Irdeto is cautiously optimistic about the Asia-Pacific market. Whilst one cannot ignore the activities and issues in the global economy, the amount of activity in the digital TV and related sectors in the region is still buoyant. Whilst the near-term is very important, it is the longer term outlook that drives major strategic decisions, such as our decision to create a dual HQ to better serve an ‘eastern’ market that we see as playing an increasing role for us. As early as 1998, Irdeto established its AsiaPacific, regional HQ in Beijing – a move which was initially seen as counter to global business trends, as most companies chose other locations in Asia to set up their regional headquarters. Irdeto considered that China would become the economic centre of gravity for the region, so that was the natural place to locate such a regional office. In 2007, we made a strategic decision to go another step further and to set up a dual headquarters, one in China (the eastern hemisphere) and the Netherlands, our traditional HQ (the western hemisphere). In order to ‘jumpstart’ this change, I relocated to Beijing last August, and several other executives will join the Bejing complement. Now with the Beijing office functioning as our joint HQ, we will split the location of senior management between our east and west HQs and top executives will be rotated regularly between Beijing and Amsterdam, whilst retaining the global briefs. Asia-focused staff members are expected, even more than before, to develop market strategies appropriate for the region, rather than just following them. This approach is planned to sharpen our competitive edge and agility to take advantage of opportunities in the marketplace. At the same time, the western world remains a strong source of revenue for us and we see continued opportunity for expansion there. Our recent announcement to build a new building in Amsterdam, which is planned for completion in 2009, underscores our continual commitment to this market. 2007 has been a year of strategic partnerships, acquisitions and making breakthroughs in emerging markets for Irdeto. On the partnership side a good example is our relationship with Huawei through which we together work with the likes of top tier telco Pakistan Telecommunication Co Ltd (PTCL) to launch Pakistan’s first IPTV network. We have seen a number of important customer wins in the Chinese cable market over the last 12 months – that part of the market is really digitizing apace now. Our partnership with China’s leading handset maker, Amoi Electronics Company Limited (Amoi), saw the integration of our Open Mobile Alliance (OMA)-compliant Digital Rights Management (DRM) content security solution on their handsets. Globally we acquired a middleware business, IDway, a customer care and billing system company from elsewhere in the Naspers Group, IBS Interprit, and we acquired a software security company, Cloakware. Through these acquisitions we are able to offer end-to-end solutions to our customers and other security solutions. As I said earlier we enter 2008 cautiously optimistic. The weakening of the US dollar, oil prices and various financial market shocks may have a dampening effect on consumption, which may in turn, suppress and/or delay the demand for, and growth, in entertainment. Irdeto’s business is absolutely linked to the fortunes of its customers in that if they grow their volumes of customers it means more volume for Irdeto. Irdeto customers’ volume growth is linked to the consumer spend and time spent on entertainment. Countering some of the macro to micro economic forces of concern are moves by governments to digitize their countries and switch off analogue transmissions. Hence, a mood of cautious optimism as we enter 2008. Increasing demand by some operators to introduce new services and revenue streams stimulate demand for more advanced solutions, including IP VOD and Push VOD, creating growth opportunities for Irdeto. Irdeto will be continuing to advance its range of offerings to customers and to leverage the range of products and services that we have in our portfolio to create new solutions of value to the market.
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