JIN-152 -- Internet security and "911"

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. 152
Wednesday, October 10, 2001


+++ Viewpoint: Internet security and "911"
+++ Noteworthy news
- DSL users up 140,000 in September
- NTT DoCoMo's Tachikawa eyes Europe for 3G phones
- Japanese firms ready to withdraw employees from Central Asia
- Starbuck's IPO makes a splash
+++ From the readers
+++ Events

+++ VIEWPOINT: Internet security and "911"

While most companies have been hunkering down and examining their wounds
since September 11, at least one sector is bullish about the future.
Internet security companies are moving fast to raise their profiles in
global markets now that companies all over the world are (or should be)
taking a second look at just how secure their information networks are.

The bottom line is that most companies in Japan (and elsewhere) don't pay
enough attention to portal security, and security providers are thinking
that now, just maybe, they will.

Bill Conner, president and CEO of Entrust, an Internet security provider
based in Dallas, refers to the attacks on New York and Washington as
"911," since the date of the attacks was 9/11. "911 was a wake-up call,"
Conner said while in Tokyo this week. "It's pretty safe
to say that almost all portals are very unsecure."

Conner, who spoke at a US Congressional hearing about Internet security
soon after the attacks, was in Tokyo to announce that Entrust and Secom of
Japan are boosting their investments in Entrust Japan to give them both
about 36% ownership. Entrust is pitching in an extra $2.8 million and
Secom is adding $1.8 million to its initial investment. EnCommerce Japan,
an Internet security and solutions provider, will be absorbed by Entrust
Japan, giving it 32 full-time employees.

Entrust is not the only one making moves. NEC, Hitachi, and Fujitsu have
joined forces to work on encryption technology. Sources close to the
project won't comment on it except to say that it exists and is ongoing.
And the Japanese government announced today that it would
form a government team to prevent cyberterrorism.

Conner says one of the reasons for boosting Entrust's stake in Entrust
Japan now is that "I had to show the Japanese government that we were
putting our money where our mouth is."

Conner threw out some interesting ballpark figures from FBI reports and
other sources: Somewhere between 60 percent and 90 percent of security
breaches are done internally. That means big opportunities for
identification and authorization technologies. He also said
that companies in North America suffered about $2 million in costs *per
hack* and about 85 percent of the companies were victims of some sort of
network security breach. He says the figures are probably comparable to
those of Japanese companies.

Terrorist attacks or not, we think many Japanese companies have only
looked at network security as a sort of insurance policy, i.e., they do
what they think they must do to cover themselves, but don't spend too much
time worrying about whether their networks are really safe. Time for a

-- Bruce Rutledge

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** DSL users up 140,000 in September

Extract: Kyodo reported today that there were 650,796 subscribers of DSL,
or digital subscriber line, services in Japan as of the end of September.
That's a jump of 140,000 from the August total.

Commentary: A pretty heavy duty price war is going on among DSL services,
which offer high-speed Internet connections, in Japan right now. In fact,
we checked out prices elsewhere and think we can say with relative
certainty that Japan is the cheapest market in the world for DSL services.
Last we checked, several companies were offering services for
monthly fees of under 3,000 yen. How long will this last? The field is
bound to thin soon, so if you're thinking about subscribing, now is the

Kyodo's site:


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** NTT DoCoMo's Tachikawa eyes Europe for 3G phones

Extract: Keiji Tachikawa, president of NTT DoCoMo, told a luncheon crowd
at the Foreign Correspondents' Club in Japan that he thinks "the first
opportunity to roll out 3G outside Japan will be in Europe in the second
half of next year." DoCoMo's 3G, or third generation, mobile phones went
on sale on Oct. 1 in some areas of Tokyo. The company plans to expand
sales nationwide next year.

Commentary: Tachikawa says he is banking on Hutchison 3G UK, which DoCoMo
has a 20% stake in, to lead the way in Europe. While we like DoCoMo's
initiative in rolling out the 3G phones before the competition, we are not
holding our breath on the European sales. The 3G phones have been marked
by delays from the beginning, and this may be another prediction
that is just a little too rosy.


** Trading companies ready to withdraw employees from Central Asia

Extract: Japanese trading firms, oil refiners, electronics companies and
other manufacturers are preparing to evacuate employees in the Central
Asian and Middle East regions in the midst of the US and UK bombings of
Afghanistan. Those that aren't planning evacuations are taking steps to
secure the safety of their workers as tensions build in the region.
Among those either sending Japanese nationals home or beefing up security are
Marubeni, Sumitomo, Sanyo Electric, Taisei and Asahi Glass, news
agencies reported.

Commentary: Japan gets close to 90% of its oil supply from the Middle
East, and if that supply is interrupted, it will have effects across all
industries. We hope evacuations aren't necessary elsewhere, but eye the
situation in Indonesia -- where Japanese manufacturers have a strong
presence -- with growing unease.

** Starbuck's IPO makes a splash

Extract: And finally some good news for investors to wrap up this week's
news. Starbuck's Coffee Japan opened on Nasdaq Japan today at 80,000 yen,
well up from the IPO price of 64,000 yen. Frappucino anyone?

+++ From the readers

** The news of Roger Boisvert's death in last week's newsletter brought
some reader response, and we'd like to share one excerpt with you.

This is from Bill Tribley:
"I founded JemaNET as a mail and BBS service, with UUCP service
from GOL...Roger was an encouragement to all of us. GOL was a model of
rock-solid reliability and good customer service, carved out of a very
resistant and hostile NIC/KDD/NTT monolith. After meeting Roger in person
I realized that the good qualities of GOL were a reflection of the
character of its founder."

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Written by Bruce Rutledge (bruce@japaninc.com)

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