GOVERNMENT & POLICY

MITI to promote Asian standards
Japan's Ministry of International Trade and Industry (MITI) plans to start making use of the Internet to solicit and consolidate opinions from Asian nations regarding standardization issues. It will then submit those opinions to international standardization organizations, such as the ISO and IEC. The ministry feels that current international standardization initiatives have been driven primarily by the US and Europe, with Japan and other Asian nations largely excluded from the process. MITI's aim is to be a clearinghouse and proponent for Asian opinions regarding standardization issues.

MPT backs off on digital date
The Ministry of Posts and Telecommunications (MPT) has been deliberating with the intention of designating the first two years of terrestrial digital television broadcasts in Japan as an "experimental" period. During this initial period, broadcasters would not be required to switch over to an all-digital broadcast format. Terrestrial digital television broadcasts are slated to start in 2000, but broadcasters including NHK have voiced strong opposition to an all-at-once switchover schedule based on the massive investment that would be required to change to an all-digital format. The ministry hopes that a one- to two-year grace period, during which broadcasters could implement digital broadcasts for portions of their programming, will cool opposition by enabling investments to be spread out over a longer period.

MITI tightens Web commerce rules
MITI is in the process of implementing a ruling that requires all Internet vendors to display a business telephone number and contact name information on their websites. The ministry says the move is necessary because of growing problems with fraud and questionable business practices amid a proliferation of Internet-based retailers and service providers. According to a MITI spokesman, the ministry was to implement inspection of a number of websites in May in order to determine compliance with the new ruling.

A new name in cell phones
Semiconductor part maker Niigata Seimitsu is entering the cellular phone manufacturing business. The company has developed a cellular phone, which uses a chip integrating multiple components, that can be distributed at a price about 20% cheaper than the products of other makers. In April, the company began supplying Florida-based cellular phone seller Quintel Cellular with 300,000 units annually, and is starting negotiations with five or six other US cellular phone sellers. Niigata Seimitsu's aim is to export 800,000 units to the US in the first year.

NEC ties with Thomson for PDP development
NEC has agreed with Thomson Multimedia of France to develop next-generation plasma display panel (PDP) technologies. The partners will focus on PDP electronic circuit and process technologies, and will incorporate them into their respective color PDP products that will be commercialized within two years. NEC has also reached agreement to OEM-supply several hundred 42-inch PDPs per month to the French company, which will market them in Europe and the US. The PDP market is expected to reach \260 billion in 2000, climbing to \760 billion in 2002.

New transPacific cable planned
Six Japanese, US, and UK carriers will construct a submarine optical cable system between Japan and the US. Japan Telecom, Worldcom, Cable & Wireless, MCI, Bell Atlantic, and GTE will join forces to establish a consortium to build and operate the system, with plans to put it into commercial use by the end of 2000. Detailed plans for the construction period, line capacity, and required investment have yet to be determined, but the cable is likely to have a capacity of 80G bps, equivalent of 960,000 telephone lines. The six carriers have been approaching other carriers to take part in the project, and held a conference in Hawaii in late April.

NEC teams with Clarify
NEC has teamed up with Clarify of California to market integrated business support software packages in the world market. Clarify, a specialist in sales, telemarketing, customer support, help desk, and other customer care and support software, will in late June release a Japanese version of Clarify 5.0 through its subsidiary Clarify Japan. NEC will market the new version as well as develop comprehensive business support systems by combining its back-end products with the US firm's front-end packages. NEC and Clarify will initially develop systems integration packages using NEC StarOffice groupware, data retrieval software, and View Kobo (NEC Business Systems' call center software package). NEC in April opened a joint project office at the US company, aiming to launch a systems integration operation in North America in the fourth quarter of 1998, then moving into Asia-Pacific markets.

Mobile market moves upward
The mobile computing market will continue to grow, with the number of users of handheld PCs, PDAs (personal digital assistants), and other mobile computing devices soaring 20 times between FY1997 and FY2000. According to the Mobile Computing Promotion Consortium (MCPC), which conducted a survey with 98 carriers and communications equipment makers, there will be 13.6 million mobile computing device users by 2000. Currently, notebook computer users who use a cellular phone or PHS handset for data communications account for just 6% of total notebook computer users, but they will account for 15% in 1999 and 20% in 2000. PDA shipments will likely expand from an estimated 1.2 million units in FY1997 to 3 million units in FY2000, of which 35% will be purchased by mobile users. The number of cellular and PHS subscribers is expected to expand from the current 30 million to 63 million in FY2000.

Online parcel tracking
Leading parcel delivery services Yamato Transport and Nippon Express have started offering Web-based package tracking services, in February and March, respectively. Nippon Express has also become the industry's first carrier to offer a service whereby the sender of a package can be notified via e-mail that delivery has been completed.

Yamato's tracking system, designed and installed by IBM Japan, links an IBM S/390 enterprise server with a Web server to make real-time, online inquiries possible. Internet-based parcel tracking services are also offered by Seino Transport, which means that online package tracking functionality has become the industry norm.

Anti-copy specs proposed
Hitachi, Intel, Matsushita Electric, Sony, and Toshiba have cooperatively compiled the basic specifications for copy prevention technology related to IEEE1394, a transmission standard for linking PCs, digital video tape recorders, and other devices. The five firms have submitted their proposed standard to the Copyright Protection Technical Working Group (CPTWG) for deliberation, hoping it will be adopted as the standard copy prevention scheme for a new generation of digital devices that can be integrated with personal computers in various ways. The companies claim their proposal is the most cost-effective and functional method of preventing the illegal copying of digitized content once DVD players, digital video recorders, and other consumer electronic devices become widely interoperable with personal computers.

PC store sales down
PC sales declined 14.2% year-on-year, to 710,300 units, in Japan's three largest electronics shopping districts, according to statistics compiled by Multimedia Research Institute (MRI), while on a value basis sales were down by 11%, to \173 billion. PC sales in Tokyo's Akihabara district declined 13.7%, to 461,100 units; sales in Osaka's Nipponbashi decreased 14.5%, to 185,500 units; and sales in Nagoya's Osu fell 16.2%, to 63,700 units. Combined sales of the three districts accounted for 9.7% of total PC sales in Japan last year, down from 11.7% the previous year. MRI predicts that sales in the three areas will grow about 6%, to 750,000 units, in 1998.

Printer shipments fall
Domestic printer shipments declined 4.0% year-on-year, to 2,948,000 units, in FY1997, according to a Yano Research Institute survey of 31 domestic printer makers and sellers. Seiko-Epson took over the top spot, shipping some 1.35 million printers in FY1997, for a 45.8% market share, up from 1.05 million units and a 37.0% share in FY1996. Canon saw shipments decline to 1.10 million units in FY1997, down from 1.18 million, for a 37.3% market share (down from 41.6%). Third-ranked NEC also saw shipments dwindle to 138,000 units, down from 213,000, with market share falling to 4.7% (down from 7.5%).

ERP market grows
The Japanese ERP (enterprise resource planning) software market expanded 76% year-on-year, to \36 billion, in 1997. According to a Gartner Group Japan survey of 26 ERP vendors, the market will grow by an average of 36% annually and reach \170 billion in 2002. In a bid to boost its sales in this fast-growing sector, Oracle Japan plans, within the year, to double its ERP software staff to 500. The move means that ERP staff will comprise one-third of the company's staff. In 1997, ERP sales accounted for less than one-tenth of Oracle Japan's \44.3 billion in annual sales. SAP's R/3 had a 58% share of the market in 1997, followed by Oracle Application with 10% and Baan with a 6% share. Oracle Japan hopes to triple ERP sales by increasing its workforce faster than its rivals.

Leave it to NTT
NTT has begun offering a new service whereby it will dispatch staff to consumers' homes to deliver and set up a PC, and configure the machine for Internet access, for a fixed price of \248,000 (including the computer). The new Marugoto Omakase ("Leave It All to Us") service is designed to help beginning computer users and older consumers overcome the difficulties in establishing an Internet connection. It is also considered a clever method for selling subscriptions to NTT's OCN and ISDN services. According to an NTT spokesman, Marugoto Omakase will be the first-ever onsite Internet setup/connectivity service in Japan to target the consumer market.

Telecom profits to drop
NTT has forecast that both revenues and recurring profit will decline in FY1998. Revenues are expected to slip by almost 1% year-on-year, to \6.46 trillion, while recurring profit will drop by 29%, to \274 billion. This would mark the first time in five years that both revenues and recurring profit have declined. NTT projects that the number of subscribers to its telephone services will be down 1.35 million, to 59.23 million, at the end of fiscal 1998, causing monthly phone fee revenues to fall by \32 billion, while rate cuts will cause another \80 billion loss, and a decline in use of pay phones will result in an additional \30 billion revenue reduction. ISDN and leased line service revenues, on the other hand, will expand.

KDD, too, forecasts a decline in both revenues and recurring profit for FY1998, for the third consecutive year. Revenues are likely to be down 7% year-on-year, to \294 billion, while recurring profit will plunge 44%, to \9 billion. Although international telephone traffic is expected to rise 5% in FY1998, KDD's telephone service revenues will slip by 8%, to \233 billion.

Toyota takes the driver's seat
Toyota Motor boosted its capital stake in cellular telephone service provider IDO from 27% to more than 60% when it tripled its investment in the company from \22.9 billion to \68.7 billion in late March. The restructuring move, driven by IDO's continuing losses amid overwhelming dominance by NTT in the cellular sector, makes IDO a Toyota subsidiary. Toyota plans to acquire a more than 80% stake in IDO sometime in fiscal 1999, and will eliminate the company's accumulated losses. NTT's recent announcement that it plans to fold its PHS operations into NTT DoCoMo is likely to spur even more restructuring efforts on the part of NTT's competitors in the cellular industry, say analysts.

NTT plans corporate discounts
NTT plans, by April 1999, to start offering its corporate customers discounts on bundled telephone, Internet, and other services. The discounts will be made available to users of the company's NTT Group Card, a credit card issued by NTT Leasing. The telecom giant is considering nearly 30 different services for inclusion in the bundled discount program, including its OCN Internet connectivity service, ISDN offerings, and F-Net facsimile network service. This new bundled discount strategy is expected to pose a severe threat to Japan's new common carriers, who depend on corporate customers for their core revenues.

Network of blimps planned
Tomen will cooperate with Skystation of the US to start a wireless communications service using blimps in Japan as early as 2002. The partners will keep six or seven 150-meter-long, 1.1-ton blimps about 20 km above the ground. Each stationary blimp, which will cover a range of 500 km and have a lifespan of five years, will be able to accommodate 350,000 subscribers. The partners plan to charge \2 to \3 per minute, and users will be able to send and receive data at 2M and 10M bps, respectively. The partners intend to ask carriers and communications equipment makers to establish a joint venture for operation.

Investors use the Net
Japanese individual investors are increasingly using the Internet to buy and sell stocks and other financial instruments. Daiwa Securities reports that subscriptions to its "home trading" Web-based individual investor trading service rose sharply after Japan's stock market plummeted last fall; the combined total of online accounts at all branch offices is growing at a rate of 6,000 per month. Most of the new subscribers are said to be individual investors in their 30s, investing relatively small sums. Nomura Securities, meanwhile, claims that hits on its World Wide Web stock pages now exceed 3 million per month. Other smaller securities firms also report steady growth in home trading, reflecting greater PC penetration into the home and higher recognition of the personal computer as an investment tool, say industry analysts.

Cellular subscriptions still strong
Japan's mobile telephone user base surpassed the 30 million mark for the first time in February, according to estimates provided by PHS and cellular operators. Net cellular subscription growth in February (new subscribers minus cancellations) totaled 828,000, up 13.5% from January and an 11.4% year-on-year increase. The strong numbers contradict analyst predictions that 1998 will be a year of slow growth in the cellular sector. PHS operators, however, continued to lose ground, posting their fifth consecutive month of net subscriber losses. Japan now has 30.3 million mobile telephone users, meaning one in four people own portable phones.

Making long distance easier
The MPT has convened a Study Group on Priority Connections committee that will deliberate implementing a priority connection system in Japan. Priority connection allows telephone subscribers to register with a specified long-distance carrier, and thereafter be automatically connected to that carrier without the need to dial the carrier's code (such as 0061) first. The system is already in use in the US, Australia, Canada, and South Korea, and is slated to be adopted in Europe by 2000. The NTT study group was to compile an interim report in mid-May, following discussions concerning how priority connection can be implemented amid the widespread usage of least cost routing (LCR) devices in Japan.

JPIX to offer ISP support services
Tokyo-based Japan Internet Exchange (JPIX), the Internet service provider (ISP) interconnection firm backed by KDD and a number of leading ISPs, will offer support services to the growing number of new ISPs located outside of Japan's metropolitan areas. JPIX plans to make use of its 24-hour technical monitoring staff and other personnel to offer new services and develop another revenue stream. Services to be offered include planning and consulting regarding interconnectivity system issues and 24-hour network monitoring. JPIX is also considering offering fault-recovery services in cooperation with network equipment manufacturers.

Softbank is reorganizing its software and network product distribution units and will centralize all related operations at a new distribution facility in Tokyo's Koto Ward. Softbank's gross margin on distribution is reported to have fallen significantly.

Fujitsu expanded hard disk drive production by over 60% year-on-year, to some 11 million units, in the fiscal year ending March 1998. This accounts for about 9% of the world market, which was estimated at 130 million units.

Matsushita Communication Industrial shipped 9 million cellular phones in the world market in FY1997 -- 7 million units in Japan and 2 million units overseas. The company is aiming for a 10% share of the global market in 1999, and 15% in 2000.

Itochu Techno-Science (CTC) has acquired Mobileware of the US and established a Texas-based wholly owned software development and sales firm in order to enter the mobile office software market. The new subsidiary, also called Mobileware, in April released a Windows NT version of MobileWare Office Server.

Sanyo Electric has teamed up with Brightpoint of Indiana to begin marketing cellular phone handsets in the US starting this fall. The company hopes to ship 200,000 units in FY1998, and between 1.0 and 1.5 million units in FY1999. Sanyo will consider local production if sales grow as expected.

Global digital camera shipments more than tripled year-on-year in 1997, to 2.1 million units, according to Nikkei BP. Shipments in Japan reached 1.09 million units, while overseas sales totaled 1.01 million units. Domestic and overseas shipments are expected to expand to 1.5 million and 1.7 million units, respectively, in 1998.

Itochu, Marubeni, NTT Data, Toyota, JVC, and two other firms have cooperatively established Japan Digital Contents, a new firm that will provide financial support to digital content developers and perform a number of other services to encourage the development and distribution of digitized content.

According to a survey by Osaka-based market research firm JMR Science, 15.5% of all Internet users in Japan are women, and 42.1% of users access the Internet from PCs located in their living rooms. One-third of all respondents had had their PC for less than a year.

Japan's IT industry, excluding demand for content, reached \64.6 trillion in 1997, up by 85% from 1996, according to the Japan Economic Research Center.

Compaq Computer Japan has opened an Enterprise Solution Center at its headquarters in Tokyo's Shinagawa Ward. The new facility will provide customers as well as dealers with testing, verification, and product demonstration environments.

NTT and Japan Satellite Systems (JSAT) have cooperatively established a new firm, NTT Satellite Communications, that from September 1998 will start offering satellite-based Internet connectivity and intranet services.

Trading giant Marubeni plans to allow its Global Access subsidiary to become a Type-1 carrier, and will team up with Global Crossing of the US to build a transPacific submarine optical cable network between Japan and the US by 2000.

Tokyo-based Internet services firm E&I has signed an exclusive agreement with California-based Telepost for sales in Japan of that company's integrated telephone/Internet services.

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