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December 1999 Volume 6 no.12

Fujitsu goes ASP
The Japanese giants slowly wake up to the Net

by Hugh Ashton


Although the electronics giant Fujitsu is altering direction, to a more software- and Internet-based strategy, the general public may not be aware of this change. The problem may actually be that Fujitsu has been too successful in the past, selling its hugely popular line of computers. As a result, the company is not typically identified with software, even though it has sold software in the past--usually bundled with mainframe computers. In short, software sales on their own have not formed a large part of the public perception of Fujitsu, especially overseas.

This is just one of the tasks facing Ryuzo Miyahara, the new president of Fsol ( His task is further complicated by the fact that the composite entity that we know as Fujitsu is essentially a large group of companies, each with its own identity, often sharing the same turf (both geographically and in terms of vertical markets) for the same stakes.

The new Fsol
Fsol was formed as the result of a merger between four companies, all in the Kanto area (the prefectures surrounding and including Tokyo). Fujitsu also operates software houses in other areas of Japan. However, since programming talent in Japan naturally gravitates to the Tokyo region, Fsol--with nearly 2,000 employees--possesses more expertise, both in terms of quality and quantity, than any other regional software effort. As a result of the merger, Fsol has inherited a number of software lines, each applied to a specific market. Although Miyahara is well aware of the vertical and geographical boundaries between the different areas of Fujitsu operations, Fujitsu is a very free and easy company in which to operate a subsidiary. The key concept for the company, then, is to cooperate, rather than to compete, with the sales forces of other Fujitsu group companies.

Among its offerings, Fsol offers the cryptically - named ISS - SV / SC, a retail package designed to help managers of shopping centers offer turnkey services to their tenants. However, the main focus of today's software efforts within Fsol is on the Internet, echoing the driving principle of Naoyuki Akikusa, the Fujitsu president, "everything on the Internet." As a result, the Fsol offerings include a range of Web-based products, all designed to help their customers achieve effective business-to-business as well as business-to-customer e-commerce solutions. Included in this strategy is the business of being an application service provider, where an Fsol solution can live on a central server, and be accessed through the Internet.

Japanese companies traditionally provide "one-stop shopping," and here Fsol is no exception, with the range of services running from providing a Web server hosting service, through to sophisticated custom solutions. However, Fsol has another key card to play, which is not as readily available to its competitors. Within the Fujitsu group is the recently-christened @Nifty (ex-NiftyServe)--one of Japan's largest ISPs, with over 3.5 million users connected to the Internet, and this provides any Fujitsu group company (all aiming to help customers to achieve B2B on the Internet) with an almost captive market, provided by a portal service on @Nifty. The number of subscribers to the service is still increasing and some estimates place total users at 10 million in the next 12 months, providing any company wishing to start an e-commerce business in Japan with a very large, ready-focused audience within a very short space of time.

But why has Japan, with its large and well-educated population, been so slow, compared with North America and Europe, to embrace the possibilities of the Net?

Miyahara regards the current era as a time in which dramatic changes will occur. He takes a cyclical view of history, in which three sets of conditions predominate. Typically, these cycles repeat at three-hundred year intervals, but in the last few hundred years, these cycles have sped up dramatically (this seems to be the case in any cyclical view of history).

The first of these periods, into which we are now moving and which last occurred immediately following the Second World War, is the age of expansion and entrepreneurs. Immediately following the Second World War, companies such as Matsushita and Sony had their beginnings, fueled by the energy and initiative of individuals who worked hard to build up Japan from the ashes (literally). Miyahara likes to refer to this as the age of the Samurai, or to the age of the settler in the pioneer Wild West. In fact, Mr. Miyahara is a great fan of Western films and enjoys vivid similes such as these, referring often to the "pioneer spirit" which was present at that time, and is rapidly becoming more apparent in today's new economy.

The next age is that of the bureaucracy--and this is the age in which Japan grew and became a leading economic power. This, however, was gained at the expense of initiative and individuality. It was a time in which many managers in large corporations and enterprises gained promotion, not through any exercise of their merits, but through seniority and length of service. As a result, when the bubble economy burst, there were many managers in positions of so-called responsibility who were unable to react to events, never having had to make a significant decision in the whole of their careers. Miyahara is scornful of the bureaucrats in Kasumigaseki. Noting that the United States especially is far ahead of Japan when it comes to software development (except in one noteworthy area, that of games), Miyahara asks why this should be so and concludes that games are one area of software where the heavy hand of Japanese bureaucracy has never set foot (my mixed metaphors, not those of Mr. Miyahara).

Japan and e-com
One very important question that is being asked both inside and outside Japan is, "When will the electronic commerce revolution begin in Japan?" Miyahara's answer is an interesting one. He compares Japan to sumo [Japan's national wrestling sport] and the US to boxing. In boxing, when the bell rings to signify the beginning of a round, the fighters come out of their corners, and start fighting immediately. No such strict time keeping exists in sumo--the wrestlers decide for themselves, within certain parameters, when they start fighting, the exact time being determined by the state of readiness of the contestants themselves. In the same way, Japan must make sure that everything is ready before e-commerce becomes a widespread reality in Japan. The banking system, which still retains some procedures that would not be totally unfamiliar to Victoria bankers, must be dragged, kicking and screaming (Miyahara says "uprooted") into the 20th century in order to be ready for the 21st.

Perhaps this rationalization and deregulation inside a major Japanese company, with a new emphasis on software and services, rather than on manufactured goods, signals the start of a new era for Japan. The rigid systems which grew up in the postwar era in larger companies in Japan are now coming to an end, as the world moves toward open systems in which Japan can no longer afford to be isolated, the traditional conservative Japanese corporate structure has to change.


High Ashton is a regular contributor to Computing Japan Online and J@pan Inc. magazine.

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