JIN-134 -- Trends Besides Wireless

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J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the week's business and technology news
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Issue No. 134
Wednesday, May 30, 2001
Tokyo

CONTENTS

+++ Viewpoint: Trends Besides Wireless
+++ Noteworthy news
- DSL Net provider Tokyo Metallic in trouble
- More details on L-Mode released
+++ Worth a read

+++ Viewpoint

(This one is a bit long. Apologies. Please spare your eyes and
print it!)

Trends Besides Wireless

J@pan Inc, being a magazine about innovation and business in the
high-tech arena, has been focusing on i-mode and the browser phone,
which have drawn global attention. But eventually -- not any time
soon, but eventually -- 3G, 4G, and the wireless Web will be no more
remarkable than the TV and email are today. So what's next? Let's do
some sloppy brainstorming ...

** Home robots
** Telematics
** L-Mode
** Japan as test bed
** Post-PC world = consumer electronics = Japan's strength??
** Japanese design sense becomes more evident in tech products

HOME ROBOTS
Home robots sound a bit sci-fi, but consider the startup Tmsuk,
based in Kitakyushu in Fukuoka prefecture. Its goal is to offer
Japan's graying population a home robot that can be controlled
remotely. Relatives and nurses could thus care for the elderly from
a distance, through a robot. If you can forgive the spotty English
and scratchy illustrations, the essay the company wrote on its site
at http://www.tmsuk.co.jp/e/eindex.html (click "About Robot Industry")
is actually rather profound. Is it too early to take home robots
seriously? Probably, but Sony is doing well with Aibo, and Tmsuk is
backed by global VC Defta Partners (http://www.defta-partners.com/
portfolio5.html). For more on robots, see the piece we ran in our
February issue:
http://www.japaninc.net/mag/comp/2001/02/feb01_filter_aibo.html

TELEMATICS
This sector is already booming in Japan, which is the world leader
in consumer GPS automobile navigation systems (it's common to see
TV, DVD, and cellphone-based Net connectivity in cars here) and has
the most sophisticated telematics applications. Oddly, the fact that
most streets in Japan aren't named will likely lead to superior
offerings and unexpected innovations. Necessity is the mother of
invention, and thanks to a screwy addressing system Japan has
navigation needs that other markets don't. (The typical visitor is
surprised by all the unnamed streets but then figures that the
Japanese must have a system worked out. They don't. Or rather, they
do, but it's terrible. Getting lost and making a few calls is par
for course.)

L-MODE
See JIN No. 130. We think this will be big (could be wrong, of
course). It starts at the end of June, and there are now about 200
companies supplying content. One thing we didn't mention in No. 130
is that customers of Asahi Bank and a few others will be able to
check their bank balances and transfer funds using the system. (See
Noteworthy News, below.)

JAPAN AS TEST BED
One trend that **could** be emerging: Foreign IT players first
entering the Japanese market in hopes that it will be easier to go
global from there. And why not? The formula seems to work for
Japanese companies. Intel challenger Transmeta, from the US, is
employing this strategy and has all the Japanese laptop makers lined
up (though the firm is struggling, it should be noted -- see Worth a
Read, below).

** POST-PC WORLD = CONSUMER ELECTRONICS = JAPAN'S STRENGTH??
If it's true that we're entering the post-PC era and that portable
information devices will replace deskbound PCs, that sounds less
like the PC industry and more like consumer electronics -- Japan's
strength. Replace the desktop with a laptop, the fixed-line
phone with the keitai, the PC calendar software with the dynamically
updated wireless PDA organizer. Big office devices with small
personal devices. The LAN with the PAN (personal area network). To
take advantage of this shift, though, Japan's consumer electronics
giants face challenges beyond exporting battery-operated Walkmans.
They've also got to deal with software, the integration of software,
and complex (and varying) international communications standards.
It's not a given that they can clear these hurdles ...

** JAPANESE DESIGN SENSE BECOMES MORE EVIDENT IN TECH PRODUCTS
In all cases of technological innovation -- whether it originated
here or elsewhere -- Japan will put its "stamp" upon each new
concept. That stamp can be summed up in two words: 1. mottainai, and
2. simplicity.

"Mottainai" means, loosely, "it's a shame when you waste something."
When Japanese see the size of the servings at US restaurants, they
often exclaim, "Mottainai!" By which they mean it's a shame they're
being served more food than they could possibly eat. (The doggie bag
is an alien concept.) Never mind that it's no skin off their backs
that food is being wasted, they just hate that anything is wasted,
period. This sense of "mottainai" -- centuries old -- leads to
objects and devices in Japan being fitted together in intricate and
complex ways, so as to save the most precious resource of all in
Japan: space. Mottainai helps explain the country's "converged
appliance" phenomenon, wherein more and more functions are crammed
into single consumer electronics devices. (See "Convergence
Emergence" in our June issue.)

Japan's sense of simplicity in design is well known. In technology
devices, it leads to clean, user-friendly interfaces. Whereas
converged appliances in the West are often seen as "geeky" because
they're too disorganized for anyone but geeks to bother with, in
Japan such devices are simple enough for easily bored teenage girls
to enjoy.

Mottainai and simplicity are not new, but integral to a culture
that's been evolving for thousands of years. When a new technology
comes along -- the car, the TV, the browser phone, the home robot --
Japan applies these design sensibilities to it.

There are more trends, but we'll explore them further and in much
more detail in a future issue of the magazine. Whether a particular
Japanese tech trend is relevant to the rest of the world will have
to be decided case by case.

-- Steve Mollman

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+++ NOTEWORTHY NEWS
(Long URLs may break across two lines.)

** DSL Net provider Tokyo Metallic in trouble

EXCERPT: DSL Net provider Tokyo Metallic Communications is facing
money woes so severe that it may have to be put up for sale. Tokyo
Metallic said in a release Tuesday that it plans to raise funds by
issuing new shares to third parties. Negotiations with potential
buyers are now under way. Losses at the company total 150 million
yen a month, while its debts have hit 4 billion yen. But there is
still hope for Tokyo Metallic, according to Tuesday's press release.
Monthly sales have reached 300 million yen. If that level is
maintained and drastic reform is implemented, the company will be
able to turn an operating profit this autumn, the release said.

COMMENTARY: As reported in our June issue and previous issues of
JIN, we question whether any of Japan's broadband upstarts stand
much of a chance against NTT. (See "Mission Impossible? Do Japan's
Broadband Upstarts Stand a Chance Against NTT?" page 48, June 2001.)
Now it looks like Tokyo Metallic, which played a key role in getting
the government to force NTT to open its boxes, is hurting. We knew
trouble was in the air when NTT responded to the DSL threat by
simply offering similar services on its own. The problem with DSL
service providers is that they must go through NTT's infrastructure.
This allows NTT to create administrative hassles (sometimes by
simply acting slowly to address issues) and profit from their
competitors. Even if Tokyo Metallic were to join forces with the
other big DSL upstart, eAccess, their combined forces probably still
wouldn't scare NTT. (Though note that eAccess seems to be growing
rapidly, whereas Tokyo Metallic's growth appeared to level off last
month.) And, as we observed last week, the size of Japan's new DSL
market, while growing rapidly, is still extremely small.

SOURCE: "Pioneering Tokyo Metallic in crisis," Asahi, May 30,
http://www.asahi.com/english/asahi/0530/asahi053008.html; "Tokyo
Metallic Struggles With Debt, May Be Looking for a Buyer," News.com,
May 28, http://news.cnet.com/investor/news/newsitem-printer/
0-9900-1021-6069391.html?tag=ni

** More news on L-Mode: pre-paid IC card for payphones, bank account
transfers, terminal for kids, a competing service from Japan Telecom

EXCERPTS: NTT East and NTT West plan to start the L-Mode service
nationwide on June 29. A monthly fee of 300 yen will be charged to
use the L-mode service, in addition to a phone charge to the L-mode
access point. Approximately 200 official content providers have
signed up. NTT will also offer a 500-yen user-ID IC card for
L-mode-compliant public telephones. By inserting the card into the
phone's reader, the user will be able to access the Net through
L-Mode. Also, Asahi Bank and two other major banks announced that
their customers will be able to use L-Mode to check balances and
make money transfers. Meanwhile, toymaker Bandai plans to market in
October an L-Mode network terminal targeted primarily at girls
around 11 to 13. Finally, Japan Telecom plans to launch "J-Web by
ODN," a competing and very similar service, on July 13.

COMMENTARY: This is starting to feel like the early days of i-mode,
with big-name content providers and hardware makers jumping at the
chance to be involved. And as with i-mode, a huge draw is that NTT
name. It's hard to see how this service will appeal to the Net
keitai generation as much as i-mode did, but it could be big among
the more home-bound age groups, such as pre-teens and retirees.
(That's no small market, and even "kogaru" stay home sometimes.) See
JIN No. 130 and the above Viewpoint for more on L-Mode.

SOURCES: "Japan's Bandai To Market Kids' L-Mode Net Terminal In
Oct," May 24, http://sg.biz.yahoo.com/010524/15/pyev.html; "NTT to
Start L-Mode Service, Accessible from Public Phones Using Special
Card," May 30, AsiaBizTech, http://www.nikkeibp.asiabiztech.com/
wcs/leaf?CID=onair/asabt/news/131491; "Japan Telecom to Launch Net
Service for Fixed-Line Phones, Challenging NTT," Nikkei Computer,
5/25, http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=onair/
asabt/news/131216.

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+++ WORTH A READ

Nice piece on the Crusoe chip entering Japan. Takes a realistic look
at Transmeta's strengths and, more important, weaknesses.

"Crusoe Chip Stages Good Start but Experiences Some Challenges,"
AsiaBizTech, May 28, http://www.nikkeibp.asiabiztech.com/wcs/
leaf?CID=onair/asabt/fw/131293

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STAFF
Written by Steve Mollman (steve@japaninc.net)
Assistance with news compilation:
Richard Ochero (richard@japaninc.com)

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