JIN-217 -- Smartcards to Play New Roles for JR East, ANA

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. 217
Thursday, March 6, 2003


++ Viewpoint: Smartcards to Play New Roles for JR East, ANA

++ Noteworthy News
- Toshiba Creates Fuel Cell for Laptops
- Toppan Forms Cellphone Content Alliance with Handango
- Scandal Rocks K-1 Empire

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++ Viewpoint: Smartcards to Play New Roles for JR East, ANA

Tokyo is quickly becoming the world's smartcard laboratory. About
5.7 million cards with integrated circuits (ICs) have been sold to
commuters to use on JR East trains -- the noncontact cards don't even
have to be taken out of commuters' wallets or bags as they pass
through the wickets. But that's old news to Tokyoites. What's new are
plans by JR East and All Nippon Airways (ANA) to extend the use of

First, JR East has announced this week that by next spring, its Suica
smartcards will be used for shopping at about 500 stores in its
station complexes. This is the second step in making Suica an
industry, and possibly a national, standard for electronic money. JR
East says convenience stores and restaurants in the stations will
accept the Suica cards for payment, but kiosks will still only accept
cash. "If e-money cards aren't used by a lot of people, the system
won't spread," the company says. "We are targeting sales of 2 million
(new) cards."

ANA, Japan's second biggest airline, is planning to use a different
smartcard system, Edy from Bit Wallet, in its campaign to let fliers
turn ANA mileage into e-money. For 500 yen, any of ANA's 9 million
frequent fliers will be able to buy an IC card and convert every
10,000 miles traveled into 10,000 yen in e-money. ANA says the e-money
could be used for purchases in 23,000 stores nationwide sometime in
fiscal 2003, which begins April 1. The airline calls this program a
world's first for e-money, and the media has reported that ANA
executives expect 1 million members to buy the IC cards when the
program officially kicks off on June 1.

Nowhere in the world is e-money being put to the test on this scale.
Edy and Suica are duking it out to emerge as e-money standards, and
their test markets are starting out in the millions. Japan has the
right mix of population density and technological savvy to make this
heavyweight battle get very interesting very fast.

-- Bruce Rutledge

Asahi Shimbun (in Japanese)

All Nippon Airways (in Japanese)

"From Ticket Reservations to Phones as Tickets and Money" (Part 1)
from our July 2002 issue

Part 2, from the August 2002 issue

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** Toshiba Creates Fuel Cell for Laptops

In Brief: Toshiba announced this week that it has developed a fuel cell
that will power laptop computers in the same way that larger fuel cells
power cars. The company is hoping to work out the remaining kinks and
have the fuel cell for sale by sometime next fiscal year.

The small fuel cell creates electricity by reacting with oxygen in the
air and methanol, which contains hydrogen. The biggest remaining
obstacle the the fuel cell's success is the methanol, which is
registered as a harmful substance in Japan, according to Japanese media
reports. Methanol also can't be taken on planes. But the Toshiba fuel
cell uses very little methanol, according to reports, which may allow it
to squeeze in under industry safety guidelines.

Commentary: NEC, Hitachi and others are also devoting a lot of time and
resources to developing smaller fuel cells to power a range of products.
Japan controls 70 percent of the world market for lithium-ion batteries,
according to the Nikkei, and as this market makes its transition to
next-generation technologies like fuel cells, about 300 billion yen in
annual sales will be up for grabs.

Nikkei Net (subscription required)


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** Toppan Forms Cellphone Content Alliance with Handango

In Brief: Toppan Printing is officially getting into the cellphone
content business by acquiring the Japan sales rights of US content
provider Handango. The US company owns about 20,000 types of software,
according to press reports, and 400 of those are in Japanese. Toppan
will begin distribution in Japan this summer; it already distributes
content for PDAs.

Commentary: Toppan, one of Japan's leading printers, is also the
world's leading manufacturer of color filter arrays. It has an intense
interest in electronic printing technology and is trying to position
itself in all media, now including the keitai. Toppan has also invested
in E Ink of Massachusetts to create color displays for PDAs, cellphones
and car navigation systems. The printer has been focusing on what it
calls the "three Es": electronics, e-business and ecology. We know it is
taking at least the first two very seriously.

Nikkei Net (subscription required)

"Eyes on the Screen" from our September 2001 issue

** Scandal Rocks K-1 Empire

In Brief: K-1, that blend of martial arts and boxing with a
sprinkling of pro-wrestling panache, is in trouble after the
indictment of former K-1 president Kazuyoshi Ishii on tax
invasion charges in late February. Fuji TV, a main sponsor of
K-1 since 1993, has pulled its sponsorship of the March 30th
bouts in Saitama (although it will still air the fights) and
has said it will have to cut ties with K-1 and rethink its
relationship with the fight production company from May,
according to the Asahi Shimbun.

Commentary: In the latest issue of J@pan Inc, Roland Kelts
explores the business of this very special sport and why it
has gripped Japan's imagination. In a time of geopolitical
tension in Northeast Asia, one K-1 fan surmises that the
fights represent "Japan's special wars." The magazine is
available at bookstores now.

The Asahi Shimbun (in Japanese)

"Japan's Fight Clubs" from our March 2003 issue (subscription

SUBSCRIBERS: 6,655 as of March 6, 2003

Written and edited by J@pan Inc staff (editors@japaninc.com)


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