A Japanese Internet Prognosis

by Forest Linton

Yes, the Japanese Internet is alive and kicking. I'll devote this month's column to giving you a sampling of what's been happening recently.

The Net in times of crisis
The Internet has always demonstrated its power in times of crisis. Many times when traditional media fail to deliver, regular folks connected to the Internet are able to send out reports and news.

Japan first witnessed this on a large scale during the Kobe earthquake in January 1995. Recently, when the hostage standoff at the Japanese embassy in Peru came to an abrupt end, the Internet was once again the best place to find the most recent news.

Asahi.com says that at the peak of the hostage crisis, hits reached 4 million per day. The daily average was closer to 2 million hits.

AOL Japan launches
After months of anticipation, America Online (AOL) finally launched its Japanese service on April 15, 1997. AOL Japan is a joint venture with AOL USA, Mitsui, and Nikkei. Sources say that since its launch, AOL Japan has been besieged with requests for trial access software CDs and membership sign-ups. AOL Japan faces stiff competition in the online segment with NIFTY-Serve, Biglobe (formerly PC-VAN), and the Microsoft Network. But as the market is still growing rapidly, I am sure there will be room for a young and energetic AOL Japan.

Yahoo Japan site gets big hits
Last quarter, Yahoo turned in a profit and its stock soared. That was exciting news for all Internet start-up stockholders, as it signaled an end to the bleeding red quarterly reports of last year. Or did it?

Although Yahoo's stock jumped 10% on the news of a profit, it turned out that they only made around $200,000 in profit on revenues of a bit over $9 million. One interesting note: The Yahoo Japan site was specifically credited in the Yahoo press release as one of its high-traffic international sites, getting an average of over 1.4 million hits a day.

Japan bandwidth increasing
Although it has been in operation for a while, WIDE's second experimental hub, NSPIXP2, is finally making an impact as Japan's big Internet service providers (ISPs) connect to it via T3 (45MB) and 100MB LAN connections. The major Internet service providers are also upgrading their connections to the US; the following ISPs now have T3s connected to the US Internet: IIJ (3), MSN (2), Biglobe, KDD, AT&T, IDC, and Tokyo Internet.

In addition, two commercial interchange projects are underway. Nippon Internet Exchange, led by KDD with support from NTT, plans major connection points in both Tokyo and Osaka. Media Exchange, run by Tokyo Telecommunications Network with Mitsubishi and Mitsui as major investors, plans a major switch in Tokyo and in various strategic spots across the country.

Japan's current major switches, NSPIXP 1 and 2, have been run by WIDE technically as an experimental research project. WIDE's limited funding has prevented the rapid expansion that true commercial hubs would allow. These two projects are welcome signs of the maturing of Japan's Internet infrastructure.

Seven million users?
Nikkei Market Access (a subsidiary of Nikkei BP) conducted a 5,000-person phone survey between March and April of this year. About 6.6% of the respondents reported using the Web or e-mail, and 3.3% said they used the Web as an information source.

Extrapolating nationwide, that equates to 7 million and 3.5 million users, respectively. I have my doubts about these survey results, though. Obviously, the first thing that comes to mind is the very small sample size. There is certain to be a huge margin of error when extrapolating this to Japan's 126 million population.

But, these doubts aside, it is clear that the Internet is growing quickly. Nikkei's last survey estimated the number of Internet users in Japan at 5 million, and if they used similar techniques for gathering their sample, then the significant growth between the surveys is a telling number in itself.

Mobile phones hit new high
The May 1997 total of 28 million mobile phone users breaks down to roughly 21.5 million cellular users and 6.5 million PHS (personal handyphone system) users. Growth rates are tremendous, and have more than doubled for cellular and tripled for PHS subscriptions compared with last year. In addition, I believe that the newly announced PHS data service will really jumpstart wireless computing and Internet access.

New Nihon RSA new investors
Nihon RSA is a subsidiary of RSA Data Security that is owned by Security Dynamics Technologies, Inc. Nihon RSA's original investors (NTT Electronics Corp., NEC, Sony, and Nichimen Corp.) have been joined by six new investors: Shar, Mitsubishi Materials, Sumitomo Bank, Sanwa Bank, Orix Corp., and Nippon Investment and Finance.

Some of the items in this article were originally reported by Newsbytes Pacifica (http://www.nb-pacifica.com/).

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