TT-860 -- How to Deal with a Shortage of Data Scientists, e-biz news from Japan

An Insider's comments on Japan's high tech business world
* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.
(http://www.terrielloyd.com)

General Edition Sunday, July 31, 2016, Issue No. 860

- What's New -- How to Deal with a Shortage of Data Scientists
- News -- Smoking rate falls further
- Upcoming Events -- Free Shochu Tasting
- Corrections/Feedback
- Travel Picks -- Matcha in Uji, Ikebana in Saitama
- News Credits

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+++ WHAT'S NEW

The week before last, a Japanese organization did what is probably the
biggest online content sales deal in the nation's history. No it wasn't
an anime sale, nor was it some massive multi-player online game
cross-license. Instead, it was the sports broadcast rights for J.League,
which runs the national soccer league here, sold to Britain's Perform
Group. The deal is worth JPY200bn (US$1.88bn) to J.League over the next
10 years -- massively more than what it gets in fees from local TV
stations. Perform gets the right to live stream all matches for J1, J2,
and J3 matches on both its pay-per-view web platform as well as certain
satellite stations. The deal doesn't include terrestrial TV, which
doesn't bother Perform since they think most of the user demand will be
from Asia anyway.

This is a lot of money for a still somewhat (internationally) obscure
sports league, so why is Perform so confident of their chances?

Buried within the two companies' announcement is the comment that,
"Perform Group distributes sports content in around 100 countries. It
operates ePlayer, one of the world's biggest digital platforms for
sports video, and has strength in program production and sports data
analytics."

Analytics... now there's a word we're hearing evermore frequently these
days, and it's probably key to Perform's confidence. By having millions
of users on their platform Perform can do unlimited pre-testing and
analyze preferences, spend, trends, etc. Unlike a primitive one-way TV
broadcasting system like those owned by Japanese firms, Perform is able
to fine tune and personalize right down to the individual user, and thus
it is able to predict what those users will buy. We're assuming that in
making this rather huge offer, Perform analyzed in some detail Asian
customer interest in Japanese soccer and the numbers tell them it will
be huge. This seems to be a much better way to expand your business than
to make guesses based on personal hunches of the CEO. Now it's done, it
won't be long before Japanese broadcasters start to realize this as well.

For Perform, analytics is not just limited to audience evaluations.
Although we're not familiar with their ePlayer, if it's anything like
those of its competitors (we did some preliminary work with one such
company several years ago), then it is likely to be able to put out
tremendous amounts of statistical data on the teams, players, history,
games rules, stadiums, and even weather. This data is really addictive
and gets fans forking out for more as they to guess who will win each
game - kind of like how Japanese gaming companies put weapons out for
players to buy. Sure, putting the stats together for the first time
requires a huge financial outlay and is a herculean effort, but once
done, it can be used over and over so long as the presentation system
has the smarts to automate and personalize the process.

Analytics, which these days goes with everything from "Big Data" to
Internet of Things (IoT), to Machine Learning (ML), and Artificial
Intelligence (AI), is the ability to make sense of large volumes of
incoming data such that ordinary people, and particularly ordinary
senior management of Japan's public companies, can make investment or
competitive decisions based on what is really happening and not just
what they hear on the old boy's grapevine (or worse still, in the old
boy's newspapers).

Unfortunately for Japan, analytics involves learning some rather
difficult statistical techniques and using one's left brain - both of
which are often in short supply in elderly boards and senior management.
Normally, the solution, as with software engineering, would be to go
hire in some boffins from your friendly Systems Integrator (SI) and let
them get things done. The problem is that there is a major shortage of
Japanese-speaking data scientists among the SI firms as well.

So for this reason, Japanese major tech firms are starting to use M&A as
one way to acquire the necessary expertise.

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[...Article continues]

For example, in June last year, HDS (Hitachi Data Systems) bought a
leading data integration, visualization and analytics company called
Pentaho (which still has billboards up along Highway 101 in Silicon
Valley). HDS bought the company because it is committing to an IoT
vision and realizes that the huge amounts of data that all these devices
will generate will need some very sophisticated and scalable processing.
In 2014, IoT research accounted for about 24% of Hitachi's entire basic
R&D spend, and it is preparing to ramp this up to 64% over the next
couple of years. By 2018, Hitachi reckons it will have about 2,900
researchers around the globe, mostly in China and the USA. Ironically
only a few of these people will be in Japan.

Hitachi sees its sensors-to-smart-sense strategy giving it an edge in
connected transportation (automobiles, trucks, and trains), connected
energy (drilling to production), connected factories and farms, and many
other applications besides. Certainly it wants to be sure that it can
compete against foreign majors such as IBM, SAP, Oracle, Google,
Microsoft, Amazon, and others who are all pouring tons of cash into this
sector.

A couple of months after the Hitachi acquisition, Mitsui made a
strategic investment in a US-based oil drilling analytics company called
WellAware, which targets the shale oil industry. WellAware has a
soup-to-nuts solution involving IoT devices at individual production
sites that monitor fluids, chemicals, and production levels so as to
predict the condition of a given site. Mitsui is apparently planning to
rejig the solution to expand into mining and agriculture as well.

There are many other examples, and we see this M&A/Investment trend
picking up pace over the next 1-2 years, as the slow-pokes among the SI
firms start to realize what is going on. This is good news for the many
foreign analytics, ML, and AI companies out there, mostly in the USA and
India, who are in a cutthroat race to create automated solutions and
customers wanting to use them.

Indeed, here at home, machine smarts are starting to make the press in
the form of real results. Last week Toshiba touted spectacular
production improvements from incorporating AI and ML into the production
of flash RAM at the company's super-sophisticated memory chip plant in
Yokkaichi (Mie). Toshiba reckons their wafer fabrication times have
fallen from six hours to just two, while wafer yields have also improved
(they didn't say by how much - although we note that Sony got a 3%
improvement with a similar system in 2014). We believe Toshiba is
getting its technology from a US firm - where else?

Other Japanese end-user companies have been slower on the uptake,
although EVERYONE is aware of the importance of IoT for the future. A
December 2014 survey by the Nikkei found that 53% of 92 major companies
were planning to utilize Big Data (thus inferring analytics to interpret
it) in some way to improve business efficiency. However, those actually
using the big data are mostly focusing on simple logistics and product
quality control, which isn't particularly different to what they having
been doing in the past with proprietary systems, meaning they miss the
real opportunity with analytics, especially recently emerging streaming
analytics - which is to not do batch checks then make modifications some
months earlier. Instead, analytics/ML/AI now days offer the opportunity
to provide real-time feedback which can be built directly into the
production system, prompting same-day modifications, improvements, and
maintenance.

So which sectors are lily to use the latest analytics technology? Most
receptive to intelligent feedback and same-day improvement are probably
Japan's convenience stores, which with 100,000 outlets and fierce
competition between them, are hyper sensitive about things like today's
weather and the sales of chicken sandwiches versus pork fry ones. So if
you want to see the direction that Japan's majors will take on
analytics, especially real-time analytics, watch 7-Eleven, Lawson, and
their cohort. Soon after them will be the large retailers and B2C
companies doing business overseas.

...The information janitors/

***------------------------****-------------------------***

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***********************************************************

+++ NEWS

- Kagoshima governor to challenge government over reactors
- Start-up Paidy scores US$15m in Series B
- GPIF loses US$51bn in FY2015
- Safecast gets a major article in LA Times
- Smoking rate falls further

=> Kagoshima governor to challenge government over reactors

The Abe government severely underestimated just how badly people feel
about his government trying to re-start the nation's reactors. He may
have been reelected nationally because the opposition is weak, but
voters are finding another way to show their displeasure - and that's by
voting in regional politicians who are anti-nuclear or even anti-LDP
(per the Tokyo governorship win on Sunday). One such politician is the
new governor of Kagoshima, Satoshi Mitazono, who has said that he wants
to close down the Sendai (Kyushu) reactors, that are currently the only
re-started reactors in service in the country. ***Ed: Although he can't
close the reactors down directly, since the reactors are so old (more
than 30 years) he can request further inspection checks and deny
replacements after the current units are retired. He can also make life
uncomfortable for the government and Kyushu Electric by convening expert
panels to publicize the debate even further.** (Source: TT commentary
from asahi.com, Jul 29, 2016)

http://bit.ly/2aHgHz1

=> Start-up Paidy scores US$15m in Series B

Yet another foreign-run start up in Japan has scored the big time after
proving itself at the frontlines. Paidy, an alternative payments
company, has just received US$15m from six investors participating in
the Series B round. The raise could be the largest by non-Japanese
founders, eclipsing a US$12m round by translation company Gengo three
years ago. Paidy will apparently use the money to further grow its user
base here in Japan and to create new financial products. ***Ed: Paidy
substitutes user ID and security for purchases normally done with credit
cards with two-factor authorization using email addresses and mobile
phone numbers. Users are also screened against consumer credit data to
help reduce defaults. Nothing earthshaking in the technology, just very
well executed.** (Source: TT commentary from techcrunch.com, Jul 28, 2016)

http://tcrn.ch/2arkxbg

=> GPIF loses US$51bn in FY2015

Even as the government tightens the screws on small companies and
workers everywhere by inexorably ratcheting up the cost of pension and
health contributions, once it has the money it is proving not so adept
at keeping it. The background is that the Bank of Japan is swamping
purchases of government bonds to prop up Abenomics, so the GPIF, the
worlds largest pension fund, has been forced into riskier domestic and
international stock investments. As a result, the fund is suffering for
its newly increased exposure and last week it declared paper losses of
JPY5.3trn (US$51bn) through til the end of March, 2016, which is
approximately -3.81% of its equity. ***Ed: The GPIF is so huge that it
owns almost 1% of all the publicly traded stocks in the world, and 7% of
Japanese stocks. And to be fair, the GPIF was not the only large
international government fund to suffer in the current stock market.**
(Source: TT commentary from wsj.com, Jul 29, 2016)

http://on.wsj.com/2aUCCyT

=> Safecast gets a major article in LA Times

Japan's very own citizen-based radiation monitoring network, Safecast,
has hit the big time PR-wise, with a major article in the LA Times. The
newspaper interviewed founders Pieter Franken, Joe Moross, Jonathan
Wilder, Azaby Brown, and Kohei Matsushita, about their efforts to
validate Japan's actual radiation levels outside the Fukushima exclusion
zone. As the article points out, Safecast is really an amazing
phenomenon, having generated with homemade radiation detection devices
over 50m data points all across Japan since 2011. ***Ed: And so what
does Safecast have to say about Japan's radiation levels in 2016? A
recent group report said they are almost back to normal and far below
internationally agreed upon safety limits. In fact, it's safe enough
that Safecast has decided to expand beyond radiation readings and is now
starting to do pollution readings as well. They'll need new sensors for
that, but once ready we believe they will have no shortage of volunteers
around the globe to do the readings.**
(Source: TT commentary from latimes.com, Jul 6, 2016)

http://lat.ms/2ae9ph8

=> Smoking rate falls further

In a development that may help Japan's longevity stretch even further,
Japan Tobacco announced that the rate of male smoking had fallen to less
than 30% for the first time since the company has been polling the
public. The estimated distribution of male smokers is now 29.7% of the
adult male population, down 1.3% over 2015. The rate for women actually
rose 0.1% to 9.7% of the adult female population. As a result, there are
now estimated to be about 20.27m smokers in Japan. ***Ed: How
unfortunate that they always go to the same bars and restaurants that we
like...** (Source: TT commentary from japantimes.co.jp, Jul 28, 2016)

http://bit.ly/2aFgOd3

NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links -- we apologize for the inconvenience.
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***------------------------****-------------------------***

+++ UPCOMING EVENTS

--------- Free Shochu Craft Liquor Tasting Event ----------

Discover the charms of Japanese spirits! On Sep 8 at Togo Kinenkan, a
variety of Japanese craft liquors will be presented, with information,
at a special event. Tasting opportunities available. Free attendance;
registration required.

http://metropolisjapan.com/freeshochutasting
-----------------------------------------------------------
***------------------------****-------------------------***

+++ TRAVEL DESTINATIONS PICKS

=> A Half Day Trip to Uji, Kyoto
Guide to the Matcha City

You're looking at your Kyoto travel itinerary and wondering what other
wonders Kyoto has to offer. You hope to find a place that is a little
more local, perhaps with less crowded sightseeing areas, and a place
where you can stroll around leisurely at your own pace. Then you stumble
across the name of a city called "Uji" on Google, and decide to look up
more about the southern city of Kyoto. Information on Uji is a bit
scattered and you're unsure of what to do. But no worries, this article
will give you a guide to Uji.

Sample Itinerary: Matcha Soba/Ramen - Byodo-in Temple - Matcha
Soft-Serve - Walk along the Uji River - Taiho-an Teahouse

Uji is famous for its matcha, so each meal you have in Uji, should most
definitely include some kind of matcha product, whether it be a sample
of hot tea, a flavored main dish, or a dessert. Byodo-in Omotesando
(Byodo-in street) has a lot of shops that sell a variety of matcha
dishes and products. Try some matcha noodles - soba or ramen or both! -
at one of the stores for lunch. The taste and texture of the matcha
noodles will definitely be one of the most unique you will ever try.

http://bit.ly/2aa1RjJ

=> Ikebana Class in Kawagoe, Saitama
Try your hand at traditional flower arranging!

Ikebana, or Kado, is a Japanese style flower arrangement that focuses
not solely on the flower but also on the beauty of a plant's leaves and
stems to create a unique display. Unlike the very full and multicolored
bouquets often seen in western style flower arranging, Ikebana draws
more attention to creating a scene or symbols with the plants at hand.
Derived from Buddhism and Shintoism, Ikebana as has spiritual
connotations such as patience and relaxation through art. Though it
takes years of practice and studying to truly hone the craft, a class in
a Kawagoe community center gives locals and foreigners the opportunity
to learn the "way of flowers."

Although the majority of students are Japanese, there is no need to be
hesitant in taking a class as the Ikebana sensei, Rihou-san, has taught
foreigners numerous times. However, those with at least some Japanese
speaking ability will gain more out of the experience and have an easy
time truly following along in class.

The hour long class begins with setting up all of the plants, pots, and
tools needed to prepare your arrangement. Each student starts out with
the same apparatus and types of flora. The teacher gives a basic
explanation of the image students should attempt recreating, but from
there, students are allowed to attempt building an arrangement by
themselves. Testing out different angles and configurations of the
flowers, students can exercise their creativity through Ikebana...

http://bit.ly/2aquVlT

***------------------------****-------------------------***
***********************************************************
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+++ ABOUT US

STAFF
Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

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