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Umax embraces handheld strategy

Following a bitter dispute over Macintosh licensing, Umax Data Systems is attempting to shift from its hardware roots to become a provider of Internet services.

TAIPEI, Taiwan--Following devastating financial losses and a bitter dispute over Macintosh licensing with Steve Jobs, Umax Data Systems is attempting to shift from its hardware roots to become a provider of Internet services.

And, unlike some hardware companies, the Taiwan-based company appears to have a product strategy that may help it make that jump. In two weeks, Umax will release a handheld computer that can wirelessly receive stock quotes and then conduct online stock transactions via a cell phone bridge, said Dr. Frank Huang, chairman of Umax. Two weeks later, the company will then introduce its own online stock brokerage.

The new strategy comes largely as a result of shifting trends in the technology industry. As computer prices plunge, PC makers are making less money. This and other reasons are forcing many of them to look to new markets, including handhelds and other devices. Meanwhile, service opportunities like Net access or serving up stock information are cropping up in unlikely places.

Umax's stock trading products and services will essentially link two existing divisions at the company. The company currently sells a proprietary handheld/beeper called the InterMessenger. In addition, the company owns an independent banking/financial division which has its own stock brokerage.

In two weeks, the company will release a new version of the beeper/handheld, which contains an electronic cell phone. Stock quotes will be delivered to InterMessenger via the beeper technology. If a user wants to trade, InterMessenger sends a signal to the user's cell phone, which in turn sends a fax or telephone message to a brokerage house.

"This is the first wireless stock purchase program," Huang said. "This is true wireless." A few weeks later, the company will then open an online trading site to complement its current brokerage services.

Other companies are pursuing similar plans. Later this summer, Palm Computing will offer a similar service for its Palm VII wireless device. In conjunction with Fidelity Investments, the Palm VII will introduce wireless stock trades for Fidelity customers, according to a Palm spokesman.

In the fourth quarter, Umax will introduce scanners deliberately tuned to allow individuals send images over the Internet.

"All the PC is is a service for communication," Huang said. "The day is for those who will control the traffic, not make the car."

The Umax products will be first released in Taiwan, "but if they are successful, we will try it all over the world," he said. The company has enjoyed some success locally, he said--100,000 of the devices have been shipped locally since its introduction last August.

Internet scanning
For the world audience, Umax by the fourth quarter will release a new series of scanners geared for the Internet. The new devices will effectively make it easier to capture and send images over the Internet.

"The purpose is to make sure that there are more color images sent through the Internet?The scanner should be an Internet entry point, but not so complicated," he said. "We are prepared to deliver a new product by the fourth quarter of this year."

In many ways, the new series of scanners is similar to efforts spearheaded by Hewlett-Packard and Intel over the past few years to transform the PC into a vehicle for visual communication. Images can be found all over the Internet, but most were put there by users with greater-than-average technical skills. To date, getting the average PC owner to venture into image communications, through videoconferencing and digital photography, has been tough sledding.

Despite this history, visual applications may begin to take hold because of greater bandwidth, better compression technologies, and faster processors.

There's something about Steve
Umax's grand plans follow two tumultuous years. In 1997, Umax was one of a handful companies in the then-promising Mac clone market. Interim chief executive Steve Jobs, however, killed off the licensing program, which then forced licensees to sell off their inventory at reduced prices and scuttle their PC operations. Umax lost approximately $40 million in its fiscal 1998, said Huang, mostly because of the reversal at Apple, which he claims unfairly violated the licensing contract.

"Because of Steve Jobs we were forced to pull out of the market. We believe Apple did not comply with the contract," Huang said. "He never liked the idea of licensing.

"It is very hard to deal with Steve Jobs," he added.

Umax contemplated litigation, but backed away, he said, because of the difficulty and expense. "1998 was a big loss mainly because of Mac clones."