embedded S/WEmbedded S/W
Digital ContentsDigital Contents
Packaged Packaged S/WS/W
System System IntegratioIntegrationn
iPark SV Sweet Spot (Current) Mfg/Commodity Takeover by China: Seek higher value chain - Build up key success factors for Enterprise solutions, Software&Middleware in ubiquitous network - Maximize Korean IT core competence, better ROI, quicker results, and New Growth Engines
e-Gov solutionsPOS solutionsEducation solutionsLatin American market
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
Key Issues to address - Korean IT Companies (1)
Small to medium size typical ventures companies iPark deals with
• Enthusiasm for key Technologies/Product Features• Product/Technology Centric Approach vs Customer Value/Demand
– Vs Taiwanese ventures who have root in Silicon Valley• Lack Marketing expertise with CEOs mostly R&D background• Common Issues of US Marketing Approaches:
– Vague Product Positioning– Lack of Competitive Analysis– No Brand recognition– Unclear target segment– Little or No understanding of US Channel Structure– Entry Price, Market driven pricing
• Psychological & Cultural Barrier for US market• Only a Few ready for US entry
– Stage of company maturity (no full span of products)– Financial support (Mktg, Channel Dev, Post-support )– Experience of Mgmt team (i.e., CEO)– Almost no ideas on next steps…
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
Revenue growthPenetrate
proper channelsTarget the rightmarket segments
Set up MKTG & Sales operations
Every Step Can Be A CHASM Unless Obstacles are Removed
Close deals
Key Issues to address - Korean IT Companies (2)Why They failed?
• Localization• Packaging • Local Operation & Offices • Local Staffing• Support Infrastructure• Value Chain Understanding
• Competitive Analysis• Identifying penetration segment• Differentiators• Product Positioning• Market driven Pricing• Introductory PR • Trade Shows• Incentive Schedule
• Tactical Channel Plan• Setting up Sales Team • Channel Networking• Promotion• Training of Support Team
• HQ Support for Deals• Incentive Management
Most Korean IT companies failed to cross the chasm in the US.
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
What is iPark?Ministry Information &
Communication
International Cooperation
Bureau
iPark Silicon Valley
iPark Boston
iPark Beijing
iPark Tokyo
iPark London
iPark Singa-pore
iPark Osaka
iPark Shang-
hai
iPark is a non-profit organization designed to promote Korea’s best IT
products
Silicon Valley
Boston Beijing
Shanghai
London
Singapore
Tokyo
Osaka
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
$1 Billion iParkSV RevenuesiParkSV Revenues
Strategic Partnerships
MIC Strategic Initiatives
Marketing &Promotion
Operations
New iPark Business ModelTransition to the Next Phase (2006-2010)
R&D CenterIT 8-3-9
IRMarket Intelligence
Industry Marketing – Korea Country Marketing
Tier I Shared Service ModelNasdaq, M&A, Funding, Tech Partners
(Phase II: 2004 and beyond)
SV150VCs
IncubationIncubation30 Tenant Companies30 Tenant Companies
Client SatisfactionClient SatisfactionBasic Client Marketing, Referral ServicesBasic Client Marketing, Referral Services
(Phase I Focus: 2000-2003)(Phase I Focus: 2000-2003)
Goal: $1 Billion in US Revenues by 2010
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
NASDAQ listings2 iPark Silicon Valley client companies• Pixelplus: CMOS imaging sensors solution• Leadis: Small panel display enhancement solution
AMD R&D center in KoreaInduced and steered AMD R&D center establishment in Korea
GIO ForumOpened a doorway to U.S. and global IPO opportunities
International CooperationDMB/WiBro MOU between Alberta Canada and iPark Silicon Valley
Telecom Service Providers Investment ForumConnect IT Korea to top U.S. telecommunicationsservice providers and venture capital firms
AwardsHigh Tech Businessmen of the Year - KACCInternational Business Development – GartnerInternational Partnership – IT Channel VisionBest Software Product – Retail VisionBest Product – Retail Vision
VC CircleConnect IT Korea to top 50 U.S. venture capital firms
Recent Highlights
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
Broadband/NetworkingVoIPHome NetworkingNetwork Equipment WirelessMobileSet Top Box
IT SoC (Semiconductors)MobileMultimedia
Digital Content
2004 2005 -2006 2007-2008
Digital Contents
Embedded S/W
Packaged S/W
SystemIntegration
E/SDCBcN
VoIPIPv6
Home NetworkingIT SoCRFIDNextGen PCDigital TVNG Mobile
WiBroDMBTelematicsService Robot
8-3-9
OtherOpen SourceEmbedded SoftwareSI Latin America
Consumer ElectronicsDigital, LCD TVsMP3DVRsPC Accessories CamerasPDA, GPS
Application SoftwareSecurityWeb EditingPC Suite
Target Industry Segments
Sep/12/06– Kevin JH Lee KITA Q306 Seminar Connecting the World to Ubiquitous Korea
“Our mission is to establish and promote
thriving partnerships between U.S. IT
channels & Korean IT client companies, and
provide an effective gateway for Korean IT
companies to successfully penetrate the
United States marketplace.”
Mission – iPark Silicon Valley