Microsoft Accelerates New Economic Opportunities for Chinese Software Companies

BEIJING — Oct. 31, 2006 — Today at the Innovation Summit in Beijing, Microsoft Corp. announced the first-ever licensing of technologies to two Chinese software companies, Comtech Group Inc. and Hunan Talkweb Information System Co. Ltd. (Talkweb). The innovative mobile communications technologies were developed by scientists at Microsoft Research Asia in Beijing. Comtech and Talkweb are demonstrating the potential for intellectual property created in China to be the basis for new businesses in the growing Chinese knowledge economy. Although Microsoft has successfully partnered with other companies and entrepreneurs in Europe and the U.S., this is the first time early-stage intellectual property-based technologies are being licensed under the shared-success business model of Microsoft® IP Ventures in China.

“The change in the way Chinese companies think about intellectual property rights and licensing is allowing companies like Comtech and Talkweb to take advantage of business opportunities in the knowledge economy,” said Ya-Qin Zhang, corporate vice president for Microsoft China Research and Development Group. “Through IP Ventures, Comtech and Talkweb now have the opportunity to increase their unique footholds in the IT industry by expanding their business offerings with innovative technologies that carry the potential of stimulating consumer interest, innovation, competitiveness and, ultimately, greater economic development.”

As the Chinese government makes strides to open its economy to multinational businesses, including stronger intellectual property (IP) protection, Microsoft is making increasing investments in China to accelerate innovation and economic development in the region. The three technologies from Microsoft Research Asia — Mobile Picture, Mobile Bandwidth Optimization and Personalized Facial Sketch — represent unique, innovative components that Comtech and Talkweb will deliver in new products to be launched to consumers in the coming months.

“We’ve worked with both Comtech and Talkweb to transform a prototype from our research lab into a marketable product for consumers, which is the purpose of the IP Ventures program,” said Harry Shum, managing director of Microsoft Research Asia in Beijing. “IP Ventures is just one way we pair ideas and innovations with people and funding to provide customers and partners with empowering solutions, advanced technology and economic opportunities.”

Comtech is a leading provider of customized module design solutions as well as other engineering and business services for more than 200 domestic and international technology product manufacturing companies based in China. Comtech licensed various mobile media technologies from Microsoft IP Ventures and plans to incorporate these technologies into applications for distribution to original equipment manufacturers that will in turn sell their devices preloaded with Microsoft’s cutting-edge innovations.

“We are pleased to be one of the first companies in the Chinese marketplace to officially license Microsoft’s dynamic suite of products geared toward next-generation digital media products,” said Jeffrey Kang, chairman and CEO of Comtech. “The opportunity within China for technologically advanced portable media players, digital video and TV, IPTV, game consoles, and smartphones is tremendous as consumers continue to upgrade and adopt devices with added functionality and features. This new relationship with Microsoft IP Ventures in China is mutually beneficial as Comtech will now be able to offer a more feature-rich products set to its customers.”

Founded in 1996, Talkweb is a key software development and government-backed systems integration company with strong and long-term (over 10 years) partnerships formed with mobile carriers such as China Mobile Communications Corp. Talkweb licensed Personalized Facial Sketch technology from IP Ventures to build a Web application to convert photographs into cartoons that customers can then send to mobile devices via Multimedia Messaging Service, which is helping expand the market of 120 million Internet users and 400 million mobile users in China.

“Consumers are increasingly interested in having as much personalized functionality in one device as possible, with the preferred device often the mobile phone,” said Xinyu Li, CEO of Talkweb. “Microsoft IP Ventures enabled us to refine the cartoon technology to deliver an exciting new mobile phone product to the expanding Chinese market.”

Microsoft’s longstanding commitment to growing local economies with its technologies was extended in May 2005 with the launch of the IP Ventures program. IP Ventures puts cutting-edge research from Microsoft’s world-class labs in the hands of entrepreneurs and companies to accelerate business growth and ultimately strengthen regional software industries. By licensing or acquiring pre-commercial, cutting-edge technology through the IP Ventures program, growing companies and entrepreneurs can achieve a significant time-to-market advantage. The program is available globally and is frequently updated with new technology offerings. IP Ventures partners already include EON Reality Inc., Inrix Inc., Skinkers, SoftEdge Systems LLC, Vimio plc and Wallop Technologies Inc. Additional information about Microsoft’s IP Ventures program may be found at

About Comtech Group

Comtech Group (Nasdaq: COGO) is a leading provider of customized module and subsystem design solutions for the Chinese market. Partnering with Microsoft IP Ventures allows Comtech to position as a leading design house in digital media area. The company believes it acts as a proxy to China’s technology industry. Comtech utilizes these relationships and combines their IP to create designs that Comtech then sells to electronic manufacturers. These designs allow manufacturers to reduce their time to market for new products and ultimately increase sales. Comtech Group focuses on the mobile handset, telecom equipment and digital media end-markets for their customized design modules while also offering business and engineering services to their large telecom equipment vendor customers. Over the last eleven years, Comtech has grown its customer list to include more than 200 of the largest and most well known manufacturers across the mobile handset, telecom equipment and consumer markets, covering both multinational Chinese subsidiaries and Chinese domestic companies.

About Talkweb Ltd.

Talkweb, a key software enterprise, was founded in May 1996. It has gained 1st class qualification on computer information system integration issued by the State Information Industry Department. With 6 shareholding and 1 joint stock companies, as well as 526 staff members, it is a rare high-tech technical enterprise integrating industrial software development, operation and wireless value-added service.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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