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Sucat
Road: Manila's High Tech Zone
By Michael Alan Hamlin
September 27, 1999
What combination of resources catalyzes
the development of high-tech industrial zones? Key components are
probably educational institutions supplying a steady stream of young,
capable, and ambitious knowledge workers, infrastructure support,
investors and venture capitalists, entrepreneurs with bright ideas,
and low costs.
While the notion of bringing all
these components together through a determined plan — as Hong
Kong, Singapore, Malaysia, Thailand, and to some extent the Philippines
say they are doing — up until now successful high-tech zones
have had a life of their own. For instance, high-tech zones in the
northeastern U.S., South Texas, and California are not the product
of design, but the result of key components being more or less haphazardly
present and percolating away in some sort of gooey evolutionary
melting pot.
In fact, these high tech zones are
particularly notable for what they don’t have: 1) a plan; and,
2) government involvement. Take note.
High-tech production corridors and
export processing zones are not high-tech zones, by the way. They
would be more accurately referred to — in their present configuration
— as low-value added production enclaves. But they are important
to the Philippines because of the jobs they create and their first-step
introduction to and transfer of new technologies. Ironically, they
are actually prevented from helping catalyze more complex assembly
and manufacturing here because their output must be exported and
then re-imported at prices that are significantly higher than they
need, or should, be.
Rodolfo L. Peralejo, chief financial
officer of Adham Development, Inc. (ADI), says this is because government
apparently doesn’t believe that Filipinos can produce complex
or original high-tech products. As a result, Mr. Peralejo finds
himself importing made-in-the-Philippines components from Taiwan
and other regional supply centers.
Despite such obstacles, Mr. Peralejo
and other high-tech entrepreneurs and investors entrenched along
Parañaque’s Sucat Road are demonstrating, it appears,
that high-tech zones can actually crop up in the Philippines in
unexpected places, on their own, too. Several weeks ago I wrote
about an Internet software firm on Sucat Road that provides software
and software-related services to U.S. clients. Last week, I came
across Mr. Peralejo’s operation, which is developing its own
original hardware for PCs.
ADI is named after Lebanese-American
entrepreneur Jawad Adham, who founded the firm following a 25-year
career with IBM. He settled in the Philippines — according
to Mr. Peralejo — in large part because he is married to a
citizen. Mr. Adham was in Taiwan negotiating with suppliers last
week, so we haven’t talked.
Hardware development is not the sexy
part of the high-tech sector, mostly because it’s viewed as
a commodity business. That’s largely true, but like televisions,
stereos and other electrical appliances, it is a commodity that
is constantly evolving, unlike pork bellies. Companies on the edge
of the sector’s evolution — like Dell, Cisco, and Intel,
for instance — are wildly profitable despite being in a commodity
business.
So hardware innovators probably deserve
more glory than they enerally get, especially from investors and
venture capitalists. And Messrs. Adham and Peralejo — along
with their Filipino team of engineers — appear to deserve quite
a lot of glory. After seven years in development, the company is
about to announce the first fully integrated, commercially available
motherboard — in the world.
The motherboard, as most of you know,
is the nervous system of all computers. ADI’s motherboard is
distinguished from other motherboards because it integrates all
the functions usually provided by integrated circuit cards that
fit into slots on the motherboard. Those functions include video
graphics, modems, sound cards, etc. In place of the cards, ADI uses
chip sets that reside on the motherboard.
No one has been able to do this before
for both technical and market reasons. Technically, integration’s
biggest hurdle was interference — noise. ADI has developed
a proprietary technology for solving that problem. Market-wise,
the fear has been that the fast-evolving technology industry required
the capacity to add new features to existing computers, and so inefficient,
energy-sucking cards were kept on motherboards.
Mr. Peralejo says the concern with
incorporating new features is principally addressed by simply interchanging
new chip sets that provide the new features. In fact, integrating
features such as video and Internet access actually supports software’s
clear migration toward technology convergence. And in terms of features,
ADI’s integrated motherboards provide functionality that is
seldom seen in desktops, like video out at high resolution. Sitting
in his office last week, Mr. Peralejo was recording our conversation
with a digital video feed directly into his computer while playing
a processing-intensive karaoke CD.
ADI intends to do more than just
sell motherboards, however, and intends to build and retail complete
desktop units — minus a monitor — for as little as P16,000.
With the video out feature, users can connect to their TVs instead
of a pricey monitor. An infrared, wireless keyboard completes the
package. The computer itself comes in a clear, acrylic package with
a footprint about one third as large as a typical desktop. Reduced
size is possible because there is no need for those bulky cards.
The principal benefits of feature
integration, according to Mr. Peralejo, are increased speed, reduced
power consumption, and low cost. He intends to sell PCs — ADI
has five different versions — for about 10 percent less than
comparable clones, and 50 percent less than branded PCs. And still
make lots of money.
As is generally, the case, I believe,
ADI and other entrepreneurial firms are showing us that it doesn’t
take grandiose plans to create a high-tech zone. It takes the right
people.
Copyright © 1999 The Events
& Awards Managers of Asia and
Hamlin-Iturralde Corporation. All rights reserved.
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