Mimos, the making of a Web enterprise

Mimos had a milestone year in 1999, with multiple local and foreign deals to launch several new businesses, including a homegrown desktop PC line with Intel.

"Not just geeks with a gift for fortune telling, but the ability to see beyond technology to the people who will be affected by it." That was Prime Minister Mahathir Mohamad's description of research and development body Mimos Bhd on an official visit last November. His speech was unusually peppered with metaphors and euphemisms reflecting Mahathir's fondness for an organization that he seeded 15 years ago but has begrudgingly approved large sums of funding with little return on investment.

Set up in 1984 by a small group of academics in a wooden building in the capital of Kuala Lumpur, Mimos first went by the lengthy moniker Malaysian Institute of Microelectronics Systems. For many years it was just an obscure lab on the periphery of rapid industrial changes taking place in the country in the 1980s, with little to show for its continued existence.

Mimos Milestones 1999
March Obtains sole supplier contract to lease its made-in-Malaysia PCs and peripherals to Malaysian Government after signing OEM agreement with Intel.
May Teams up with Microsoft and Hewlett-Packard to set up Connected Learning House Web site linking the National Library and 14 other state libraries.
  Launched educational multimedia courseware for primary schools with Negeri Sembilan state education department and Jendela Pagi Sdn Bhd.
July Announces joint organization with the New Straits Times and TV3 for the "Malaysia Internet Awards @my'99".
  Joint venture with Pos Malaysia, Digicert Sdn Bhd, Malaysia's first licensed certification authority for online transactions ready for business.
"At the beginning, Mimos was simply an idea and we were foolish enough to believe we could make it happen," said Tengku Dr Mohd Azzman Shariffadeen who founded the research institution and has helmed it through its difficult phases. In plush premises at the Technology Park Malaysia in Bukit Jalil, Mimos has grown into a multi-building 680-strong organization offering everything, from Internet services to computer assembly and wafer foundry services.

"At the beginning, Mimos was simply an idea and we were foolish enough to believe we could make it happen."
--Tengku Dr Mohd Azzman Shariffadeen, president and CEO, Mimos

Azzman, now president and CEO, explained that the turnaround began three years ago, when Mimos stuck its head out and decided to corporatize the government department. "In 1998 (during the worst recession in a decade), we re-focused and sought to flatten our organization to enable us to move quickly. We came up with a systematic four-stage process to redefine our roles comprising R&D, product development, field trials and finally commercialization. We are now harvesting the seeds of that re-focusing," he said.

1999 was nothing short of stellar for Mimos. It launched a series of new projects, partnerships and joint ventures, while many long-conceptualized ideas came to fruition. "We expanded our internal capacity and brought in people with business orientation and prodded them to look for commercial applications, business opportunities and partnerships. We are now on the map, even globally, and various companies have come knocking on our doors. It's just a matter of execution and delivery now," said Azzman. Last March, Mimos landed a plum exclusive contract to lease PCs and peripherals to the federal government. "It was entrusted to us because the Government was fed up with the inability to find reliable suppliers. One common complaint by the various departments was that the process was too slow and by the time they got the machines they were already outdated. After-sales service was also found wanting because some of these companies folded up after awhile and left their customers in a lurch," said Azzman.

He explained the Government also no longer wanted to be stuck with the cost for such PCs and sought a leasing program where obsolete computers could be changed for new regularly.

A place in the sun

Mimos signed on Intel to supply its microprocessors and built its own range of desktop PCs with parts mostly sourced locally. It also leases various branded notebooks and peripherals from other vendors. The private sector and home users are next on the cards. "The feedback from government users has been positive and the failure rate has been very low, so we are testing the waters with other markets."

Mimos Milestones 1999
August Launched Mobile Internet Unit program to bring Internet to rural schools in co-operation with the education ministry, United Nations Development Programme and Automotive Corp Sdn Bhd.
September Collaboration with Nasdaq-listed Integrated Silicon Solution Inc for Mimos Semiconductor to license its EEPROM technology.
  Launched Jaring Virtual Private Network for corporate users as cheaper alternative to leased lines.
October Launched SuperJARING with Cisco Systems, M'sia's fastest (2.488Gbps) and longest (861 km) Internet fiber-optic backbone.
  Made official Webcaster for live NetAid concert held simultaneously in New York, London and Geneva to raise funds for UNDP extreme poverty program.
  Jointly launched MyMalaysia Travel Services Web site with Asia Travel Network (ATN) for Internet Travel Reservation Service.
  Jointly launched with Sharp world's first digital video camera able to send MPEG4 moving pictures through the Internet.

Azzman said capacity is still small, but he believed Malaysia could and should be manufacturing all sorts of computing, handheld and wireless devices for local and global markets. He added that Mimos also supports the open source movement and is all for more accessible products. It has also designed a prototype Linux server of its own. "We like the idea of making devices cheaper, more functional and accessible to the public."

On the upstream end, Mimos is on the verge of signing a deal to supply its wafer foundry services to its first major customer. "We have enquiries to make simple four-layer mask devices, and expect to make an announcement soon."

Azzman hinted that the production volumes of the products would be high as the company is a heavy user of the product. For him, the set-up of the RM200 million wafer fab, Mimos Semiconductor (MySem), was the culmination of long-term lobbying to take Malaysia up the value chain from a mere back-end assembler of chips to a front-end wafer player. The fab offers wafer foundry services for 1 micron CMOS and 0.5 micron CMOS/ BiCMOS devices with plans to go down to 0.35 micron by this year and sub-0.2 processes in the future. Production capacity is in the region of 3,000 wafers per month.

MySem has produced a 16-bit Reduced Instruction Set Computing (RISC) microprocessor internally and plans to become a niche player for application specific integrated circuits (ASICs). "We are not trying to beat the Intels and Samsungs of the world but to get into niche areas such as microcontrollers, digital signal processors (DSPs) and non-volatile memory devices.Our analysis suggests that the market for such semiconductor devices is huge in Malaysia and all we need to do is capture five percent. Also the market is wide open with the outsourcing trend in our favor. We are talking to a number of players and we think we can find our place in the sun," he said.

MySem has also licensed flash technology from Nasdaq-listed Integrated Silicon Solution Inc, and Azzman hopes its various offerings may soon draw revenues for the company. He acknowledged that to date its pioneering Internet service, Jaring, has been its most successful venture with over 300,000 subscribers.

In 1999, Mimos launched SuperJaring with technology provider Cisco Systems Inc, the nation's fastest and longest Internet fiber-optic backbone at 861 km. The OC-48 fiber trunk is able to transmit data at a zippy 2.488Gbps, can support 175,000 dial-up users, and allows for various new services such as Internet telephony, virtual private networks, video-on-demand, distance learning and telemedicine.

Last month, Mimos also collaborated with pay-TV operator Measat Broadcast Network Systems to launch a new satellite-based service called @stronet that will offer multimedia broadcasting and Internet access at speeds of up to 6.5Mbps. Pushing the technology envelope

In the Internet space, Azzman is not worried of competition from new players Time dotCom and Maxis Net or even established rival TMnet.

Mimos Milestones 1999
November Launched iVEST, a locally developed advanced 128-bit Internet security and digital signature system, to enable secure e-business to flourish.
  Collaboration with Ericsson to develop the Wireless Application Protocol (WAP) platform and applications and promote use of Internet on mobile phone and other wireless devices.
December Co-branding agreement with Lycos Asia for Jaring homepage to be positioned to attract e-tailers.
  Collaboration with Measat Broadcast Network Systems, operator of the satellite pay-TV service Astro, for a new service called @stronet that offers multimedia broadcasting and Internet access at speeds of up to 6.5Mbps by April 2000.
  Engages IBM and Mesiniaga Bhd as consultant for Mimos Semiconductor's systems to improve customer service and supply chain management.

"We started with connectivity, but now we are moving into content creation and community development. It's not connectivity that counts but what sort of value-added services and applications you can offer. We believe we are well positioned to take advantage of that," he said. He sees the Internet is going to be generating a sizable chunk of future revenues and is aiming to spawn Web enterprises as the next goal for the company. "The growth strategy is to spin off satellites. The subsidiaries won't be out of orbit--the gravitational pull will still be there--but there's no hands-on. It will be at arm's length but still connected to our system," he said.

Azzman cited the flurry of dot coms enjoying a rally in recent months on the Nasdaq as examples of opportunities and did not find their lack of profits worrying. "Buyers of dot com shares are anticipating the future growth of those companies. And it may be justified. We want to be in that business. We should be in that business."

Azzman added that there no plans, however, to list Mimos, which is still government-funded and owned. "We want Mimos to remain focused on R&D and not subservient to shareholders on the kind of activities it should do." In the next five years, Azzman said Mimos will continue to be a knowledge-based company that creates value from that knowledge. "The value may not be solely profit motivated, but also transforming and influencing other companies to find their own value."

Despite reaching lofty heights last year, Azzman assured that Mimos will not be sitting on its laurels but will continue to push the technology envelope. "The environment changes. It is very dynamic. You have to be agile."

Prime Minister Mahathir, at the same November visit, described Mimos as Malaysia's "Starship Enterprise", the flagship of a fleet of cyber businesses. "This mother ship will share its expertise, thereby giving cyberpreneurs the confidence to go where no businessman or woman has gone. And it will always be on standby to help its fleet establish new colonies in cyberspace," he said.

Azzman does not suggest he will always remain the captain. "The secret of creating an organization is to make yourself redundant. I think this 'juvenile' (company) will have to determine its own future," he said.