JIN-195 -- Remote Mail Venture Remains Robust; IPO Scheduled in September

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

Issue No. 195
Wednesday, September 4, 2002


++ Viewpoint: Remote Mail Venture Remains Robust; IPO Scheduled in September

++ Noteworthy News
- Aozora Bank To Start Buyout Fund
- Amazon.co.jp Launches "Shop in English"
- MOF to Issue 300 Billion Yen in Government Bonds for Individuals

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Email: Finney@nihonpac.com

++ Viewpoint: Remote Mail Venture Remains Robust; IPO Scheduled for

"Web users ultimately want to get at data quickly and easily. They
don't care as much about attractive sites and pretty design," a
novel-winning scientist and the father of the World Wide Web, Tim
Berners-Lee once said.

Tokyo-based venture Net Village's services are by no means fancy; they
allow users quick access to their email messages anywhere they go. The
company's "remote mail" service allows a user to access messages sent
to almost any account via any Web-enabled keitai.

The company has 330,000 subscribers; most are heavy email users in
their late 20s and early 30s. Despite the planned withdrawal of Nasdaq
US from Japan, some companies --like Net Village -- are going ahead
with plans to go public on Nasdaq Japan. Net Village's IPO is
scheduled for September 19th.

But why IPO now? CFO Hiroyuki Miura says: "The amount we are scheduled
to offer isn't much; basically we've raised enough through third-party
allocations. IPO is more for our credibility."

Credibility aside, for a small company with only 27 staff, Net Village
is doing well. While other venture firms continue to suffer from the
economic downturn, Net Village became profitable in fiscal 2002 --
the first time since its establishment in 1998, posting a 185 million
yen profit.

While the company depends on the remote mail service for about
two-thirds of its revenue, the service costs only 200 yen per month.
Unlike regular keitai email offered by wireless Internet provider
portals, like NTT DoCoMo's i-mode, NV's remote mail -- based on Java
technology -- allows users to receive messages of unlimited length; it
can also transfer messages to a fax or print them at a convenience
store printer terminal.

If remote mail subscribers use an email account provided by the
company, the service allows the user to send and receive ecards
including music or images. NTT DoCoMo 504i-series Java handset users
can also save packet data transmission fees, since remote mail
compresses messages by up to 90 percent.

Miura downplays the belief that the mobile market has been saturated.
"The mobile market is entering the age of maturity, and re-streamlining
of the industry is inevitable; there will be winners and losers. But,
as prices go down, there will be more corporate demand." The company's
game plan is to grab that market.

Net Village is also eyeing the development of new keitai technologies.
According to Miura, services will soon allow cellphone waiting screens
to have portal-like functions. DoCoMo's 504i-series handsets, released
in May 2002, featured an increased Java application download size
("i-Appli" Java application download limits were boosted from 10KB to
30KB). "There will be more things one can do with i-Appli, such as run
email and games on one screen," says Miura. Net Village already offers
some keitai game software and the company may soon incorporate its
email service into games.

The question of how Net Village will combine the simplicity of its
remote mail service with other services is yet to be answered, but for
now the 200-yen monthly fee is a great deal for heavy email users.

-- Sumie Kawakami& Daniel Scuka

Net Village Home Page

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** Aozora Bank to Start Buyout Fund

In Brief: Aozora Bank, formerly Nihon Credit Bank, which was bought by
Softbank, will join Itochu and and Deloitte Tohmatsu Consulting in
launching a buyout fund specializing in information systems, according
to Nikkei Sangyo Shimbun. The three companies will start the fund with
3 billion yen but plan to increase it to about 10 billion yen.

The three companies expect strong demand as medium to large
corporations are likely to sell off their information system
businesses as a result of restructuring, the newspaper says.

Commentary: Buyouts are no longer a novelty in Japan, but a fund
specializing in a particular industry is quite new here. This may be
the last ditch effort for Softbank's CEO Masayoshi Son, who has been
trying to sell Aozora Bank's shares in order to improve Softbank's
balance sheet. Son in July criticized the government for pressuring
him on the sale of Aozora Bank shares. Softbank owns about 50 percent
of Aozora Bank, which it bought from the government when the bank was
nationalized due to insolvency.

Nikkei Sangyo Shimbun (September 3, 2002)

"Softbank CEO Son Says Government Pressuring Him to Keep Aozora Bank
Shares in the Family," news item from September 2002 issue
(password protected)

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** Amazon.co.jp Launches "Shop in English"

In Brief: Japan's largest online bookstore Amazon.co.jp on Monday
opened a "Shop in English" page that allows users to browse and order
in English. The page allows the user to browse 2 million English
titles, ranging from art to nonfiction.

Commentary: Amazon.com in the US expects to be profitable in the next
quarter. There have also been reports that the company is in talks
with German media giant Bertelsmann on the sale of Bertelsmann's
online bookstore BOL.com. But Amazon Japan is still struggling. It
is the largest online bookstore in Japan with 800,000 subscribers, but
because of low margins in the bookselling business, the company isn't
expected to go profitable until 2004, news reports say. According to
Shuppan Kagaku Kenkyujo, which researches the publishing industry,
Japan's market for online bookselling was 140 billion yen in 2001,
almost double from a year earlier. Yet it only occupies 1.4 percent of
the total book market -- a small piece of a very large pie.


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** MOF to Issue 300 Billion Yen in Government Bonds for Individuals

In Brief: The Finance Ministry says it will issue about 300 billion
yen in Japanese government bonds (JGBs) for individual buyers in
February or March of 2003. Reuters reported that officials didn't
confirm any other details of the bond issuance but government
officials have mentioned in the past that interest earned on the bonds
may be tax free.

Commentary: By now most of you have checked out Norika Fujiwara in
posters around town as she gazes up into the sky and ponders a
purchase of JGBs. The government hopes you'll be imitating her come
next year when it pushes government bonds on the masses. But is this
what Japan needs? Hardly. Some economists argue that Japan's
government debt is not a big deal because it is debt owed to its own
people, not foreign powers. And that's true if you're the government.
But for the average Japanese person, it is just another sign that
their government is bankrupt of ideas and is just planning to do more
of the same.

From Reuters via Yahoo!

"Economic Bondage" from the August 2002 issue (password protected)

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Written and edited by J@pan Inc staff (editors@japaninc.com)


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