Prospectus Summary
You should read the following summary together with the more detailed information regarding our company and the shares of the common stock being sold in this offering and our historical financial statements and notes thereto included elsewhere in this prospectus.
AsiaInfo Holdings, Inc.
Our Business
We are a leading provider of Internet-related, information technology ("IT") professional services and software products in China. We offer total network solutions and proprietary software to meet our customers' Internet and telecommunications infrastructure and operating needs. Our customers are leading telecommunications service providers, Internet service providers ("ISPs") and Internet content providers ("ICPs") in China, including the China Telecom system and China Unicom, the two largest Chinese telecommunications and Internet service providers, as well as China Mobile, the largest wireless telephony service provider in China.
We provide network solutions for large Internet and telecommunications projects. We deliver Internet infrastructure solutions such as backbone and access networks, operations support solutions using our proprietary and third party software, service applications such as IP telephony and virtual private networks, and network performance and security solutions. In response to customer preferences in China, we often offer services in the context of total solutions, which include systems integration and customization of our proprietary and third party software.
With an early entry into the market, we are now a leading provider of network solutions for large Internet and telecommunications companies in China. Our Chinese, western-trained senior management and technical personnel have a proven track record of delivering high performance, cost effective solutions for the specific needs of these companies. We designed and built ChinaNET, China's first commercial and largest national Internet backbone. We are in the process of designing and building UniNET, China's second-largest national Internet backbone, for China Unicom. We have also built numerous provincial Internet backbones, including GuangdongNET, the first and largest provincial Internet backbone in China.
We develop and sell carrier class software products tailored for the specific needs of the China market. These products include real time, highly scalable customer management and billing ("CM&B") software and carrier-scale messaging software for ISPs, ICPs and wireless telephony service providers. We have historically sold our software products as part of our network solutions projects, but we are increasingly marketing these products on a stand-alone basis. Our software can support up to millions of users and is designed with open architecture to facilitate customization.
We have the largest customer base for CM&B software among large ISPs and ICPs in China, with approximately 1.8 million user licenses as of December 15, 1999. AsiaInfo Mail Center ("AIMC"), the latest version of our messaging software, was launched in April 1999 and within eight months has been licensed for over 3 million users. As of December 15, 1999, we had sold over 7 million user licenses for our wireless telephony CM&B software.
Our Market Opportunity The Internet market in China has been growing rapidly due primarily to increased access to telecommunications services and declining personal computer prices. International Data Corp. ("IDC") estimates that China will have 3.8 million users at the end of 1999 and forecasts that China's Internet population will grow at a compound rate of 54% per year to 33 million users in 2004.
Chinese telecommunications carriers have made significant investments in Internet and telecommunications infrastructures using advanced technologies. The Internet and telecommunications markets in China have become increasingly competitive as the Chinese government has taken measures to deregulate the telecommunications industry and introduce competition. China's pending entry into the World Trade Organization (the "WTO") is expected to stimulate spending on the Internet and telecommunications infrastructures, particularly broadband networks. Increased demand for Internet services and competition have also prompted service providers to offer varying, customer-tailored service plans and focus on customer care and support. We believe that the combined effects of increased deregulation and industry competition, coupled with a growing demand for Internet services and multimedia applications, have created opportunities for us in the following areas:
. high value Internet-related IT services in an increasingly complex network environment;
. real-time, scalable CM&B software that meets the specific requirements of Chinese service providers; and . broadband network and convergent communications solutions including unified messaging software, which integrates email, voicemail and fax services.
Our Strategy
Our strategy is to be the leading China-based, world-class provider of Internet-related IT professional services and software products to enable our customers to build, maintain, operate and continuously improve their Internet and communications infrastructures. Key aspects of this strategy are to:
Maintain our leading position in providing Internet and telecommunications infrastructure solutions in China. We plan to maintain our position as a leading provider of network solutions to the largest Internet and telecommunications companies in China. Total investment in China's telecommunications industry is expected to continue to grow rapidly, particularly in Internet infrastructure and related areas. We expect most of this investment will be made through our customers, which are the largest Internet and telecommunications companies in China. We believe that our close relationships with our customers, our unique understanding of the China market, our technical capabilities and our proven track record will allow us to capitalize on these growth opportunities.
Focus on high value IT professional services. As the IT market matures in China, we plan to focus increasingly on providing our customers high value IT professional services such as network planning, design and optimization, while gradually outsourcing lower end services such as hardware installation.
Significantly grow our software business to maximize opportunities in the Internet software market in China. We expect rapidly expanding Internet usage in China to create increasing demand for reliable and scalable software products that address the specific requirements of Chinese ISPs and ICPs. We plan to invest significant financial and personnel resources to expand our Internet software business and strengthen our leadership position in the Internet CM&B and messaging software markets in China.
Develop broadband and convergent communications solutions. We are committed to developing solutions and software products to meet the future requirements of our customers. We expect increasing investment in broadband network solutions and convergent communications, which combine voice, data, video and Internet services using IP technology. We plan to develop broadband backbone and access network solutions and upgrade our CM&B and messaging software to support convergent communications. Our Internet infrastructure technology leadership and software experience in both the Internet and wireless services markets make us well positioned to develop broadband and convergent communications software and solutions for the China market.
Leverage our large customer base to generate recurring revenues. We have a high quality group of network solutions customers and one of the largest installed software customer bases for leading telecommunications service providers, ISPs and ICPs in China. Our customers include the China Telecom system, China Unicom, China Mobile and China Netcom. These companies have historically accounted for and are expected to continue to account for a majority of Internet investments in China. Our large customer base enables us to foster close relationships with our customers, develop an in-depth understanding of their needs and raise barriers to entry for our competitors. We intend to generate recurring revenues from our existing customer base through upgrades of their networks and implementation of new services and products, including outsourced applications.
Attract and retain highly qualified personnel. We place great importance on attracting and retaining highly qualified personnel. In view of the specific needs of the China market, we target our recruitment efforts on Chinese who have both IT and professional competence and extensive exposure to western education and/or management practices. We attract and retain these qualified personnel by offering them attractive compensation packages, including stock options, and a challenging and rewarding working environment.
Our Competitive Strengths Internet infrastructure technology leadership in China. Our technical personnel have state-of-the-art expertise in Internet infrastructure information technologies in China. This expertise enables us to develop and implement Internet solutions that employ high quality designs and to deliver the high performance-to-cost solutions required by Chinese companies.
Combined international and China expertise. Our senior management is a Chinese team. A majority of our senior management has been educated in the United States or has worked with leading multinational companies in or outside China. They have an in-depth understanding of the China market, combined with a knowledge of best management practices gained from some of the world's leading IT companies. We believe that the unique strengths of our management team will enable us to anticipate and effectively capitalize on market opportunities for our business in China.
Established customer relationships. We have close relationships with almost all the leading telecommunications services providers, ISPs and ICPs in China and have provided services and products to most of them. Our understanding of their requirements allows us to successfully deliver customized solutions and maximize revenue opportunities created by increased investments in the Internet in China.
Real time, scalable and adaptable proprietary software. Our proprietary software allows service providers to monitor user activity and analyze user data in real time. All our software products are scalable to accommodate up to millions of users. Our software products are also designed with fully documented, open application programming interfaces ("APIs") that allow our customers and third party systems integrators and software developers to integrate our software with existing applications and services requiring minimal effort and programming overhead.
Total solutions approach. We provide our services in the context of total solutions including systems integration and customization of proprietary and third party software. This total solutions approach is favored by Chinese customers and allows us to build and maintain close, long term relationships with them.
Corporate Information We started our business in Texas through a predecessor company in 1993 and are now incorporated in Delaware. In 1995, we moved our base of operations from Dallas, Texas to Beijing, China to capitalize on emerging opportunities in the rapidly developing Internet market in China. Today, almost all our operations and employees are based in China. Our executive offices are located at Ligong Science & Technology Tower, 4th Floor, 11 Baishiqiao Road, Haidian District, Beijing 100081, China, and our telephone number is (8610) 6846-7058.