TechTarget, ChinaByte deal to renew interest in sector
By Li Weitao (China Business Weekly)
Updated: 2004-07-08 14:35

US-based technology magazine publisher TechTarget Inc last week struck a partnership with Chinese information technology portal ChinaByte.

Under the deal, which points to renewed interest in the nation's technology media industry, ChinaByte will initially launch Chinese-language versions of a series of TechTarget's websites, targetting China's IT professionals.

In the long term, ChinaByte will develop localized contents based on TechTarget's business models.

TechTarget, which runs 21 websites, makes money by collecting advertising from major tech vendors such as IBM, Microsoft, Oracle, Hewlett-Packard, Cisco Systems, Intel and EMC.

Technology publications have been hit hard after the dotcom economy bubble burst.

However, the industry is seeing a turnaround along with a recovery in the technology sector.

TechTarget received US$70 million in venture capital funding last month.

That is one of the largest venture investments this year, the Wall Street Journal cited a survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association, as saying.

No investment is involved in the partnership between TechTarget and ChinaByte, Susan Odell, vice-president of TechTarget's international operations, told China Business Weekly, on the sidelines of a press conference last week.

However, China is one of the brightest spots in the global IT industry, she noted.

"In the United States, many people realize China will become the major manufacturer of IT products,'' Odell said.

Citing market researcher IDC, Odell said the size of China's IT market will more than double, from this year's US$25 billion, to US$50.8 billion in 2008.

"We want to be part of that growth,'' she said.

Odell would not say whether the firm will inject funds into ChinaByte in the future.

Company Chief Executive Officer Greg Strakosch has said the US$70 million cash infusion will be used for global expansion and acquisitions.

TechTarget expects this year's sales to reach US$50 million, compared to US$33 million in 2003.

Unlisted firm ChinaByte is already profitable and expects to record sales of US$10 million this year, company Chief Executive Officer Li Zhigao told China Business Weekly.

ChinaByte was the country's first provider of online IT news. Now the website also focuses on providing wireless value-added services and technical support.

ChinaByte also makes money by licensing its IT news to other leading Web Portals including Sina, Sohu, NetEase and Yahoo! China.

China's People's Daily, Popular Computer Week Newspaper, and international big names News Corp and International Data Group (IDG) are investors in ChinaByte.

The alliance would help TechTarget and ChinaByte to tap into China's online advertising market.

As TechTarget's websites target only IT professionals, advertisements posted by tech vendors can directly affect executives' spending decisions.

China's online ads market surged 120 per cent year-on-year to 1.08 billion yuan (US$130 million), about one quarter of which are IT-related, according to Shanghai-based iResearch.

That accounts for only 1.13 per cent of the global online ads spending of US$11.5 billion, offering opportunities for huge growth potential.

IResearch projected the size of China's online ads market will hit 4 billion yuan (US$481 million) in 2006.

Li acknowledged that ChinaByte lags behind Sina and Sohu in terms of online advertising revenue.

However, ChinaByte's wireless value-added service is performing quite well with about 500,000 subscribers, he added.

ChinaByte can learn from TechTarget's profitability model which focuses on corporate users, said Hugo Shong, senior vice-president of IDG.

Li revealed ChinaByte has signed partnerships with Yahoo! China, with the details to be revealed in the near future.

The IT media is less regulated in China's overall media and publication industry.

IDG has already invested in China Computer World (CCW), forming the first Sino-foreign joint venture in the country's publishing sector.

CCW, which has several publications, has raked in hefty profits, buoyed by the technology boom, in the country's largely unprofitable media industry.

Tom.com Ltd, a media and Internet venture controlled by Hong Kong tycoon Li Ka-shing, recently secured a formal green light from mainland regulators to form an advertising and magazine distribution joint venture with Popular Computer Week.

Tom.com will pay 312 million yuan (US$37.6 million) for a 49 per cent stake in the joint venture.

Despite overseas investors' increasing interest, China's IT media is still facing a big challenge, said Liu Ren, vice-president of ChinaByte and a well-respected IT columnist in the country.

The boom four years ago is now just a memory and the IT media should seek a new direction, he noted.

"With IT products increasingly becoming consumer products, traditional IT media is being overshadowed by the mass media,'' he said.

"And as IT industry has become a major part of the GDP (gross domestic product), the IT media is also being replaced by finance media.''

IT media should focus more on the technology sector, which is more specialized and is hard to be replaced, Liu noted.

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