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The Silicon Valley Experience, Not All Gold and Glory

Arcadian Wireless Inc, a newly-established commercial spin-off of Malaysian-based Embedded Wireless Labs (M) Sdn Bhd, is planning a Nasdaq listing or a buyout within a year. The company's president Cheam Tat-Inn said he was confident of the aggressive timeframe even though the fixed wireless player made its Silicon Valley debut only in February.

"Both options are available to us going by the many enquiries since our launch," said Cheam, who quit as Compaq Computer (M) Sdn Bhd's managing director to join the start-up in January.

The company is pushing a patented, proprietary technology called Internet Protocol Multiple Access (iPMA) as a rural access solution in emerging economies. Cheam explained that with iPMA-enabled systems, the wireless "last mile" can now be up to 50km compared with the less than 20km with conventional protocols, resulting in hefty cost savings from using fewer base stations in an area of coverage.

"It also overcomes the 'bursty' or time-sensitive data traffic drawbacks associated with CDMA (code division multiple access), TDMA (time division multiple access) or FDMA (frequency division multiple access) protocols. This is done through a process which dynamically allocates bandwidth based on traffic demands thereby eliminating the need for excess bandwidth," he said.

Cheam added the resulting efficiency translates to five to ten times more voice and Internet traffic over the same bandwidth. It took two years and an investment of US$8 million to design and develop the technology through a cross-continental collaborative effort.

Valley Presence

Arcadian is targeting China, India and Indonesia, and countries in Eastern Europe, and remote parts of developed nations, where it is projecting high demand for wireless local loop solutions in the coming years. The company has also established a joint-venture with its largest shareholder Cape Range Wireless Ltd, a company listed on the Australian Stock Exchange, for exclusive marketing of its products in Australia, New Zealand and the State of Hawaii.

Cheam expects to attract Internet Service Providers (ISP), tele-communication product and service companies as potential partners. He suggested the company may also license the technology for other companies to innovate and develop their own products.

"Our presence in the Valley would be to seek strategic partnerships and access the capital markets, while the Asia Pacific office based in Malaysia will head up our sales and marketing, manufacturing, engineering, support and product development," he said.

Silicon Valley Not for All

However, two other Malaysian software companies that previously made the leap to set up base in the Valley cited cost as a deterrent to shift key staff or research and development there.

Java solutions developer BizTone.com Inc pulled out altogether in February this year, after over a year in San Jose, California and relocated its operations to Denver, Colorado.

"Although, Silicon Valley was our first, and most logical step into the US market, we found that it is unreasonably expensive to run a business and almost impossible to attract and retain staff," said CEO Darryl Carlton, who also lamented how the dotcom frenzy and stock option carrots were fueling rampant job-hopping.

The final straw for BizTone.com came when it lost its US operations head Miko Matsumura in February who left for a new start-up. The former Java chief evangelist for Sun Microsystems Inc was instrumental in incorporating BizTone.com, giving it the high profile boost it needed and paving the way for a listing.

"The Valley today is at a disadvantage when it comes to software development and engineering activities because the high expectations of those always wanting to work on ิ๔he new, new thing,' and be rewarded at a much more significant rate," said Carlton.

He believed the Valley was still an important location for marketing and business development, but for any company in start-up mode with limited funds, he suggested other locations.

Location No Longer Vital

Tim Loving, managing director of financial software developer AccTrak21 Inc, believes in an Internet-driven world geographical location may no longer be a pre-determinant for a successful software business.

"The R&D industry is intellect-based and people-intensive. If you can find the right kind of people at the right cost then that resolves the most important input requirement. That's why most of our work is still done in Malaysia," he said.

Over a year ago AccTrak21 set up an office in Santa Clara and a subsidiary company in California as a prelude to an eventual listing on the Nasdaq. "We needed a US address since we were exhibiting at shows there, and our software was getting favorable reviews in US publications. We also needed to establish a North American distribution and support operation.

"Santa Clara just happened to be our first choice. We were influenced by a mistaken belief that presence in Silicon Valley would lend credibility to our brandname. We are a bit wiser now," said Loving.

The company has since set up a Delaware company, which is likely to be the nucleus for its US expansion plans. "We believe that the East Coast of the US has been and continues to be a major contributor to the technological revolution. It's also where Wall Street is. Our analysis of US software companies by region also indicate that they are evenly spread and a Silicon Valley address has no significant impact."

by Julian Matthews, Kuala Lumpur

(May 2000 Issue, Nikkei Electronics Asia)

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