GOVERNMENT & POLICY

MPT projects get reprieve
A number of proposed Ministry of Posts and Telecommunications (MPT) projects got a reprieve during discussions between the MPT and Ministry of Finance (MoF) in December. Among the projects agreed upon are proposed field trials of magnetic IC (integrated circuit) cards for use with the postal savings system, which have been given a budget provision of JPY6.6 billion. The funding for an R&D project dedicated to next-generation Internet development was more than doubled to JPY892 million, while other proposed projects received smaller boosts. All ministries must negotiate increases with the MoF after publication of MoF draft budgets in mid-December.

NET NEWS

Venturing onto the Web
Japanese corporations and associations are increasingly utilizing the Internet to support venture capital (VC) efforts. VC firm Jafco, which has investments in some 1,600 companies, is entering the connectivity service provision business, primarily to furnish webpage production and connectivity services for the companies in which it has invested. Jafco intends to launch an "electronic venture network" on the Internet in June.

The New Business Council (NBC), an incorporated foundation, is working on implementing NBC World. Within the next three years, NBC World will provide online business information on more than 500 member companies, and will support electronic transactions, technology and personnel exchanges, and other interactions between members. Tokyo-based Internet access provider Alpha, meanwhile, has launched a Web-based support effort for entrepreneurs focusing on cooperative software development.

EC trials to start
The committee responsible for operating the MPT-sponsored Electronic Market Place (EMP) electronic commerce trials hopes to sign up 1,000 volunteer monitors. From this month (April), the EMP monitors will be able to shop by credit card on the Internet and use electronic money in real shops. These functions will be realized through a multifunction IC credit card. The trials are scheduled to run until February 1998, and involve seven companies, including NTT AT, JCB, Shiseido, Jusco, and IBM Japan.

Access is a tough business
A July 1996 survey of 237 domestic Internet service providers (ISPs), conducted by the MPT, found that 74% had annual revenues of less than JPY10 million. Of those surveyed, 73% employed 10 or fewer staff, 38% had between 100 and 1,000 subscribers, and 62% had only one access point. Only two firms had annual revenues of more than JPY100 million, and just three had more than 10,000 subscribers.

BUSINESS BRIEFS

MS boosts NT sales efforts
In a bid to boost sales of its Japanese-language Windows NT 4.0 network operating system, Microsoft KK has started offering sales staff training and support to key PC resellers across Japan. The company has set up "business solution corner" displays at some 120 authorized NT dealerships across Japan, and will provide free training to 18 facilities now offering help desk services for NT purchasers. Microsoft has been focusing on boosting sales to the small office/home office (SOHO) market through specialized PC retailers, but was hampered by a shortage of sales staff with the required expertise.

Oracle increases NT support
Oracle Japan, the nation's largest vendor of relational database systems, will beef up its support for the Windows NT platform. The company has formed an NT Solution Team of strategic partners who will work to provide support for, and compliance with, the Windows NT platform. Oracle Japan has also doubled (to 10) the number of its training centers for NT-compatible products. Until recently, Unix software accounted for over 60% of Oracle Japan's revenues, but the growth of the Windows NT platform in Japan has become a significant issue for the company.

Corporate reorganizations
Sony will establish (on April 1) a new company to oversee all of its domestic sales operations. The move is aimed at strengthening the competitiveness of Sony's home electronics products. Tentatively named Sony Marketing Japan, the new company is to be based in Tokyo and will be wholly owned by Sony. The new unit brings together three consumer electronics companies, two specialty sales companies, and the domestic sales division of Sony. It will have sales of over JPY300 billion and will employ about 3,000 people.

In January, meanwhile, CSK merged two of its subsidiary corporations to create a new firm, Serviceware Corporation. The firm will offer telephone-based client/server system support and field maintenance services. The subsidiaries to be combined are Osaka-based INS, a temporary personnel and data entry outsourcing firm, and Systems Operation (SOC) of Tokyo, a computer operations management firm. CSK expects the newly created firm to have first- and third-year revenues of approximately JPY7.6 billion and JPY10.0 billion, respectively, with telephone support services accounting for about half of total sales by 2000.

More data warehousing planned
Hewlett-Packard Japan plans to double the size of its Open Warehouse data warehousing business over the next year. HP Japan has established a dedicated data warehousing consulting team, and will sign data warehousing-related partner agreements with more than 20 companies. It also plans to offer Internet-linkable systems from spring 1997. HP Japan, which had data warehousing-related sales of JPY9.0 billion in FY1996 (through October), sees the data warehousing market expanding rapidly, and hopes to take share away from massively parallel computer manufacturers.

NEC, meanwhile, has got off to a good start in the data warehousing business. The company, which launched a data warehousing systems integration service in July 1996, had received orders for 40 systems by year-end, of which 10 had already been put into practical use. NEC's data warehousing systems integration services range from consulting and prototyping to operation management. With the business in good form from the start, NEC is now aiming for data warehousing system sales of JPY150 billion in three years.

Software market grows by 25%
Japan's domestic market for PC software will expand 25% year-on-year, to JPY450 billion, in FY1996 (through March 1997), according to research firm MIC Research Institute. The company surveyed 51 major software suppliers to forecast the market for 17 categories of software, including OSes and applications. The largest segment will be the word processor market, which will grow 27% (to JPY61 billion), followed by spreadsheet products (up 35%, to JPY47 billion). The fastest growth will be among groupware for such applications as e-mail, which will rise by 202%. Windows 95 sales are seen as rising by less than 1%, since sales of the pre-installed version are credited to Microsoft's US parent company and not to Microsoft Japan.

The troubling new century
The Japan Information Services Industry Association (JISA) has published a report that anticipates a shortage of up to 17,000 computer programmers for fixing problems associated with the "year 2000" software dating problem. The association notes that Japan has been slower than Europe and North America in addressing problems related to the change of year numbering going from the 20th to the 21st century, and claims that the nation will not have enough technicians to perform the necessary reprogramming. Based on a survey conducted among JISA members, 260,000 man-months will be required over each of the next three years to fix all problems.

So-so SOHO sales
Nihon Cisco Systems has downgraded its strategy of marketing to SOHO (small office/home office) users in the wake of disappointing sales growth. The company is scaling back its Cisco Pro series, amalgamating it into the overall Cisco brand, and switching the focus of its sales to the corporate branch market. Nihon Cisco is also revising its sales channels, changing the status of Otsuka Shokai from that of a dedicated Cisco Pro dealer to handling Cisco's entire product range.

TELECOM TOPICS

DDI buys into KDD's cable
Domestic new common carrier DDI has agreed with KDD to acquire 20% of the international carrier's submarine optical cable capacity for an estimated JPY40 billion to JPY50 billion. KDD will start installing a Japan Information Highway (JIH) cable, which will surround the Japanese archipelagos, in the second half of 1997. The system is scheduled to be put into service in early 1999. DDI will own the rights to 20G bps, the equivalent of 300,000 telephone circuits; it plans to connect the eight JIH access points to its own network, which consists mainly of 3.5G-bps microwave circuits. DDI is hopeful that the arrangement will alleviate the capacity shortage problem it is beginning to face.

Next-generation cellular trials
NTT DoCoMo will, in early 1998, begin testing a next-generation cellular phone system based on wideband CDMA (code division multiple access), with the intent of launching commercial services in 2000. The company has already commissioned the development and manufacture of handsets and base station equipment, and will work with selected suppliers for a year. NTT DoCoMo's previous wideband CDMA transmission trials have confirmed that images can be transmitted at 2M bps. The company reportedly has decided on protocols and confirmed interference levels. Wideband CDMA is considered the most likely candidate for FLMPTS (future land mobile public telephone system) adoption by the International Telecommunication Union (ITU).

MARKET NEWS

PC98 sales hit 15 million
In December 1996, NEC shipped the 15-millionth unit of its PC98 series of personal computers. Sales have averaged better than 1 million units per year in the 14 years since the PC9800 was introduced, and topped 2.6 million units in 1996. NEC expects to reach the 20 million unit mark in 1998 by using leading-edge technologies to create user-friendly models for specific markets and applications. NEC will also strengthen its support services and extend its PC College Partner Schools program nationwide.

Competition for Mondex
VISA International will link with Japanese banks and credit card companies to conduct electronic money (e-money) trials in Shibuya ward, Tokyo. The large-scale trials, to run for about 18 months beginning in June 1998, will test the convenience of card use and the profitability of the system. The move is designed to compete with the Mastercard-backed Mondex trials. VISA will build the overall system, install e-money terminals at nearly 1,000 shops and restaurants in Shibuya, and issue more than 100,000 IC cash cards and disposable VISA cash and IC credit cards. Other participants in the trials will include credit card companies and banks.

NTT, meanwhile, will form a group to conduct electronic money trials based on a system developed by NTT and the Bank of Japan. The group will include city banks, credit card companies, central and local government agencies, computer manufacturers, and Internet service providers. Trials are scheduled to begin early in FY1997 and run for three years. While NTT hopes to make its system a de facto standard, it faces stiff competition from the VISA and Mondex systems.

PRODUCTS & SERVICES

Motorola modems
Nippon Motorola plans to introduce modems for the Japanese consumer market early this year, hoping to eventually capture a 10% share of the market. The company intends to release a Japanese version of its 33.6K-bps Modem Surfer, a model that has been available in the US. Nippon Motorola will market its modems both through major distributors and via direct sales channels. The push into the consumer modem market by Motorola follows the company's introduction in late 1996 of terminal adapters and card modems.

Navigating by DVD
Matsushita Communications Industrial, Alpine Electronics, and other leading electronics companies are developing car navigation systems that incorporate DVD (digital versatile disc) players. With a storage capacity seven times that of a conventional CD-ROM, a single DVD will be able to hold clear, detailed map data for all of Japan's major cities, as well as data for accompanying voice guidance. DVD car navigation systems could appear on the market as early as spring 1997.

INTERNATIONAL NEWS

US to benchmark telecom fees
The US Federal Communications Commission announced in December that it will adopt a "benchmark" system whereby it measures fees that carriers in Japan and other nations charge US carriers to complete overseas calls. US rates will serve as the benchmark standard, and overseas carriers failing to reciprocate with comparable rates will be essentially barred from entering the US market. In particular, the FCC is demanding that NTT reduce its connection fee to 15 cents per call within a year, less than one-third the current level. Otherwise, NTT could face restrictions or even exclusion from the US market. Analysts say the move could be a major roadblock for NTT, which has been authorized to enter the international sector; it may not be willing or able to comply with such a dramatic rate decrease within such a short time span.

Hitachi gets Mondex business
Hitachi has won an order for a Mondex-standard electronic money settlement system from WestPac Trust Bank of New Zealand. The JPY100 million order is Hitachi's first for a Mondex system. Hitachi will adapt the bank's existing online system to support electronic money settlements. WestPac Trust will initially introduce its electronic money service to employees on a trial basis, then move to a commercial launch.

Meanwhile, Hitachi and the Hongkong and Shanghai Banking Corporation (HSBC) have signed a partnership agreement to promote the use of the Mondex electronic money system in Asia. The companies will invite officials from the Chinese telecommunications bureau to Hong Kong for a demonstration, and will tap into the strong interest in Mondex from other Asian countries hoping to turn it into the region's de facto standard.

NEC to supply VSATs to Russia
NEC has won a JPY3 billion order from Russian Satellite Communications (RSCC) to supply 1,000 VSAT (very small aperture terminal) systems over the next three years. RSCC will use the VSATs to support network services linking the head office and branches of large companies, such as banks and airlines. NEC already has a track record of supplies to the Russian market and expects this order to the country's largest satellite service operator to strengthen its position.

IN 50 WORDS OR LESS

Nisshin Electric is moving into the systems integration (SI) business, specializing in the design, development, andÅ@maintenance of secure corporate intranets on an outsourcing basis. The company has formed marketing partnerships with several large domestic SI firms, and may establish a full-fledged development presence in the US.

Hitachi has released a data warehouse development package targeting divisions in large corporations and small and midsize firms. The company currently offers four packages, ranging from an entry-level Windows NT server-based package to a full-fledged set centered around a cluster-type Unix server.

Yokogawa Digital Computer (YDC) has teamed up with Nihon DEC in the electronic data interchange (EDI) business. The companies will market systems based on the DEC Alpha server bundled with Yokogawa's ACMS EDI software.

From April, Toshiba will sample-ship an IC card with a built-in 8-bit CPU. The CX3000 series will support ISO and EMV standards and contain 6KB of ROM and 128 bytes of RAM. Volume production will begin in June 1997, and Toshiba aims to ship 12 million units in FY1997.

Sumitomo Corp. has made a $5 million investment in California-based Terayon that allows it to sell the US firm's cable TV modems in Japan. Sumitomo will initially supply the modems to CATV operators in which it has financial stakes.

NEC plans to enter the telephone service business. It is negotiating interconnections between its leased-line network and NTT's local telephone grid. Ordinary telephone subscribers would be able to use NEC's network simply by dialing 0091 before the phone number.

Tokyo-based Information Services International Dentsu (ISID) has formed a partnership with California-based venture firm Enterprise Productivity Systems (EPS) under which it will develop and sell Java software.

Nihon Silicon Graphics (NSG) and Toshiba Engineering have formed a partnership in the systems integration and customer support sectors. The two firms also plan to work together to develop new computer graphics applications in the CAD/CAM sector as well as digital content for other applications.

Newsbriefs are based on materials provided to Computing Japan by Digitized Information

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