Motorola had already invested US$7.5 million in June 2004 and has an option to invest an additional US$18 million. Net proceeds from Motorola's investment will be used for research and development, particularly for application software and services; and for working capital.
Mr. Terry Lui, DVN's Chief Executive Officer, "DVN and Motorola are cooperating very well in a number of areas as reflected by the increased investment. By working together, DVN and Motorola will be able to capitalize on each company's respective strengths, and hence accelerate the deployment of set top boxes in China." With video, internet, and telecoms beginning to converge around the world, Motorola with its strengths in broadband and hardware; and DVN with its presence in China and strengths in application software for the China market, will be able to provide the technology to facilitate this convergence in China.
For 2004, DVN's set top box sales have increased rapidly, with DVN's STB unit sales rising over six times to over 240,000 STBs, compared to 35,515 in 2003. DVN believes that the digital cable market is about to expand rapidly as China's State Administration for Radio Film and Television ("SARFT") has announced plans to migrate 30 million cable subscribers to digital within thenext several years, with the analog service to be completely cutoff by 2015. There are currently over 100 million cable TV subscribers in China.