Toru Arakawa

CEO, Access

Access, now known as the company that developed the Web browser for i-mode phones, was out there before all the Bit Valley Net ventures arrived with the Internet boom. The company began in 1979, when a 19-year-old university student named Toru Arakawa started his business as a software developer. Joined by Tomihisa Kamada, he formed Access Co. in 1984. The company shifted its target from system software to network software, and then moved on to embedded software for home appliances -- all of which turned out to be good moves for them. Kyoko Fujimoto asked CEO Arakawa to tell us the whole story.

What was the original concept for the company?
I realized the software companies in Japan were all developing application software, and no company was developing system software. All the system software was imported from the US, and I thought it wasn't a bad idea to establish the only system software company in Japan. That's how I started the company.

What made you shift your target to network software?
At first we were quite successful as a student startup, but if we think about being the de facto standard, our success was a small thing. We tried to compete with MS-DOS, which was a single-task system, and thought of a multiple-task operating system. Many manufacturers were interested in our product and financially supported us in developing the system. But even though they thought our system was a good one, they were hesitant when it came to using it because it wasn't the standard per se. Many said they would use it if IBM America was using it, and we realized it wasn't the quality of the product that mattered -- it needed to be the industry standard in order to persuade people.

The PC was born out of American culture, and we thought making a Japanese standard for a product from the US wasn't a smart idea. Then we thought there would be an era of the network soon, and targeted network software. We were right. In the late 80s, many LAN vendors came out, and most of them were using our network software. We only had about 20 to 30 people in the company, but our sales reached several hundred million yen. It was a big success.

If you were so successful, why did you change your target again?
Well, when Microsoft released Windows, they loaded the network function within the OS. Everybody uses Microsoft's OS, so it means everyone can get network software for free. We knew we couldn't fight something free, and decided to target home appliances instead of the PC. We had already been developing embedded software for products other than the PC, but it only accounted for about 10 to 20 percent of our sales. It was a big decision, but we decided to make it 80 percent.

And Nikkei Newspaper in late 1995 introduced Access as the company that would make Internet TV a reality.
Yes. Actually from the early 90s we were already thinking of TV or other home appliances that could have network functions, but there was no consumer need for that at the time. But when we saw the browser for academic search, we thought that could get into the home appliance area. We made the prototype for the Internet TV in 1994, and when we were about to test it, there came the Internet boom. Suddenly we were asked to make the prototype into the real product.

So what's your main business now?
Embedded software called NetFront is our main product now. For cell phones, we have Compact NetFront. When we thought about this product, the industry was only thinking about expanding software functions. But that requires huge memory in hardware. Non-PC appliances have limited resources, and the software to be embedded needs to work with one-tenth of the specs PCs have. NetFront was developed to meet this criterion. For cell phones, it has to work with one-hundredth of the specs of PCs. So we developed Compact NetFront. Now NetFront is used in about 80 percent of home appliances, such as word processors, game machines, and others. For i-mode cell phones, three out of four makers are using ours.

We also thought it was important to have the standard subset for home appliances, so we developed compact HTML in association with five other manufacturers, and proposed it to the W3C. It was the first proposal made to the W3C from Japan.

What do you think about compact HTML being an open source technology? Didn't you want to keep it closed?
We wanted to spread out the standard. And open source technology means it is not a new technology anymore. That's why we made it open source. When others try to catch up with our technology, we already have the newer technology. You can't be cutting edge if you are just trying to imitate others.

You've received billions of yen in investments. How did you use it, or how are you planning to use the rest?
The first billion was used for research and development. We received another investment of ¥3 billion in January, and that will be used for expanding the office. There are many inquiries from overseas, and we are thinking of doing business with overseas companies. As a start, we set up a US office in California last summer. We would like to have offices in Europe and other Asian countries as well.

What's your take on the venture boom and Bit Valley these days?
I think it is good that many young people have the entrepreneurial spirit. The situation and the environment for entrepreneurs in Japan are much better than the old days, and people have better chances to succeed. But what seems to be a good idea now may turn out not to be. And I see some people that are only looking at immediate profit. We shouldn't be brainwashed by this Net venture boom.