Company E

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4.2.1 Company E IT capability Internal R&D

Company E has establish the research center which served as the R&D department in invention and development of a varies of telecommunication related technology. This research center has developed a number of convenient services to meet public demands, such as call center systems, e-government applications, vehicle location and dispatch management, broadband Internet and mobile value-added services. Besides that, the department plays the important role in research, which has contributed to up to 1000 patents so far. This intelligence property becomes an important asset which they can leverage by either technology protection or by creating entry barriers.

Patent

Company E considers the value of intellectual property creation and importance in addition to the establishment of the office of Intellectual Property services, dedicated to the management of intellectual property associated with the system. They promote the improvement of patent quality with a patent review committee, which is responsible for patent application for review. At present they applied for more than 1000 patent on their technological invention in both international and domestic.

Complementary Resource

Long established and once government owned business

Company E had been the monopolized company in the telecommunication industry before 1996 when Taiwan’s government revised the law of the telecommunication business, which opened the market to free competition. Due to the historical reason (i.e. government owned company), they have accumulated numerous resources of different kinds of IT infrastructures, customers’ bases, and the business and technological experience on the telecommunication broadband network. On the basis of monopolized service, for a long time they had already obtained the huge customer base on the network service and telecommunication service. This has largely created entry barriers in terms of the tremendous resource and capability in providing telecommunications-related services.

Innovation culture

They also encourage employees to engage in creative innovation, and to establish a number of incentives to encourage staff to enhance innovation and invention to unite the company's corporate culture. They provide the mechanism to encourage the new service proposal. They also design the specialized team to take charge in different projects according to the characteristic of the project and the employees’ capability.

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IT-enabled Service Innovations Apps Platform

The strategies applied on the application platform went through different stages. Initially, content providers were mainly the source of the applications. These contents included phone rings, media messages, and music, etc. Although these contents contributed to huge revenue and usages, the company still merely played the role in data transmission service providers, who took a relatively small share of the services’ fees in the service-value network. Later in 2009, in order to promote the smart phone “iPhone”, they offered the proprietary application platform and activities such as lessons on the usage of smart phone and applications. To become the agency of iPhones, they have leveraged their most valuable resource: the customer base, to obtain the right to sell the iPhone. This action has resulted in the boost of sales and abundant customers from other competitors. This case has shown the fact that the large customer base is a critical resource that they can leverage in terms of greater bargaining power.

In the next stage, given the lack of self-owned content provision, the sources of revenue cannot be expanded more in terms of shares in value-added services. Aware of this situation, they started to actively develop their own application mall, consisting of rich applications, furnished by both self-made and by cooperation with third party application providers. The shift in focus for this innovation, driven by their top managers’ insight for the future, can be shown as follows:

“The future of Taiwan’s telecommunication industry is not just about hardware line set up, but also about software services,” said the chairman of Company E.

At present, Hami Apps Store is Taiwan's first one to introduce the advertising system, and there will be advertising platform management systems, with more than half of the revenue to be split off to the free software provider. Currently there are 250 models in the Hami Apps Store.

E-book

Seeing the prosperity of the combination of digital content and the mobile services, they have developed the digital content commerce mobile mall, which has attracted more than 400 thousand mobile users. Company E also played the role in coordination and integration of the publishing industry by offering the IT infrastructure for delivery of the contents and transaction information processing.

The motivation of coordination system construction can be attributed to the context of the struggling publication industry. That is, although there are abundant amounts of domestic publication and publishers, 70 percent of the best-selling books are the translation books. In this manner, local publications are facing a severe situation where now the mobile e-book can provide the market expansion for local artists by cooperation with the local publishers. Three months later, in addition to increasing the mobile system platform compatibility, they also actively cooperate with content providers and supply more digital books. For example, in February 2010, they cooperated with the e-book content provider, who had entered the e-book market for ten years in China. The other

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company is the largest online bookseller (Books.com) in Taiwan. These alliances contributed to mainly two aspects. One is the construction of the e-book service value eco-system, which contains the content providers, virtual web channels, and the information and content delivery systems (Company E). With the complementary resource each firm possesses, they can construct the value network of the e-book markets, which can be done by the individual.

At present, the E-book platform Hami Bookstore, has supported four major smart phone platforms, and with views from 3 million people, and with the e-book download capacity of 300,000, e-books will become this year's estimated revenue growth of value-added services.

Micropayment

Notice that with the merchant and consumer payment system, which integrates strong demand for Internet security, Company E has come up with the micro payment through extension from their existing mobile phone billing system that thereby provides customers the convenience of the Internet consumer payment mechanisms. Users can purchase online hours, and then can have the internet service on the spot. The payment will be included in the phone bill for the next month which will save the user having to fill in a number of documents, identification verification.

In the beginning, the micro-payment was a very unstable system and broke down at least once a month. Aware of the potential serve consequence caused by the system breakdown, they decided to seek for the IT suppliers to help them build the more stable and robust IT infrastructure. By the adoption of Microsoft’s solution, they largely improved the stability of operation and further improved the performance. The solution, which is an integrated, component-based programming modular IT infrastructure, not only accelerates the pace of project development, but also offers the capability of quick adjustment in the rapidly changing business environment. In this manner, precise control of process management and the flexibility to track the order status of the transaction make the collection of money or order processing more accurate and agile among Company E and contract service providers.

Generally, Company E has three major advantages of operating micro payments. The first one is the existing 13 million subscribers, including the home phone, mobile, and the internet services. This large customer base offers more incentives for content and service suppliers and operators. Second, a set of credible accounts and billing systems, which provide billing services to other businesses, facilitate the information stream and cash flow management across different companies. This coordination task, solved by Company E, extremely reduced the cost of other stakeholders in the value network of this service innovation. Lastly, they can reduce the cost of service or product providers on the bill delivery by counting the fees together with their subscriber fee on the same bill.

The micro-payment mechanism is a great help for small-scale companies who find it difficult to construct a complex billing system, in bills printing, binding and sending. Specifically, Company E's micro-payment infrastructure provides an easy online application, the connection interface and standard operating procedures more and more company joined the rapidly growing online payment businesses.

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At present, Company E provides a micro-payment mechanism to about 300 to 400 content operators. It generated the revenue by transaction charge about 20% of 240 million dollars. Moreover, Company E keeps the electricity billing and accounting system operating fully transparent, making it easier to check the record companies, based on mutual trust. In addition, the accumulation of a small payments system will record the user's purchase, combined with the automated customer’s tracking, and consumer behavior and then to offer auto recommend products and as up sales according to customer purchasing habit and taste. In the future, Company E will constantly develop more value-added applications, such as the simple operation code, mobile ticketing, and the mobile booking and payment.

NFC payment

In late 2007, Company E’s pilot program of NFC payment was launched by the cooperation with two other leading companies in each industry (Financial and Mobile Phone Design). Using the visa chips embedded phone, customers can pay the bill in the cooperated stores, and moreover obtain the coupon sent via messages. Later, they launched another project with the transportation card tool issuer, “Easy Card Co”. and other information integration companies and the mobile phone design company. In this case, customers can take the public transportation (i.e. MRT, bus) through the sensor antenna built phone and experience other features, such as the check feature, the parking payment feature, or download electronic advertising. By Company E’s laboratory SIM card development, NFC technology combined with Easy Card SIM card chip and mobile phone together from semiconductors company and mobile phone manufacturer (BenQ); the Easy Card company is responsible for integration of a money information system, and other information integration companies assist the system development and technical support. By joint research and development, they completed the integration and solved the technical challenges which gradually shaped the new market.

While they have completed the technology, they still actively discover those applications to which this technology can apply. In the next stage they cooperated with the real estate and financial industries to expand the usages into more domains. They introduced the mobile phone SIM card with the integration of communications and transport and digital home control. In 2009, Company E and the Far Glory Group launched cooperation offering 5,950 of NFC mobile phone in four residential building construction cases. This kind of mobile phone has several features such as the money card, access control, community services, and the control functions such as digital home devices.

Recently, they cooperated with the Taipei City Government; they have applied the NFC RFID technology in the 2010 Taipei International Flower Expo. This innovation becomes a world NFC (Near Field Communications) technology, and wireless application, as the core service applied throughout the whole exhibition. These services included the advanced navigation system, vendor information audio guide, integration of financial services, access check, transportation and other functions on the mobile devices

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4.2.2 Company F