Japan's Internet Appliances:
Will US Innovators Connect?
by Noriko Takezaki
Competition for leadership in Japan's Internet appliance market promises
to be fierce. And in the early stages, at least, it is American firms with
a global perspective that are setting the pace.
Mitsubishi Electric's announcement that it will release an Internet TV
system in late October heralds the debut of Internet-based appliances in
the Japanese market. In the midst of Japan's ongoing Internet boom, domestic
consumer electronic appliance manufacturers are eagerly eyeing emerging
new business opportunities. But American joint-venture companies are trying
to grab a piece of the Japanese Internet pie by selling Japan's equipment
vendors on made-in-US technologies -- and so far, they seem to be succeeding.
Mitsubishi: first off the blocks
Mitsubishi Electric was the first Japanese consumer electronics maker
to announce the release of a wide-screen TV set featuring a built-in WWW
browser function. The browser was developed by Tokyo-based Access Co., Ltd.
(For more on Access and its technologies, see "Internet TV: Surfing
the Web Without a PC" in our June issue, page 61.) The inaugural
Mitsubishi product is scheduled to be released on October 21, and other
Japanese manufacturers (including Sharp, Matsushita Electric Industrial,
Victor Company of Japan, and Hitachi) are expected to follow suit with their
own Internet TV sets very soon.
Mitsubishi's wide-screen, multi-window Internet TV will enable viewers
to browse the World Wide Web with a built-in 14.4K-bps modem; e-mail service
is accessible through an onscreen keyboard. For Internet access, the set
is designed to automatically connect to a Mitsubishi-affiliated Internet
service provider. With its list price of about JPY270,000, the TV set will
also accommodate Hi-Vision broadcasts, Japan's version of a high-definition
TV system.
The WebTV solution
Meanwhile, several American companies (WebTV Networks, diba, Integrated
Systems, and ViewCall America, to name just four) have been approaching
Japanese manufacturers. California-based WebTV Networks, founded early this
year by three engineers who had previously worked for such companies as
Apple Computer and General Magic, focuses on the business of Internet TVs.
In addition to WebTV's own subscription- based Internet information service,
the company designs Internet set-top boxes and devices for manufacturers.
WebTV's hardware features a 112-MHz, 64-bit MIPS RISC CPU with digital
signal processing (DSP) extensions. This unit was specifically arranged
for WebTV by Silicon Graphics to offer DSP-like functionality at lower cost.
In addition, several patent-pending technologies are incorporated, such
as for image enhancement to eliminate interlace-flicker without blurring
and Web content formatting that is optimal in all TV formats (NTSC, PAL,
and SECAM). The WebTV Network service uses an Excite engine for Internet
searching, and offers five e-mail accounts per household. An LED on the
set-top box lights when e-mail is received.
WebTV has already signed Sony Electronics (a US-based Sony affiliate)
and Philips Consumer Electronics to produce its set-top box hardware. WebTV
Network service is scheduled to appear in the US market this fall.
"WebTV's screen processing technology is impressive," acknowledges
the representative of a Japanese information provider that was approached
by WebTV (speaking on condition of anonymity). "For Internet service
businesses, this kind of cool, good-looking screen arrangement and swift
market release are crucial. Since Sony has already been involved with its
hardware release in the US, I guess the WebTV will be available in the Japanese
market soon."
As of mid-August, however, there has been no announcement from Sony headquarters
about plans to release such hardware for the Japanese market, which may
be why WebTV has been approaching other Japanese manufacturers (including
Matsushita Electric Industrial) for hardware production. For its Japan market-entry,
WebTV also has been looking for partners who can provide content for its
online service.
The diba alternative
Another software company that has been trying to tie up with Japanese
manufacturers for the development of Internet appliances is California-based
diba. Founded in 1995 by a former senior VP of Oracle and the former CEO
and founder of DSP maker Wavetron
Microsystems, diba signed an agreement with NEC in early August to provide
its software architecture for development of NEC's 32-bit RISC V830 microprocessors.
NEC plans to offer this MPU to third-party manufacturers on an OEM basis,
as well as within its internal
consumer electronics manufacturing divisions, for development of the such
Net-access appliances as Internet TVs and
Internet VCRs.
The diba architecture incorporates a real-time operating system (OS),
pSOSystem, created by American software developer Integrated Systems. The
OS supports such processors as the Motorola 680X0, 683XX, Intel i960 and
386/486/Pentium, Hitachi SuperH, Power PC, and MIPS. diba has already provided
its technology to Zenith Electronics for its NetVision TV (TV plus Web browser),
which was released in the US market in May.
Other market hopefuls
According to Isao Yumoto, president of Integrated Systems Japan, which
is promoting the pSOSystem technology in Japan, Hitachi has been developing
an MPU based on the pSOSystem to be released at the end of this year. Like
NEC, Hitachi plans to offer the MPU to third-party manufacturers for making
Internet appliances. Such application products will include automobile navigation
systems that can access the Internet as well as Internet TV set-top boxes.
Regarding set-top boxes, Yumoto says that Japanese manufacturers who have
been producing decoder boxes for satellite broadcasts in Japan are showing
strong interest.
In addition to the companies from Silicon Valley, Atlanta-based ViewCall
America has also announced the development of a TV-based browser for the
Internet. The company is looking for Japanese manufacturers interested in
licensing its WEBster browser technology and set-top box design. ViewCall
America conducted service trials this summer in Atlanta, tying up with a
Holiday Inn hotel there to provide Internet links to 40 rooms. Hotel guests
thus can navigate the Internet from the regular TV set in their room with
a WEBster set-top box.
Thinking globally, acting locally
Those companies intending to enter the Internet appliance market seem
to have one thing in common: a comprehensive marketing approach with inter-industry
tie-ups, even beyond national borders. They all know that, to be successful
in the Internet appliance business, mere introduction of Internet-hooked
products is not enough. By seeking the development of low-priced but easy-to-use
products and services, they have been expanding their range of business
activities.
This spring in Japan, software developers (including Access), home electronics
manufacturers, a major telecommunications carrier, trading houses, and contents
providers discussed the formation of an intra-industry consortium so as
to establish closer relationships for the Internet appliance businesses.
Progress has been stalled, however, mainly because the companies involved
were not accustomed to the concept of intra-industry activities, and were
unclear about just how they should promote such activities for their common
benefit. Action on formation of the consortium, therefore, originally proposed
for this fall, seems to be falling behind schedule.
Meanwhile, as Japanese efforts at cooperation lag, American companies
have begun extending and enhancing their relationships in Japan to pursue
the creation of a de facto world standard -- a reality that bodes ill for
the fortunes of individualistic Japanese manufacturers in this field. Given
recent developments in the industry, and the inherent global nature of the
Internet, it is obvious that companies which do not take a global viewpoint
will become losers in the Internet appliance business.
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