GOVERMENT & POLICY

Japan, China to collaborate on mobile telecom
The Ministry of Posts and Telecommunications (MPT) has agreed with the government of China to collaborate in developing a next-generation mobile communications system. The two governments will exchange technologies and personnel in an effort to develop by 2000 a system capable of transmitting video. While the MPT is already working with domestic companies on systems based on proprietary standards, the joint project with China will aim for adoption by the International Telecommunication Union (ITU) as an international standard.

PHS WLL as global standard?
The MPT will offer its support to encourage the development of wireless local loop (WLL) systems based on PHS (personal handyphone system) technology. The first recipients of this support are likely to be Cambodia and Bhutan, which have requested assistance in developing their domestic network infrastructure. The ministry dispatched a survey team to Cambodia in December. The long-term aim is to develop PHS WLLs as a global standard.

PRODUCTS AND SERVICES

Just the fax, ma'am
Demand for home facsimiles is growing steadily. Japan's domestic home fax market, estimated at about 2.2 million units in FY1995, is expected to surpass 3 million units in FY1996. In the high-end sector (average retail price over JPY60,000), TEC and Toshiba have been eroding the shares held by leaders Kyushu Matsushita Electric, Sharp, and Sanyo Electric with new plain paper faxes. Matsushita Denso is also targeting the high-end of the market with multi-feature plain paper machines.

Nifty PHS access
NIFTY-Serve, Japan's largest commercial online service, plans by March this year to set up an experimental dedicated access point via which customers can access the service from their personal handyphone system handsets. The effort is being undertaken as a one of the interconnectivity experiments sponsored by an MPT-affiliated organization. NIFTY-Serve already offers 9.6K-bps access points for cellular telephone users. The initiative is designed to coincide with new PHS data communications services to be offered by the NTT Personal Group and other operators from March.

BTRON-based PDA
Seiko Instruments has introduced a PDA (personal digital assistant) based on BTRON, a Japan-developed operating system suited for the Japanese-language environment. The BrainPad TiPO is a 300-gram, palm-size, pen-input unit powered by two AAA batteries. The unit, which supports some 6,000 kanji characters and real-time multitasking operations, features a monochrome LCD, V810 RISC processor (made by NEC), IrDA optical interface, and various application software including a World Wide Web browser. The BrainPad TiPO is targeted at corporate users and priced under JPY100,000.

NEC to market Quovis
NEC has signed a value-added retailer (VAR) agreement with Tokyo-based software developer Sofmap Future Design to sell Quovis, an application development tool based on a new software design concept known as digital cell technology (DCT). DCT enables users to combine functional cells (such as "buttons" and "lists") and develop applications without doing "programming." NEC and Sofmap Future Design plan to work together to develop intranet-based map systems and other applications.

Good product, bad acronym
In November, Fujitsu released its Fujitsu Electronic Commerce Environment (FECE) series of software solutions and services that will enable secure electronic transactions on the Internet. Fujitsu follows Hitachi to become the second Japanese firm to release a comprehensive electronic commerce solution set, with NEC and IBM Japan expected to have followed suit by early 1997. Fujitsu says FECE will enable users to readily develop electronic commerce systems that are compatible with SET, the international standard for online credit card transactions.

BUSINESS BRIEFS

EDP outsourcing is in
A growing number of Japanese companies are attempting to streamline their operations by outsourcing mission-critical electronic data processing operations. JASCO, for example, has commissioned personnel and product control system operations to Fujitsu by moving all the computers at its Tokyo Computer Center to Fujitsu's Tatebayashi System Center. The move is expected to lower data processing operation costs by about 10%. Seiko-Epson, meanwhile, has outsourced its production management system operations to IBM Japan. Agriculture cooperative federations in 11 prefectures have asked NEC to run their online systems. Japan's outsourcing service market, estimated at about JPY100 billion, is expanding 20% to 30% annually.

Electronic nemawashi
Several electronics companies have introduced "electronic consensus meeting systems" to accelerate internal decision-making. Toshiba has installed a system for its directors, while Fujitsu and Hitachi are gradually moving their decision-making processes from a paper to an electronic base. Documents are distributed to relevant parties via networked PCs, with questions and comments circulated by e-mail. Companies using these systems report that the time needed to obtain group consensus on a proposal has been cut by 70%.

A partnership for transaction processing solutions
NCR Japan and Informix KK have reached a basic agreement to cooperate in developing and providing large-scale, open system, online transaction processing solutions in Japan. Details of the new partnership are still being worked out, but the two firms are likely to cooperate in new product research and development, product support, post-sale services, and other areas. The tie-up follows the announcement of a worldwide cooperation agreement between the US parents of both companies. Specifically, NCR will combine its Unix middleware with Informix's relational database management systems to serve mainframe customers who are downsizing to client/server systems.

Two-day PC delivery targeted
Yokohama-based direct PC seller Gateway 2000 Japan intends by early this year to have in place a system whereby its PCs are assembled and delivered to customers within two days of an order being placed. In 1996, it took the company an average of 11 days to transmit an order to its assembly plant in Malaysia, produce the PC to customer specifications, and ship it to Japan for delivery. Under the new system, the company will hire nearly 80 new employees and will maintain an adequate inventory in Japan. If the effort is successful, Gateway 2000 Japan will be able to boast the world's fastest delivery time for custom-configured PCs.

MARKET NEWS

Server, PC shipments up
Japan's PC server shipments soared 86% year-on-year in volume, to 45,300 units, in the first half of FY1996. According to a report by Tokyo-based Multimedia Research Institute (MRI), NEC's server shipments grew to 11,700 units, giving NEC a first-place 26% market share (up by nearly 8 percentage points from the preceding year). The previous leader, Compaq Japan, shipped just 8,500 units, causing its market share to plummet from 39% to 19% year-on-year. Fujitsu, meanwhile, doubled its share by to 17%, with shipments of 7,900 units, followed by IBM Japan, whose market share was down slightly to 14%.
Domestic PC shipments, meanwhile, expanded 35% year-on-year, to 3.29 million units, in the first half of FY1996, according to MRI. NEC continued to rank first, increasing its shipments to 1.31million units, and holding onto a 40% market share. Fujitsu stood second, its share rising one percentage point year-on-year to 18%. IBM Japan maintained its PC market share at 12%, while Apple Computer Japan, which had an over 11% share in 1995, suffered a decline in share to just under 10%.

Giving credit where it's due
A 19-member group led by NTT Data Communications, credit card companies American Express, JCB, and Sumitomo Credit, and computer firms is developing a system that will link the credit reference networks operated by domestic credit card companies with the Internet. The system will be compatible both with the SET (secure electronic transactions) Internet communications protocol launched by leading US card companies and the credit reference network already operated by NTT Data. A prototype of the new system is expected by the middle of the year.

RDB package sales soar
Sales of relational database packages that run on Windows NT servers are soaring. According to a survey by magazine publisher Nikkei BP, sales of NT-compatible databases, driven by rapid growth in the PC server sector, may even surpass Unix versions. The study estimates that Oracle Japan and Microsoft KK are each selling more than 2,000 units of their NT server databases each month. The study predicts that Microsoft will ship 33,000 units of its SQL Server packages in FY1996, up from 22,000 units in FY1995, while Oracle Japan will sell 30,000 units, up from 21,000.

INTERNATIONAL NEWS

NEC sets up SI unit in China
NEC has set up a wholly-owned systems integration subsidiary in China. Capitalized at JPY200 million, NEC Systems Integration will have its main office in Beijing. Branch offices eventually will be set up in Shanghai, Guangzhou, Xi'an, and other major cities in an effort to capture a substantial share of what is expected to be a fast-growing market. The operation started with 40 employees, and sales are projected to reach JPY10 billion by 2000.

Japanese developers look to US CD-ROM market
Against the backdrop of sluggish sales in the Japanese market, major players such as NEC and Fujitsu are moving to develop and sell CD-ROMs in the US. Observers estimate the Japanese CD-ROM market to be worth about JPY60 billion annually, less than one-twentieth the size of the US market. With the exception of the business and adult entertainment segments, growth of the Japanese CD-ROM market is stagnant. NEC content production subsidiary NEC Interchannel, therefore, has established an office in California that will sell English versions of animation CD-ROMs, perform market research, and try to acquire rights to content and leading-edge technologies. Fujitsu and Columbia Japan also have started releasing new English language titles in the US.

Japanese software to sell in US
Chiba-based Caien System Development will, from early 1997, sell its relational database search software in the US. The company has received inquiries from the US affiliates of several Japanese companies about SQL Maker, which supports database searches from menus in Microsoft Excel. The product, said to be over 20 times faster than competing products in Japan, supports Unix, Windows NT, and NetWare. Since its release in Japan in 1994, the product has sold about 3,000 copies. With the release of an English-language version, SQL Maker is expected to be one of the few examples of Japanese business software so far to be successful overseas.

TELECOM TOPICS

Online users top 5.7 million
The number of commercial online service users in Japan grew by more than two million from summer 1995 to summer 1996, reaching 5.73 million users by the end of June 1996. Women accounted for about 13% of commercial online service subscribers. According to a study released in autumn 1996 by the New Media Development Association, there were 2,741 online services in Japan. NIFTY-Serve, cosponsored by Fujitsu and Nissho Iwai, and NEC's PC-VAN topped the list with 1.83 million and 1.77 million subscribers, respectively. The four largest services dominate the market, having more than 75% of all users. Analysts expected skyrocketing Internet usage to slow the growth of commercial online services, but in fact the two sectors have created a synergistic growth effect.

Promoting CTI
In October, NTT and eight other firms (including NEC, Fujitsu, Microsoft, and Novell) launched the Computer Telephony Forum of Japan (CTFJ). The purpose of this new industry organization is to promote computer telephony integration (CTI), which involves connecting a computer to a telephone switch and having the computer route incoming calls through a network. Currently CTI is widely used in mail order call centers and other specialty applications. The new CTFJ group will promote the use of CTI to integrate PBXs (private branch exchanges) and LANs (local area networks), but also hopes to take the technology a step further by integrating multimedia applications.

Mobile phone subscriptions hit 20 million
The number of mobile phone users in Japan broke the 20 million mark in October 1996. Mobile phone handsets in use as of October 31 included 16.1 million cellular phones and 4.3 million PHS handsets. The number of cellular phone and PHS subscriptions signed in October 1996 totaled 854,000 and 363,000, respectively. Total mobile phone subscribers surpassed the 10 million mark only in February 1996, meaning the number of subscriptions doubled in eight months. NTT DoCoMo and other mobile communications carriers are boosting capital spending, and investment by Japanese companies in mobile phone operations has outstripped automotive and railway spending. The cellular/PHS business is increasingly becoming the a driver of private sector outlays, say industry analysts.

ODN reliant on OCN
Japan Telecom has decided to lease Open Computer Network (OCN) routers from NTT for use in its Open Data Network (ODN). Although ODN is being set up as a direct competitor to NTT's OCN, Japan Telecom will use its rival's network to provide access lines. Japan Telecom faces the same problem with its data network as it does in voice communications: it must rely on NTT's local facilities for callers to access its network. ODN is expected to start in April 1997.

IN 50 WORDS OR LESS

NEC and Mitsui & Co. have jointly won an order for a PHS infrastructure from Thai carrier Telecom Asia. The companies will supply the Thai carrier with equipment capable of accommodating 1 million subscribers.

Nippon Motorola will make a major push into the SOHO (small office/home office) market for network equipment, and intends to develop sales via volume retailers in addition to its conventional routes.

NTT plans, by 2005, to develop a multimedia network that will offer 10M-bps service atJPY10,000 per month. The company intends to invest JPY80 billion annually in development between 1996 and 2005.