Critical Path, a San Francisco-based global leader in Internet communications, recently scored a double success in China's burgeoning Web-based messaging and online finance market when it struck deals with broadband provider China Information Broadcasting Network (CIBN) and online digital certification provider, the China Financial Certification Authority.
These deals represent a major addition to the 50 million active users in the Asia Pacific who already use Nasdaq-listed Critical Path technology.
CIBN
CIBN, a pioneering broadband multimedia carrier under the Information and Network Center (INC) of the State Administration of Radio, Film and TV, showed little hesitation in choosing Critical Path's Messaging Service over several competitors, both foreign and domestic.
CIBN is the latest blue chip addition to Critical Path's list of high profile international clients, which includes 190 service providers, eight national postal authorities, 40 telecommunications carriers and 35 government agencies.
"We believe we were chosen because we provide outstanding value-added, in particular the lowest total cost of ownership, as well as immense scalability," points out Critical Path's Senior Vice President for Asia Pacific, Azita Nader, echoing the findings of a survey conducted in 2002 by independent US research firm Radicati.
"A broadband, multifunctional email messaging system is the bedrock of any multi-media carrier - and that is what we bring to the table in the CIBN deal," she adds.
Nader also explains the underlying trend of the deal.
"Broadband users are looking at having more valued-added services - and they are ready to pay for them. All across Asia we are seeing users eager for more sophisticated products. The days of free - but basic - services are numbered," she says.
CIBN's chief executive officer Wang Ping emphasizes acquiring the capabilities that Critical Path's offers will be an important part of growing the company's business.
"We are committed to growth and to expanding the scope of our services. We want to integrate video and audio mail into the CPÖ Messaging Server and we estimate users will grow to one million in the first year," he says.
CIBN's is one of the top contenders in China's broadband space, since its value-added broadband Internet service is based on CATV network resources. In addition, it can take advantage of the national cable TV backbone network as well as interconnection with domestic telecom giants China Telecom and China Unicom. The company has ISP/ICP licenses granted by the Ministry of Information Industry in 24 of China's 33 provinces.
The CPÖ Messaging Server provides a broadband Internet-based messaging solution that can service groups of users ranging from small groups to several million. Features include video messaging. These can create a more comprehensive, colorful experience for users as well as facilitating usage and building bridges between telephone and wireless networks and the Internet.
Hong Kong-based IP/Internet Network Infrastructure company NetStar, a long-term partner of Critical Path in China, will provide front-line support for CIBN in installing and maintaining the new system. NetStar also played a vital role in customizing Critical Path's technology to integrate it into CIBN's existing systems.
China Financial Certification Authority
In the deal with the China Financial Certification Authority (CFCA), Critical Path is supporting its key partner Entrust, the world's leading public-key infrastructure (PKI) provider, in the setting up of a secure messaging system by providing Critical Path's highly reliable and very high performance Directory and Meta-directory technology.
CFCA was set up in 2000 by the 14 of the country's largest banks to provide digital certificates for online transactions. So far it has generated 70,000 of the Certificates that are used to validate the digital signatures of its users, who include many thousands of the banks' retail, securities and corporate clients as well as the banks themselves.
The availability of digital signatures enables levels of transaction security unprecedented in China's financial environment. Critical Path's technology provides the Directory Servers that store the users' public key certificates whilst Critical Path's Meta-Directory keeps the user profiles up-to-date and ensures the data is consistent and accurate.
"Critical Path technology plays an absolutely crucial role in the storage of the critically important Certificates and in the management of user profiles," comments CFCA's General Manager Liu Dalong.
"In view of the rapid growth of secure online financial transactions between securities houses, enterprises and individual users, Critical Path's proven scalability will be vital for the future of this thriving sector," he adds.
"The significance of the deal for China is that this system immediately catapults CFCA to an international level in the secure transfer of information - clearly an essential requirement for a financial institution at the cutting edge of secure online transactions," comments Critical Path's Asia Pacific Senior Vice President, Azita Nader.
Q&A with Wang Ping
What is the background of Critical Path's product development?
Critical Path is a market leader in providing messaging solutions to carriers and service providers worldwide. Critical Path has more than 30% of global service provider mailboxes with a global deployment of more than 150 million mailboxes. The Meta Directory is a market-leading product. For example, Critical Path provides messaging services for the No.1 Internet Service Providers in over 20 countries. Critical Path has the fastest growing installed base for carrier grade messaging servers - at 155% year-on-year-among top tier providers, and the Critical Path Messaging Server powers three to four times more users than the competition on the same software. In fact, over half Critical Path messaging revenue is from takeouts of iPlanet, Openwave and Sendmail servers in the last 18 months.
The success of our products is based on our intense focus on Messaging and Identity Management Enablement solutions. In particular, Critical Path technology is extensible, flexible and can solve today's problems while laying the foundation for the next generation of communications devices. Critical Path technology enables the customer to integrate with existing and future third party applications and customer environments.
What is Critical Path's approach to business in the Asia Pacific?
Critical Path has had a presence in the Asia Pacific for a long time via partners and System Integrators. With over 50M users in major telecom and service provider Market and number of PKI projects from Japan to India, Critical Path has emerged as a major player in the PKI market.Now, after a period of thorough familiarization with the market in China, Critical Path is ready to pursue deals. Excellent opportunities exist in China to use emerging technologies that can provide enhanced services for enterprises and businesses and China where we are working closely with local partners to bring these technologies to the market.
What benefits will the end user see from the CIBN deal?
CIBN will be able to provide multimedia email services by implementing the Critical Path Messaging Server, supported by NetStar's network security, management and integration ability. This will tremendously enhance the endusers' multimedia messaging experience and enable them to retrieve email via any tool, since the Critical Path Messaging System supports global email systems such SMTP, POP3 and IMAP4.
How large is the market CIBN and CFCA are targeting?
It is estimated that by the end of 2002, there will be over 300,000 registered email users with CIBN, including 100,000 chargeable users. CIBN predicts there will be over 3 million users by the end of 2006, with a cumulative revenue of RMB 740 million ($89 million) and net profits of RMB 270 million. It's important to point out the price for the services will be based on achieving satisfactory levels of cost efficiency, not on offering extremely low prices to obtain market share.
In China overall, the government estimates the number of Internet users exceeds 48.5 million, of which 3 million are broadband users. CIBN aims to achieve 10% market share by the end of this year, that is, 300 000 users. The market in online financial transactions that CFCA is targeting is even greater. The Industrial and Commercial Banking Corporation, China's largest bank and a founder member of CFCA, has seen the value of online transactions soar from RMB 500 billion in 2001 to RMB 1.9 trillion in the first half of 2002. CFCA is the most important certification authority of this kind in China.
