PC Hardware and Software Shipments Rise

The Japan Electronics Industry Development Association (JEIDA) reports that domestic PC shipments in fiscal 1993 rose 35% in volume (to nearly 2.4 million units), reaching Y719 billion ($6.7 billion). PC exports soared 93% in volume (to 850,000 units), re aching Y174 billion($l.7 billion). Domestic notebook PC shipments totaled 241 billion ($2.3 billion), while exports amounted to Y170 billion ($1.7 billion). Total display, printer, and disk drive shipments came to Y11S billion ($1.1 billion), Y186 billion ($1.8 billion), and Y24 billion ($229 million), respectively. According to IDC Japan, domestic workstation shipments in 1993 also increased to YS05 billion ($4.9 billion), up Y48.5 billion ($470 million) over 1992. The number of units shipped increased by 20,000, to 345,910 units. Nihon Sun Microsystems held a 27% share (up nearly 3 points), with shipments reaching 39,700 units, followed by Yokogawa Hewlett-Packard at 17% (24,300 units). Following the two leaders were Fujitsu (14%, 19,700 units), NEC(11%, 16,300 units), Hitachi(b%, 8,500 units) and IBM Japan (5%, 6 ,900 units).

Meanwhile, according to the Japan Personal Computer Software Association, domestic package PC software sales in 1993 increased 38.0% over the previous year, to Y68 billion ($657 million). By volume, shipments soared 70%, to 2.9 million packages. A survey of 35 domestic software vendors who are members of the International Data Program revealed that, by platform, MSDOS software use has been steadily dropping: from 85% in 1992 to 62% in the first half of 1993 to 54% in the second half of 1993. Windows soft ware has increased from 17% in 1992 to 29% in the first half of 1993 and 37% in the second half of 1993.

Japanese Manufacturers Face Foreign Competition EC has announced that it will withdraw from production of 14-inch cathode ray tubes (CRTs), which are used for color displays in PCs. NEC feels it can no longer compete with Taiwanese and Korean makers due to the high yen. NEC's subsidiary NEC Kansai curr ently manufactures 180,000 CRT units monthly, of which around 5,000 are 14inch CRTs. The company is negotiating with its customers and hopes to halt production as soon as possible. NEC will thereafter specialize in the production of 1S-inch and larger CRT s. Mitsubishi Electric also plans to reduce domestic production of color CRTs, and other makers are likely to follow suit. IBM Japan has announced it will move production of its magneto-optic disk (MOD) drives to Southeast Asia by year end. IBM's Fujisawa plant has been building MOD drives, but the company has decided to build a production system not affected by fluctuations in the yen's value. IBM will shift 3.S-inch MOD drive production to a Malaysian affiliate starting in June, and move 5.25-inch MOD drive production offshore to Southeast Asia within the year.

Computer Recycling

In an effort to reduce costs and demonstrate its concern for the environment, Fujitsu will set up a nationwide recycling system for old PCs and word processors. The company plans set up 15 collection centers starting sometime in June. After dismantling a nd sortin& the parts that can be reused will be sent to the company's production centers. Fujitsu will establish a Recycle Techno Center at the Environmental Technology Promotion Center of its Kawasaki plant to develop appropriate recycling technologies a nd management systems. The goal is to achieve a recycling rate of 90% in three years.

Trip-Planning Help for Drivers

Victor Co. of Japan JJVC) will introduce on June 21 a global positioning system (GPS) car navigation system. Featuring a voice guidance function and automatic route determination, the GPS MultiNavlgator is intended to help drivers to their destination fast er and with better accuracy than conventional systems. It is being marketed as a low-priced, multifunction system. When a driver enters the starting and destination points, the system automatically determines an appropriate route; simulated voice output g ives the driver directions. The Y210,000 ($2,040) system will be distributed through car electronics dealers.

According a survey of 23 equipment makers by the Electronic Industries Association of Japan (EIAJ), Japan's GPS market will reach Y360 billion ($3.5 billioni by the year 2000. The current market is estimated at Y24 billion ($230 million). The installed b ase of car navigation systems expanded from 53,000 vehicles in 1992 to 159,000 vehicles in 1993.

New CD-ROM Sales Approach

This summer, IBM Japan will adopt a new software sales approach whereby low-cost CD-ROM discs are distributed to customers who can review the contents and then license only the programs they need by paying for decryption keys to unlock those programs. Dub bed CD Showcase by IBM Japan, this method is expected to significantly reduce distribution costs. It is currently used by several firms in the US, but this will be the first time the method has been used in Japan. IBM Japan will cooperate with PC software distributor Softbank to expand its CD-ROM titles.

Softbank will start a similar system of its own with a demo disk in June, with all the company's packages to be shipped from November. Softbank will thus follow IBM Japan as the second firm to start such sales in Japan.

Commercial Internet Access

Internet Initiative Japan (IIJ) was scheduled to launch a low-cost Internet access service using public circuits in May. The service will use TCP/IP to provide user terminals with a dial-up IP Internet link. There is an initial charge of Y30,000 ($290), a monthly fee of Y2,000 ($19.20), and a usage charge of Y30 ($0.29) per minute. Optional functions, such as a personal mailbox and bulletin board services, are MSOO ($4.80) per month.

KDD is also studying the feasibility of connecting to the Internet. Demand for access to the Internet--widely regarded as the leading candidate to become the core of the US information superhighway--is growing rapidly in Japan, but no telephone companies are yet providing access. KDD is negotiating with AT&T and MCI Communications, which already offer Lnternet connection.

Mobile Phones Proliferate

Mobile telephone subscriptions in Japan jumped 26%, to 2.1 million, in fiscal 1993. This increase of almost 445,000 over the previous year was the largest year-on-year increase since fiscal 1991. NTT DoCoMo, DDI, and IDO enjoyed subscriber growth rates of 29%, 28%, and 16%, respectively. Analysts say that elimination of s ecurity deposits and accessory price cuts by the new common carriers have spurred demand.

Crackdown on Illegal Radios n an effort to counter interference being caused by unlicensed or illegally modified radios, the MPT instituted a licensing notification system in April. This step is intended to clamp down on sales of non-approved radio equipment. Some 30,000 retailers n ationwide handling radio equipment are cooperating. In conjunction with this new crackdown, the MPT also began operating an airwave monitoring system in May.

Illegal Software Targeted

The Japan Personal Computer Software Association (JPSA) has dis- closed that it plans to sue--through software developers--schools and other organizations that continue to illegally copy software. In addition to supporting member firm lawsuits, in cooperation with the Japan Copyright Council, JPSA from July will ask th e Public Prosecutor's Office and the Ministry of Justice for assistance in implementing measures to prevent the illegal copying of software. PC LAN Market Will Continue to Expand The PC LAN market in Japan is likely to expand to more than Y1 trillion ($1 O billion) by fiscal 1996, an average annual growth rate of 43%. This Japan Electronic Industry Development Association estimate is based on responses from 98 member companies. In fiscal 1993, the PC LAN market was strong despite the recession, growing 46% over the previous year to reach Y373 billion ($3.6 billion). Growth of PC LAN systems has continued since 1992 as part of the trend of companies downsizing their information sys tems and shifting to open systems.

Loans for Optical Fiber Cable As part of a plan to build an advanced communications infrastructure, the MPT, in consultation with the Ministry of Fl nance, has decided to allow no- or low-interest finanancing through the Japan Development Bank for relay optical-fiber cable projects. F unds are available from this fiscal year. NTT and 11 other advanced communications equipment vendors are expected to be eligible for this financing.

Optical Disks to be Obsolete?

NTT, in cooperation with the Japan Atomic Energy Research Institute, has developed a magnet with recording capability greater than that of an optical disk. The super-fine structure of the new magnet (8 nm wide on average) will reportedly enable recording o f up to 10 gigabits per square centimeter-about 100 times the capacity of a conventional optical disk. NTT claims that when the technology is implemented, 10 years' worth of newspaper articles will fit on one 2.S-inch disk.

Computer Shipment Targets

Six Japanese PC makers have disclosed their shipment goals for fiscal 1994. The largest increases are expected by Apple Computer (Japan), which predicts shipments will soar to 500,000 units, up 79%, from 1993, and IBM Japan, which forecasts shipments of 3 50,000 units, a 75% rise over 1993. Fujitsu expects shipments to expand 32%, to 300,00 units, and Seiko-Epson estimates a more modest lump of 20%, with shipments reaching 240,000 units. At the bottom are Toshiba, which looks for only an 11% increase, to 2 00,000 units, and market leader NEC, which plans to ship 1.5 million units, up 10% from 1993. The combined shipments of these six makers showed a 14% year-on year increase in 1993 and should jump a further 27% (to 3.1 million units) in fiscal 1994.

Pager Frequencies and Standards

Japan's pager market grew by over 1.2 million units in 1993, and the Ministry of Posts and Telecommunications (MPT) is now mulling reallotment of pager radio frequencies in expectation that the current spectrum will become saturated following the deregula tion of pager sales slated for next spring. The ministry is considering both allocating currently ·unused frequencies to pager systems, and shifting to other frequencies the radio systems that now use the 280-MHz pager spectrum. The MPT is also mulling new pager signal standards. The Research and Development Center for Radio Systems (RCR) will consider several systems that are faster than the current NTT and POCSAG systems, including Europe's ERMES and Motoroia's WASP systems. T he MPT is expected to adopt a new standard based on the RCR report as early as spring 1996.

Family Talk

KDD has applied to the MPT for e approval to offer Family Talk, Japan's first full-fledged discounted international call service for general households. The new service, slated to start in May offers users a 10% discount on up to three frequently-called overseas numbers. There will be a Y1,000 ($9.70) basic charge every three months plus a Y200 ($1.95) monthly charge per registered number. KDD's competitors are expected to follow with their own versions of the service, signaling a new era of service comp etition in Japan's international call sector.

Loans for Outsourcing

In a move intended to raise the reliability of systems and promote stable growth in the outsourcing market, the Ministry of International Trade and Industry (MITI) has established an approval system that covers the outsourcing of computer system developme nt, operation, and maintenance. Companies receiving MITI approvalwill be eligible for low-interest loans from the Japan Development Bank. The opening date for applications was April 30, and first approvals are expected in August. MITI already has an appro val system for system integration companies.

Common Interface Specs

Fujitsu and Sun Microsystems have developed a common application binary interface specification. Japaneselanguage applications made to this specification will be able to run on both companies' workstations. Fujitsu is already supporting the common specifi cation with its UXP/DS operating system for the DS/90 7000 series of UNIX servers. Sun will support it with the next release of Solaris. The common specification will reduce the burden of software development and allow both companies to reduce time to mar ket. The companies will propose the specification to SPARC International, a US-based SPARC products promotion organization.

Changes at NEC

NEC plans to revamp its business plan on the assumption that sales of mainframe computers will drop 5O% over the next five years (on a value basis). Seeing mainframe functions increasingly being taken over by workstation and PC servers, NEC expects a dras tic drop in mainframe demand. The company therefore wants to make it easier to implement in-house changes in response to structural shifts in demand, and it plans to explicitly incorporate these anticipated shifts in its business plans. NEC's move is like ly to have significant impact on other major players in the mainframe business.

Linkage of Public and Leased Lines

The MPT is reportedly ready to permit a link-up between NTT local lines and the long-distance leased lines of the 1,500 Type II telecommunications carriers, such as Recruit. This would allow corporations leasing lines from NTT to cut their internal communi cations charges substantially. A daytime three-minute call between Tokyo and Osaka, which is 170 yen ($1.65) over a common carrier line, could drop to about 130 yen ($1.25) when the service becomes available.

The ministry is concerned that approval of a linkup between public and leased lines could result in a decline in use of NTT's long-distance telephone service and drastically deteriorate the phone company's performance. Since such a linkup is already deregulated in the US, Canada, and the UK, however, it would be difficult for theJapanese government to keep current restrictions on public-leased line connections.

National Chain of Retailers Planned

Catena is moving to create a nation wide chain of PC retailers, which could comprise as many as 3,000 outlets within 10 years. Catena recently absorbed leading software distributor Soft Wing and information service Japan Software. Catena plans to build a networked distribution information system that will feature a POS (point of sale) system at each outlet linked to dealer and manufacturer information systems. Catena's goal is to capture top slot in the domestic PC sales market.

New NEC Multimedia Organization

On April 25, NEC Corporation formally established its new C&C Multimedia Business Promodon Division. Among the roles of this new division ulll be promotion of multimedia-related operational strategy, market research, development of new products and techno logies, and promotion of business across group boundaries. NEC's fundamental multimedia policy is to advance core technologies and combine these to develop new products.

Development and Sales Tie-Up

Compaq (Japan) and Microsoft (Japan) have signed an agreement to cooperate in development and sales. The Compaq unit will develop the Japanese version of Microsoft's forthcoming operating system, "Chicago," while Microsoft's Japan arm will likely distribute new Compaq PC models through its own channels. The tie-up, which is expected to shake up the alignment of influence in Japan's PC market, is aimed at leading to the sales and development of next-generation PCs. The two companies have been exchanging technology regarding the specifications of the new operating system and operating environment. Compaq expects to double PC shipments in Japan to 100,000 units in 1994 through cooperation with Microsoft.

The Information Cable-Highway

The Ministry of Construction has firmed up a plan under which a cooperative government-private body will lay 420,000 km of fiber-optic cable underneath the nation's roads to create a Japanese version of the "information superhighway." Independent installa tions by NTT and the new common carriers would be costly and inefficient and would require additional construction work, the ministry feels. A cooperative organization is therefore deemed necessary.

MPT Internet Forum

The Ministry of Posts and Telecom munications was scheduled to hold open discussions in May on the Internet, the world's largest computer network with some 20 million users. A council will be set up prior to formulating policies to promote the Internet in Japan. The discussions were to focus on establishment of an Interne t connection center, which would serve as a single access point linking the Internet to other networks in Japan. The council was also to discuss financial support for the Japan Network Information Center (JPNIC), which runs the domestic Internet, and esta blishment of an Asia-Pacific Network Information Center.