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Announcement of involvement in Formula One In its 15th year of involvement in Formula One, KENWOOD Corporation has exclusively developed the "McLaren Special II" digital wireless radio system for the West McLaren Mercedes team using cutting-edge technology. — "Strategic Investment" and "New Brand Strategy" aimed at showing results in the 2005 series — KENWOOD Corporation (President and CEO: Haruo Kawahara; Headquarters: Hachioji-shi, Tokyo) announced today that in its 15th year of participation in Formula One World Championships, it has become the exclusive supplier of the latest-model digital wireless radio system in Formula One Australian Grand Prix, opening on March 4, to the West McLaren Mercedes team.
 Since the partnership's inception in 1991, KENWOOD has continuously been supporting the McLaren team over the years as its official supplier of digital wireless radio system, enabling accurate communication between drivers and the team, contributing to their many victories. With the accumulated proprietary expertise over long-term experience and cutting-edge technologies, KENWOOD has successfully developed the newly designed "McLaren Special II," equipped with enhanced system reliability and communication security—an improved version of the "McLaren Special" wireless radio system built specifically for McLaren using KENWOOD's proprietary digital system. After a series of tests, KENWOOD and McLaren decided to introduce the long-awaited "McLaren Special II" at the F1 Australian Grand Prix on March 4. Through the new digital wireless radio system "McLaren Special II," KENWOOD expects to help the West McLaren Mercedes team pose a strong challenge in the 2005 series. The West McLaren Mercedes team is comprised of two racing vehicles, two drivers and various group members*. During races, the drivers and team members from each group communicate with each other individually or with the whole team concurrently to exchange integral data for developing race strategies. In response to the need for such an advanced, complex wireless radio system, KENWOOD has used a variety of cutting-edge digital technology that enhances sound quality, combining it with all of the wireless radio and F1 race know-how it has accumulated over the years to create "McLaren Special II." This model boasts a high level of reliability, privacy, durability and operability that allows accurate communication and exchange of necessary information between the respective parties at the right time, against such impediments as impacts, vibrations, heats or noises. This is likely to help unify the West McLaren team and put it on the path to victory.
Comments of Mr. Ron Dennis (Chairman and CEO of McLaren Group) "McLaren Racing is honored to be able to continue the partnership with KENWOOD, a valuable member of our team since 1991. Wireless radio system is an essential part of winning recent F1 races and I am confident that the newly developed KENWOOD wireless radio system will make accurate communication between drivers and team members better than before. In fact, I know that it will bring out the best in our team." Comments of Haruo Kawahara (President and CEO of KENWOOD Corporation) "Our participation in the world's most extreme and most celebrated motor sports event, where the best technology from various industries worldwide are on display, is proof of the strong presence of the KENWOOD brand. We are proud to be able to continue our long-standing partnership with the West McLaren Mercedes team, one of the top teams in the world of F1. As a member of their racing team, our job is to utilize the cutting-edge wireless and digital technology to help ensure race victories." 2. Background of the development of "McLaren Special II" — 15 years of partnership with West McLaren Mercedes are the source of cutting-edge technology — With "audio/sound" and "wireless communications" as core competence, KENWOOD is engaged in corporate activities in three core business areas: car electronics, communications equipment and home electronics. In particular, the wireless radio field is the core of the communications equipment business as well as being historically the most established business since the inception of KENWOOD. Currently, KENWOOD is developing this business area with an emphasis on commercial wireless radios that now have the second strongest presence in the commercial wireless radio equipment market worldwide. The set-up of frequency bands has resulted in more digitalization of commercial wireless radio system. This shift to digital technology has improved the quality and security/privacy of communications. Of course in the world of F1, there is also the need for radios to be able to operate precisely in extreme environments. With this in mind, KENWOOD began developing digital wireless radio in 2001 and transferred its R&D function to the U.S. (Atlanta), presently the largest market for commercial wireless radio equipment in the world. Moreover, KENWOOD has pursued the research for digital wireless technology and the development of digital wireless radio equipment through "Strategic Investment" since last year, and it has enhanced R&D on digital wireless radio system. In the extreme racing environment of F1, where one split-second decision can be the key to glory or disaster, the radio becomes an essential tool to allow the exchange of information between the drivers and the team members during the actual race. However, this radio cannot just be any radio; it should be reliable, tough and easy to operate while maintaining a high level of security. Since 1991, KENWOOD has developed analog wireless radio system for use in F1 races as the partner of the West McLaren Mercedes team, and built a relationship of mutual trust with the team by pursuing cutting-edge technology, accumulating sophisticated proprietary know-how, enthusiastically pursuing quality improvement and providing comprehensive user support concerning wireless radio system. This full deployment of the digital wireless radio system marks the beginning of a new phase in the partnership between KENWOOD and the West McLaren Mercedes team. In this phase, KENWOOD plans to further strengthen its partnership with the West McLaren Mercedes team (as the longest standing Japanese partner of the racing team) and engage in corporate activities that aim to improve wireless technologies and enhance brand power through participation in F1 events. 3. Corporate profile of McLaren
4. Prospect of KENWOOD's wireless radio business The digitalization of the wireless transmission system has been promoted in the commercial wireless radio field. In response to this, KENWOOD has been vigorously promoting R&D on digital wireless radio system in line with "Strategic Investment", which is its policy in the current fiscal period. For example, KENWOOD introduced the aforementioned digital wireless radio system "McLaren Special II" for use in F1 races and produced commercial digital wireless radio in compliance with APCO (Association of Public-Safety Communication Officials: commercial digital wireless radios for public safety institutions such as police and fire departments) that has already been commercialized. On February 25, KENWOOD announced the establishment of a technical alliance with Icom Inc. to engage in joint research and development for wide-ranging digital wireless radio system. In the future, KENWOOD will further accelerate digitalization of commercial wireless radio system by leveraging the technical alliance with Icom to ensure the second greatest presence in the commercial wireless radio equipment market worldwide.
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