J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the week's business and technology news
Issue No. 145
Thursday, August 23, 2001
+++ Viewpoint: L-mode Enters Stealth Mode
+++ Noteworthy news
- OELs Rock
- Broadband goes Ballistic
- Fujitsu Fumbles
- Visit Web Site, Trash PC
- Old Folks Told to Cough Up
L-mode Enters Stealth Mode
We've enthused over L-mode -- the new i-mode for home telephones from
NTT East and NTT West -- in previous newsletters (see links below).
The service actually launched June 28, and within the first two
weeks, was signing up new subscribers at a rate of 500 per day.
Since then, however, L-mode seems to have entered stealth mode. There
have been no reports on the Nikkei Web site, and only a few press
releases from either company. On August 7, NTT East issued a report
that provides an interesting snapshot of L-mode's early uptake.
As of August 7, there were 144 L-mode sites spread across 17
categories. For the month ending July 31 (the first full calendar
month of operation), the service had signed up a total of some 11,900
households (6,300 east; 5,600 west), which were using the system on
average twice daily.
Similarly, both companies found that L-moders used the service for an
average of 3 minutes per access (subscribers are billed by the
minute, unlike i-mode, where surfers pay by the packet). The network
had handled a total of 119,000 mail messages, and the report also
presented a ranking of site popularity, which is (highest to lowest):
Cooking, food delivery
Gourmet town information
Transportation, travel, leisure
Shopping (including mail catalog)
Daily life tips
Health and medical, care services
Learning, working, hobbies
Beauty and fashion
Housing and auto
Child rearing and education
Repair, security, lost & found
(The category for "Town pages" -- local directories based on location
-- wasn't ranked since there was only one site presenting such
The companies have also launched Web sites (www.ntt-east.co.jp/Lmode
and www.ntt-west.co.jp/Lmode) that provide subscription and content
information, and there's another site (www.lmodentt.com) where
wannabe L-moders can take a virtual service of the tour, sign up, or
buy the L-mode terminals.
The terminals are -- in typical, thorough, Japanese consumer
electronics tradition -- robust-looking machines, providing L-mode
access on a small, monochrome screen approximately 15 x 10 cm. There
are three models, priced at JPY31,800, 54,800, and 64,800. The
machines can store 10 or 15 bookmarks, screen memos, and provide fax
as well as full telephony functions.
But will the service fly?
We've heard both pro and con arguments. The con point of view tends
to follow the line that it's a fixed, non-moving terminal targeting
stay-at-home moms and retired folks who don't get out much and that
it seriously lacks "cool" (unlike its i-mode cousin, which defines
mobility, freedom, and chic). Few people will take the time to access
the system, continues the argument, and, besides, who'll pay 500
bucks for a phone (and when was the last time anyone bought a new
phone, anyway)? In other words, L-mode is Granny mode.
But the pro argument posits that it's precisely the mundane aspects
of the concept that could just be killer. In other words, L-mode
appears to be quietly offering a seriously boring but -- and this is
key -- useful service. Granny, who lives in Nagano or Niigata, really
will want to order groceries for delivery from the neighborhood
vegetable shop in the middle of winter when there's a couple of
meters of snow on the ground, especially if the system is dead simple
to use (menu-driven, large text, large buttons, etc.).
Mom (and dad) really will want to order take-out Chinese (or sushi,
or ramen) when it's pouring rain out, the kids are screaming, and the
fridge is empty. Add into this potentially compelling mix of services
things like electronic assistance for the elderly ("Press 1 if you're
feeling fine today, 2 if you'd like the nurse to drop by"), and
L-mode might just be one of the things that helps Japan deal with its
rapidly aging population (Japanese have the world's longest life
The standard future image of technology assisting with the elderly is
a robot bathing some octogenarian (well, perhaps in the far distant
future). But maybe the real (and much earlier) benefit of technology
will be helping old folks feel connected and assisted, allowing
them to maintain independence at home much longer than otherwise.
L-mode bears watching. It isn't i-mode, but then it's something
altogether different -- and just as cool.
Links to earlier L-mode coverage:
NTT East August 7 press release:
The new Japanese .JP domains go live on August 27!
Accepting applications now!
Time is running out... Get your new JP domain name before it's too
late. JPNIC has officially launched the new .JP domains in Japan.
Japan Registry is an officially accredited JP domain registrar and is
leading the field in assisting the English-speaking world obtain the
new .JP names. Get yours now!
Matsumura Bldg 2F, 1-4-8 Sarugaku-cho
Nippon Solutions KK
+++ NOTEWORTHY NEWS
(Long URLs may break across two lines.)
** OELs Rock
Extract: Color organic electroluminescent (OEL) panels have come to
the fore rapidly as rivals to their established counterparts in the
market, liquid-crystal displays. In 2002, panel manufacturers with
many years of research experience will jostle alongside startup
companies in the race to begin mass-producing active-matrix color
OEL panels based on low-temperature polysilicon thin-film transistor
(poly-Si TFT) circuitry. Mass production will begin with 2-inch
panels for mobile phones. But manufacturers already have an eye
toward future opportunities, and are developing strategies aimed
right across the display market, including PDAs and televisions.
Commentary: OEL displays already last for more than 10,000 hours; The
major challenge now is cost. After mass production starts, color OEL
displays will still be 2.5 times more expensive than color TFT LCD
displays. But some engineers forecast that the price difference will
disappear (or even reverse itself) in 2003 or 2004. Also, many more
panel makers will begin mass production in 2003, resulting in
economies of scale.
When fully ramped up, Samsung NEC Mobile Display and Tohoku Pioneer
Corp. intend to produce some 1.5 million and 500,000 units per month,
respectively. An initial high price that quickly falls off is no
different than what happened, for example, when LCDs came along to
start displacing CRT (cathode ray tube) displays. Eighteen months
ago, a 15-inch flat panel LCD display cost in some $3,000-$4,000.
Today, the same device can be had retail for about $400 (less than
half what this author paid for a 19-inch CRT in mid-1999!).
The 10,000-hour target lifespan, by the way, comes from the mobile
phone industry, where this number was set as the minimum acceptable
for a keitai. And how is that figured? It's based on the replacement
rate, we'd guess, for new handsets, which, in Japan anyway, is
largely determined by teen and twenty-something women.
Source: "Organic EL Panels Catch Up With Liquid-Crystal Displays,"
Nikkei, Aug. 20
See "Through Thick and Thin," J@pan Inc story on OELs
** Broadband Goes Ballistic
Extract: Domestic subscribers of broadband Internet services will
continue to grow rapidly at a compound annual growth rate of 81
percent -- from 635,000 in 2000 to 12.42 million in 2005, according
to IDC Japan. The firm also says the number of people using Digital
Subscriber Line, a service based on regular copper phone cables, will
surge from 10,000 in December, 2000 to 5.02 million in 2005. The
second-largest category will be cable modem subscribers, which IDC
expects to jump from 625,000 to 3.62 million during the same period.
Commentary: When the Japanese decide to do something, they decide to
do it in a big way, and broadband is no exception. The IDC report
also mentions that cable TV services are not as popular in Japan as
in the United States, and predicts that DSL services will become the
largest broadband category, exceeding cable modem users in 2002. It
also states that fiber optic line users will rise from less than
1,000 to 3.5 million.
The final item that caught our eye was the comment that fixed
wireless access will remain a "niche market," with IDC projecting the
number of users to rise from less than 1,000 in 2000 to just 280,000
in 2005. We think this number is far too low. All you need to access
a Bluetooth or 802.11b network at your local Starbucks (which are
now, for better or for worse, everywhere in this city) is a PC Card
that costs about JPY15,000 -- and they're already selling well, if a
casual tour of Akihabara is any indication.
Once retail cafe and other shop owners realize how much of draw
installing a wireless access base station is (and how cheap a single
broadband connection is), they will rush to set up free access
services, and users will skyrocket.
Source: "Broadband to Grow 81% Per Year: IDC," Japan Times, Aug. 23
** Fujitsu Fumbles
Extract: Fujitsu, Japan's second-largest PC maker, said today it
would cut 16,400 jobs, nearly 10 percent of its global workforce. As
with US firms who have announced layoffs, many of the job cuts will
come abroad. "The chip sector and the [IT] sector have seen an
unprecedented deterioration," Fujitsu president Naoyuki Akikusa told
a news conference. Fujitsu said 11,400 of the job cuts would be
abroad and 5,000 in Japan. The cuts will allow the world's
third-largest flash memory chipmaker to return to profitability after
stunning financial markets in July with a loss warning.
Commentary: Watching Japan's giant electronic manufacturers react to
the technology downturn is better than watching reruns of "Sex in the
City." We laughed out loud when we read this report's comment that,
"The most surprising news here is that Japanese financial markets are
capable of being stunned." (The Nikkei fell to a 19-year low on
Monday (11,257), and we recall one analyst report from last year
stating that when the Nikkei falls below 12,000, the majority of
Japan's city banks become effectively bankrupt due to latent stock
Is Fujitsu's writhing in pain an indication of worse yet to come? Not
likely -- despite what the harbingers of doom have to say. The
company's share price is up 20 percent since July, PC manufacturing
has become a thin-margin commodity industry anyway, and all large
Japanese enterprises have long suffered from overstaffing. The
technology doldrums merely provide an excuse to doff some of the
If the maker reduces or stops making PCs, maybe it can concentrate on
more livelier technologies like robotics, telematics, mobile, and
nanotech. The company opened its Nanotechnology Research Center last
December with a staff of 10, whose goal is to develop ultrafast
computers. It aims to find new semiconductor materials using carbon
nanotubes to replace silicon and to develop molecular computers with
unimagined computing speed.
Source: "Fujitsu Fumbles," Forbes.com, Aug. 20
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** Visit Web Site, Trash PC
site caused Japanese surfers serious problems over the weekend, the
Japanese government's Information Technology Promotion Agency (IPA)
reported Tuesday. The auction site Price Loto, run by Mediagate, was
hacked. The attack started on Saturday morning and continued until
Monday afternoon (when Mediagate temporarily closed the site). The
site is now back in service.
Users who visited the Price Loto site using Microsoft's Internet
that was programmed to alter the software configuration of their PCs.
Users of affected PCs experienced difficulties opening up new
applications, changing set-ups, and closing down the operating
system, the IPA report said. The auction site has 40,000 page views
and 10,000 unique users per day.
Commentary: The IPA says it received reports of infected and damaged
PCs from several dozen users since Monday this week. That's a lot,
considering it normally receives about 300 reports per month,
according to one spokesperson.
Oddly, despite this report's obvious finding that safe surfing
requires procedures, policies, and caution, one recent survey from
the National Police Agency found that, across a number of industries
(IT, telecoms, finance, energy, medical), fewer than 50 percent of
organizations actually have security policies in place.
Granted, this case was an auction site, which might be considered B2C
and therefore off-limits to surfers on workplace PCs. But there's
nothing to prevent a site that would be visited by corporate
employees (news, company sites, research sites, etc.) from being
similarly hacked and bugged.
In this case, after forcibly rebooting the machine, a message would
appear in English saying "If you have any trouble please
email:email@example.com. note:not for japanese&dog&pig," and users
would either lose all of the icons on the desktop, be unable to open
any file, or be unable to shut down Windows again.
Source: "Hacked Website Damaged PCs in Japan," IDGNet, Aug. 23
** Old Folks Told to Cough Up
Extract: Senior citizens should shoulder a greater portion of their
medical bills and nursing care insurance premiums to reduce the
nation's mounting medical costs, the Japan Research Institute (JRI)
recommended in a report released Tuesday. Under the proposed "Silver
Insurance" program, citizens 65 or older would be required to pay 10
percent of their medical bills, three percentage points higher than
the current rate. Wealthier seniors would be asked to pay more under
Commentary: The program also proposes allowing people to pay fixed
fees for medical services and treatments. Adopting more "preventive
medical care services would be another effective way to reduce
medical costs," the report said. We can't agree more.
The JRI estimates its proposals would save JPY14.3 trillion in
medical costs in fiscal 2025. But even if this reform program were to
be implemented (unlikely, given the LDP's stance), Japan's medical
costs will still increase to JPY70.9 trillion by fiscal 2025 (from
JPY31.5 trillion in fiscal 2000). Nursing care insurance alone will
cost JPY13.7 trillion in fiscal 2025 (compared JPY4.2 trillion in
fiscal 2000). If the consumption tax is to be the sole source of
these funds, the tax rate would have to be raised to 13.6 percent
(it's now 5).
What to do? Well, this is an excellent case in point supporting our
argument above (see Viewpoint) for the potential success of IT-based
efforts like L-mode in reducing medical and eldercare costs. If easy,
menu-driven communication can help reduce the nursing care insurance
budget by even 10 percent (by making home visitations more efficient,
for example), that would be a saving of some JPY1.4 trillion, or
JPY70 billion per year, between now and 2025. Good start!
Source: "Japan Think Tank Proposes Elderly Pay 10% of Medical Bills,"
Nikkei on Yahoo, Aug. 22
+++ EVENTS (ADVERTISEMENT)
** FCC Marketing & Communications Symposium 2001
19 October 2001, the Tokyo American Club, Tokyo
The Forum for Corporate Communications is proud to announce the FCC
Marketing & Communications Symposium 2001, a one-day event focusing
on targeting different sectors of the Japanese market, with specific
discussions on marketing to women, the Internet/i-mode generation,
youth, teens, the silver market and the foreign market in Japan.
For more information:
Exclusive Sponsor: Starcom Worldwide Japan
** MCF Mobile Developers Conference 2001 (mobidec 2001)
August 29-30, Tokyo
mobidec 2001 provides you with everything you need to know about the
latest in mobile application and content technology. The three
Japanese carriers -- NTT DoCoMo, KDDI and J-Phone -- will be coming
together for the first time ever at this conference, and are sure to
showcase their new Java-based mobile applications. These and other
major industry leaders will bring you up-to-date information on
innovative technologies. The conference will be held August 29-30 at
the Hotel Nikko in Odaiba, Tokyo, and will feature 14 technical
sessions (fee required), 9 open sessions (free admission), plus an
For further information please visit
** The US-Japan 21st Century Project
September 6-7, San Francisco, CA
"The United States and Japan: An Enduring Partnership in a Changing
Please help us celebrate 50 years of Japanese-American friendship and
create a shared vision for the next 50 years by attending a two day
conference, "The United States and Japan: An Enduring Partnership in
a Changing World," September 6-7, 2001. Featured participants
include: George P. Shultz, former secretary of state; Carly Fiorina,
CEO, Hewlett-Packard, and former Japanese prime minister Kiichi
For further information please visit:
** Next Generation Mobile Content Strategies
11-13 September, London, UK
Next Generation Mobile Content Strategies goes straight to the heart
of mobile content development. By examining case studies from
industry leaders, delegates will gain invaluable insight into the
mobile market today.
4,242 (as of date of publication)
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