Blazing the trail

In the years following the dot-com bust in 2000, technology companies continued to face challenging times.

Corporate IT buying slowed as the global economy dipped into a recession. The Sep. 11 terrorist attacks and SARS outbreak which followed, shook investor and consumer confidence. Consumer spending in the affected countries dropped, crippling businesses across the globe.

To stay afloat, companies downsized and outsourced non-core functions to remain profitable. Thousands of IT workers became unemployed. Although companies were forced to do more with less, corporate IT budgets did not shrink completely. Businesses just got smarter about how they implemented IT and focused on ensuring every new IT tool met their business objectives.

Today, finally, there are strong indications that the IT market is picking up. But for most buyers, the purchasing decision hasn't become any easier, especially with the fast-consolidating tech sector. Organizations, which see new business requirements emerge every other day, particularly need a vendor that is also a business partner. It's not just about the technology--the chosen vendor should have an intimate understanding of the client's strategy. The IT solutions provider should have the domain experience and expertise to implement the technology correctly as well as to continually provide spot-on advice.

To help businesses make well-informed buying decisions, ZDNet Asia has identified a list of top 50 vendors that have performed financially well, have a proven track record, and are firmly committed to the Asian market. The main industry categories considered for this Top Tech Index are: systems, storage management, software infrastructure, business applications, networking and communication, security, services and Internet services.

After weeks of grueling research, we're proud to reveal ZDNet Asia's Top Tech 50 companies. These tech companies emerged with the best overall scores based on six judging criteria, weighted as indicated:

1. Latest global revenues (10%)
2. Latest global net income (15%)
3. Average percentage year-on-year revenue growth over 4 years (15%)
4. Average percentage year-on-year net income growth over 4 years (25%)
5. Global employees (10%)
6. Asian presence in 10 countries: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam (25%)

"Six or seven years earlier, this would likely not have been the case. The development and commercial success of today's business and consumer solutions is a global playing field, and those with the skills to provide true benefit or uniqueness to customers will continue to flourish," Koch said.

Half of ZDNet Asia's Top Tech 50 companies play in the IT services sector, while communications and networking was the second-most dominant category with 20 players. The third major segment is storage, comprising 16 players.

Koch said the industry segment breakdown was no surprise. "This is not an unexpected mix, as some of the fastest-growing segments of recent years, such as security products or communications infrastructure provisioning, will of course support strong revenue and net income growth rates.

"That said, to garner customer support consistently for several years, as per the judging criteria, one's products and services must be delivering or exceeding expected value," he added.

Graeme Philipson, an independent tech analyst and writer, said the dominance of services companies "reflects the reality of the modern industry which is all about services". "Most of the other companies, though defined otherwise, are also essentially about the delivery of services," he said.

James Loo, COO of Y3 Technologies, was hoping to see more software vendors enter the ranks. "I'm disappointed that the representation of software application companies is very low, in fact too low. Maybe the application software industry is in a consolidation phase with many being merged or acquired."

Loo highlighted another potential reason for the low representation. "Perhaps the lack of respect and enforcement on intellectual property rights in the region is affecting more software companies that are entering Asia. Or if the software are already in use here, they are acquired through the proper channels, which could affect the vendors' revenues from this region," he noted. =""> Dr Colin Quek, director of the senior executive program at the National University of Singapore's Institute of Systems Science, said: "Perhaps what is gratifying is that in a list dominated by Western companies, I am glad to see quite a few Asian companies playing up there with the big boys whom we would all expect to be in such a list."

In addition to this main Top Tech 50 index, ZDNet Asia also identified the top 10 fastest-growing tech companies based on a single judging criterion: average year-on-year revenue, and net income, growth over four years. The fact that these companies, which include mobile e-mail pioneer Research In Motion, and enterprise software vendor Salesforce.com, have grown at astronomical rates indicates there are still market opportunities abound in the tech sector.

Amongst these fastest-growing luminaries, the number one ranked company--Chinese search engine Baidu--has an average year-on-year revenue growth of 169.2 percent over four years. The top company with the fastest-growing average net income growth, year-on-year, of 4,740 percent is lifecycle management software provider, Altiris.

"The rate of growth of some of these companies gives us all hope that the technology train is far from running out of steam, and that economic recovery and growth could be just round the corner," said Quek.

Koch added: "To be able to grow in revenue terms at over 40 percent annually for several years is a commendable feat, and it must be supported by leading-edge technology solutions, likely in very new applications areas or areas which are growing in importance in the region."

Special mention
The results turned out some surprises. Most notably was the absence of Google from the Top Tech Index. The editorial team debated for days on whether an exception could be made for Google, which was excluded as a nominee because financial data needed to calculate the company's average year-on-year revenue/net income growth rates over four years, was not publicly available. These growth rates were two of the required judging criteria.

Nonetheless, Google deserves recognition for its innovation and contribution to how it has transformed the Internet. The company's search engine handles close to half of Web searches worldwide today, and it is setting itself up to be an application delivery system for any type of device.

Another company that deserves special mention is eBay. To date, the company has dominated the Internet scene as an online auctioneer, but its recent moves, such as the Skype acquisition, could make it a significant player in the business segment, too.

According to Philipson, "Google and eBay deserve special mention because, more than any other companies, they are defining the Internet era".

"There was much talk when the Internet 'effect' of changed business models hit in the early 1990s, and Amazon.com exemplified the way the Internet could be used for the emerging field that came to be called e-commerce. But Google and eBay have done more than change business models," said Philipson. "They have changed the whole way people think about what sorts of businesses are possible. Amazon was evolutionary, these companies are revolutionary. eBay has built a whole new industry in its own right, and Google continues to invent new ways to use information. They make companies like Microsoft look so 20th century."

These Internet companies are clearly among the industry's movers and shakers. "[Google's] stock price continues to climb, and it continues to redefine its direction. eBay's purchase of Skype is also a pointer to the future, where traditional models meet new technology to invent whole new ways of doing business," noted Philipson. "We are in a new boom--but one centered on real achievements, and real results. Google and eBay are leading the way."

What it takes to succeed
Serve thy customer. That's the motto if tech companies want to succeed, according to the Index's panel of advisors.

Koch stressed that organizations will never become leaders without exceeding customer expectations. "It takes either years of dedication and effort to build presence, customer trust and loyalty, or superior and supportable technology to become a leader," he said.

"As these tech companies have garnered this status as per the judging criteria, it is obvious that businesses continue to find value in the products and services being offered," he noted.

Philipson agreed that success boils down to offering value to the customer. "All of these companies, and indeed all companies in the industry, exist only because technology users buy their products," he said. "Invariably, those products are used in ways that help their customers gain and maintain competitive advantage. The most successful IT vendors will continue to be those who best anticipate what their customers want," Philipson said.

Note: Financials and statistics correct as at September 2005. Data was compiled by ZDNet Asia from sources such as official reports, corporate Web sites, and Hoover's. ZDNet Asia strived to get the latest information but does not guarantee the correctness or completeness of the data. The information provided on this site is for general informational purposes only and is not an offer to buy or sell any securities.