A few years ago, when Microsoft launched the Chinese version of its Windows operating system, eccentric computer genius Chu Pang-fu, inventor of the Tsang Chieh Chinese character input system, warned that Taiwan's software market would be "ruled by another race," and attempted to get his compatriots to take notice of "the cultural crisis of a technological invasion."

Chu Pang-fu's views were very similar to those put forward 30 years ago by Canadian media scholar Marshall McLuhan with his assertion that "the medium is the message." When users choose new technologies such as television or computers, their thinking and mentality are affected by this new "frame."

Technology should serve culture. Acer, the world's eighth largest computer company, and Hong Kong film industry giant Golden Harvest, have joined forces to develop "infotainment" software for sale worldwide. （photo by Vincent Chang）

Looking for niches

Although the logic of the notion that the "frame" can change the way people think may in itself be debatable, there is one fact that cannot be ignored.

"Taiwan's market is small, so it's very hard to resist outside pressures," says Associate Professor Chen Pai-ling of the journalism department at National Chengchi University.

He says that in the area of software which improves our efficiency in our work and everyday lives, such as word processing software, database software, or spreadsheet software, US vendors already hold most of the market, and it is very difficult for anyone else to catch up.

So where does hope lie for software development in Taiwan?

Kuo Yun, president of the Institute for the Information Industry (III), says that the difference between computer hardware and computer software is that producing an additional computer requires additional expenditure on labor and materials, but software exists as digital information, and can be reproduced at little extra cost; what counts is speed in developing more advanced programs ahead of the competition.

Taking the "millennium bug" or "Y2K" problem which is looming over businesses as an example, Kuo Yun says that with help from their government, Indian firms set up a software park which contracted to redesign the way computers handle dates. But small and medium-sized software developers in Taiwan, with their scattered locations and operations, have missed the boat on this business opportunity.

He also cites the example of the German software company SAP, which has risen to prominence in recent years. He explains that the company has tapped into the demand created by businesses' need to restructure, by designing integrated software for human resource management, financial management, accounting and materials management. SAP has become the global leader in software for "enterprise resource planning," with an annual turnover of US$4 billion. Kuo believes that software to assist business remodeling is an area of opportunity for Taiwanese software developers. He says: "The Chinese have a different approach to business management, and localization into Chinese is also a barrier [to overseas firms]."

The Chinese also attach great importance to their children's education, and are willing to spend money to help their children study such things as music, painting and English. Hence there is scope for the development of "edutainment" software for maths, history, languages and so on.

However, Kuo also stresses that the small size of the Taiwanese market is a genuine problem. The current population of personal computer users in Taiwan is only around 1.6 million, and is growing by 400,000 per year. But if we look at the overall Chinese-speaking market, it has enormous potential. The number of PC users in mainland China alone has already reached 2.7 million, and is expected to grow by three million per year. The III estimates that the global market for information industry services will exceed US$500 billion in 1999. Although in the Asia-Pacific region the industry is still at the start-up stage, it is growing faster here than elsewhere. Within the region, mainland China has the highest growth rate.

Content is what counts

Industry players in Taiwan agree that the rise of multimedia has created a market for "content-based" software.

In mid-March Taiwan's Acer Group, which is the world's eighth largest PC manufacturer, and Hong Kong's Golden Harvest Group, the world's largest Chinese-owned motion picture company, joined forces to set up Golden Acer Technology and Entertainment Ltd. (GATE), which will develop multimedia "infotainment" software incorporating film, animation and games.

"The purpose of technology is to serve human cultural development, and the world has already reached a stage in which intangible assets are the most valued and the most valuable," said Acer Group chairman and CEO Stan Shih at a press conference, adding that the main reason why software is so expensive in Taiwan is because of the small size of the local market.

"Without a return on investment, where is the next creative development to come from?" asked Shih. He said that to address this problem, GATE's games software will initially be aimed at the Chinese-speaking world, but its future target will be the world market.

Golden Harvest successfully created the image of kungfu stars Bruce Lee and Jackie Chan, and their powerful, agile bodies will appear in GATE's games software.

Martial arts is a theme with an oriental flavor but a global market. The "Ninja Turtles" films, which were tremendously popular in the US for a time, came from the Golden Harvest studios in Hong Kong. Furthermore, software design can be adapted to whatever the market likes.

Liu Ta-chuan, head of the network section at National Chiao Tung University's computing center, cites the examples of Rubik's cube and the tamagochi virtual pets developed in Japan which spread quickly from Japan to Taiwan and then to the USA, earning huge amounts of money: for game-based products, the importance of cultural differences is minimal.

But games software is not the only area of opportunity available.

"Taiwan still has niches in areas in which other countries dominate," says Tu Tze-chen, president of Acer TWP Corporation. In his view, the widely distributed general application programs leave many gaps in which users' needs are not satisfied. Product strategy requires "very precise positioning."

For instance, Ulead Systems' image editing software and Trend Micro's virus protection programs are both aimed at users with "special needs."

According to III figures, total sales by Taiwan's information industry last year were valued at US$35.8 billion. Computer hardware accounted for 85% of this total, while software accounted for only 5% (the remainder being network communications products).

Computers are a product of science and technology; software is a product of culture. How can science and technology serve culture? How can culture make use of technology to create a highly profitable market? These are questions which Taiwan's information industry has now begun to consider.