Cheap CPUs may revolutionize China
By Kaiser Kuo

BEIJING - A Hong Kong-based company that began as a comic-book publisher now promises to revolutionize the Chinese personal-computer (PC) market with its new, low-cost, Linux-based, Chinese-language central processing unit (CPU).

Culturecom Holdings Ltd says its new V-Dragon CPU, which retails for only US$15-$30, will reduce the price of PCs and appliances by anywhere from 50-70 percent, mostly by eliminating costly intellectual-property (IP) fees charged by "Wintel" - Microsoft and Intel - for their operating systems and CPUs.

Co-developed by IBM and based on the Midori Linux operating system, the new V-Dragon architecture aims specifically for the Greater China market with an embedded dynamic Chinese character-generating engine, allowing direct use of 32,000 Chinese characters without additional font sets or Chinese language peripherals.

"The V-Dragon is not only the first Chinese CPU, it’s also the first Linux-based CPU," Culturecom senior vice president Benjamin Lau told Asia Times Online. "Midori Linux is a flexible OS [operating system], and it's the only Linux OS whose design team was led by [Linux creator] Linus Torvalds himself," Lau added. Culturecom acquired rights to Midori Linux from the US-base company Transmeta.

In the past year, the Chinese government has thrown its weight behind the open-source Linux operating system out of concern that Microsoft and Intel have formed a virtual cartel. Beijing has joined Tokyo and Seoul in exploring development of open-source alternatives to the Windows operating system.

Culturecom made an abrupt expansion in business scope from the comic-book publishing and distribution business to include information-technology (IT) development in 1999. The company formed a joint venture with the Chinese Academy of Sciences to co-develop RedOffice 2000, a Linux-based productivity suite, and the product won a software supply contract from the Beijing municipal government.

Leaving the Wintel environment means big savings
The move into hardware soon followed. "Getting out of the Wintel environment, we can offer this CPU much, much cheaper. Not only do we avoid IP fees, but we also reduce costs because many interfaces are already built into the chip," Lau said in a telephone interview. "Chinese-made PCs aren't selling well internationally because these costs prevent them from being competitive."

Lau said that Culturecom forecasts shipments this year of between 1.5 million and 2 million units. Most are for intelligent appliances (IA) such as smart digital video disc (DVD) players, or for special-purpose terminals such as the tax terminals Chinese equipment vendor Datang is building, and for which it has ordered 300,000 V-Dragon CPUs.

Critics have suggested that the Chinese CPU's speed is prohibitively slow, but Lau disagrees. "The V-Dragon CPU offers speeds anywhere from 400 megahertz to 1.4 gigahertz," Lau told Asia Times Online. "For Datang's tax terminals, for example, they only need 400MHz processors. Some of our customers want faster CPUs, and we can meet that need."

In a market where PC penetration remains extremely low - 3.3 million PCs were sold in 2003 in a country with a population of 1.3 billion - Culturecom is hoping that its low-cost CPUs will help to bridge the gaping "digital divide". Simple desktop computers powered by V-Dragon CPUs and sufficient to browse the Internet would cost as little as $200.

"We can serve the mass population of China," said Lau. "The vast rural population desperately needs access to affordable IT."

Kaiser Kuo is a freelance writer living in Beijing. He can be reached at kaiser_kuo@yahoo.com.