AI startup iKala Interactive Media has focused business operation on providing cloud computing services and AI-based SaaS (software as a service) to help enterprises in digital transformation, according to company co-founder and CEO Sega Cheng.
iKala has three main product lines: iKala Cloud cloud computing services used in digital transformation, KOL Radar which is AI influencer marketing solutions and iKala customer data platform, with AI, big data analysis and cloud computing forming the core technology, Cheng said.
Currently, iKala Cloud accounts for 80% of consolidated revenues and KOL Radar for 20% while iKala customer data platform supports operation of the former two, Cheng noted, adding that the revenue ratio is expected to be adjusted from 8:2 at present to 6 :4 in 2024. iKala recorded consolidated revenues of about NT$1.0 billion (US$32.5 million) for 2021 and expects the 2022 figure to grow 50% on year.
iKala began to develop cloud computing services in 2015 and has developed complete services adopted by the industries using primary networks such as gaming, e-commerce and media, Cheng indicated. Beginning in 2022, iKala has focused on developing cloud computing services and SaaS for use by industries which use non-primary networks, especially manufacturing, retail and financial services, Cheng said.
From a digital transformation viewpoint, manufacturers are of two categories: traditional manufacturers with relatively little demand for digital transformation and already highly digitalized IC makers as well as large-size electronics makers which have been faced with insufficient computing capability, Cheng noted. For the latter, it is not feasible in time and cost to set up on-premises facilities to fully meet digital transformation needs and thus they have resorted to cloud computing resources, Cheng indicated, adding that they will be iKala’s target clients.
Financial data are basically of three types: financial products, financial transactions and customers, and data on financial products are available on cloud computing currently, while putting the other types of data on cloud is subject to governmental approvals, Cheng said. Seeing that open financial data available on cloud computing is a trend, iKala will promote value-added cloud computing services based on AI, big data analysis to financial service providers, Cheng noted.
While there are more and more sales agents for international operators of public clouds in the Taiwan market, iKala has maintained competitiveness through cooperating with Amazon Web Services and Google Cloud Platform as well as in-house developed, value-added SaaS – such as those used In cross-cloud management, smart maintenance, cybersecurity and data platforms, Cheng indicated, adding that Taiwanese sales agents have not provided such SaaS. Gross margins for such SaaS can reach about 90%, much higher than sales commissions acquired by sales agents.
According to IBM’s online AI adoption survey conducted in March-April 2022 of 7,502 enterprises around the world, the following factors mainly hinder enterprises’ successful AI adoption: limited AI skills, expertise or knowledge; expensive AI tools; lack of tools or platforms to develop AI models.
AI tools are increasingly affordable along with declining prices and this is a trend, Cheng said. Besides, there are AI models available for rent, such as GPT-3 which is an auto-regressive transformer language model trained by US-based OpenAI, Cheng noted. When AI technology becomes profitable, modularized or tools available on cloud computing, enterprises with limited resources need not invest in hardware and talent and spend time in developing AI models, Cheng indicated.
Founded in Taiwan in 2011, iKala established a branch in Singapore and one in Thailand in 2018, one in Vietnam in 2019, one in Hong Kong in 2020 and one in Japan in 2021, Cheng said.
Taiwanese startups have to extend business operation from the domestic market to overseas, and Southeast Asian countries are good choices due to demographic dividend, Cheng noted, adding that Japan is also attractive because Japan is the world’s third largest economy and has become more friendly to Taiwan. during changes in geopolitical situation.
Particularly in Japan, there were few startups emerging during 2010-2020, and enterprises’ digital transformation was generally slower than that in the US, Europe and China. However, the impact of the coronavirus pandemic and information security problems faced by third-party payment platforms and cryptocurrency exchanges drew the Japanese government to the importance of digital transformation, leading to the establishment of the Digital Agency in September 2021.
Half a year after entering the Japanese market, iKala succeeded in finding the first client which used KOL Radar to promote sales of cosmetic products in the Taiwan market, Cheng indicated.
Many Japanese enterprises think that their domestic market with a population of 100 million is not large enough and has grown very slowly and thus it is necessary to tap overseas markets in Southeast Asia, Cheng said. Therefore, Taiwanese startups can cooperate with Japanese enterprises to tap into Southeast Asian markets and capitalize on the commercial attractiveness of “Made in Japan” and customers’ loyalty to Japanese brands, Cheng noted.
In particular, as Japan just began to cultivate startups, Taiwanese startups have to cooperate with their Japanese counterparts over the next few years, for cooperation opportunities are likely to exist only in that period, Cheng indicated.