DOMESTIC ALLIANCES
NTT-AT to invest in Banyan
NTT Advanced Technology has announced plans to invest in Banyan Systems Japan. NTT-AT plans to invest ¥40 million to acquire a 10% share in Banyan Japan and send a director to the company. The NTT subsidiary will introduce network operating system technology and products from Banyan in an attempt to bolster its computer network business through the construction and operation of large-scale LAN (local area network) systems. Plans also call for development of LAN application software and promotion of LAN systems to customers.PHS goes better with Coke
Coca Cola Japan has signed a wide-ranging sales collaboration agreement with NTT Chuo Personal Network. The first move will be the establishment by Tokyo Coca Cola of a retail dealer network to handle new PHS (personal handyphone system) subscriptions and install base station antennas. Other Coca Cola bottlers are expected to follow suit.Tokyo Coca Cola will license retail vendors of its beverages to process PHS subscriptions and will site base stations on its vending machines. It will also help to promote NTT Chuo's PHS service by placing stickers on vending machines indicating they are in a PHS cell. A side benefit for Coca Cola is that it will be able to construct a PHS-based network for management of its vending machine network.
INTERNATIONAL ALLIANCES
NTT moves into China and India
NTT continues its move into continental Asia. In the fall, NTT subsidiary NTT International will establish joint ventures with local firms in Jiangsu and Zhejiang provinces. It is expected that NTT will hold a less-than-50% share of the joint ventures, which will construct and maintain cellular phone base stations for Chinese new common carrier United Communications. China's posts and telecommunications ministry plans to expand the nation's telephone switching capacity from over 60 million circuits in late 1994 to 140 million circuits by 2000.Meanwhile, in India, NTT is teaming up with a local conglomerate to bid for a large telephone network construction project that is to be implemented by the national government. If the bid is successful, NTT and its partner would each invest approximately ¥30 billion to establish a new corporation in India -- which currently has a telephone diffusion rate of only about 0.8%, one of the world's lowest. The Indian government has adopted a policy of opening the nation's communications market to foreign investment in order to energize the economy. NTT plans to pursue similar ventures in Thailand and the Philippines, actions sure to intensify competition with European and US telephone companies also seeking new business in the rapidly growing markets of Asia.
Japan helps the
Philippines go optical
Fujitsu, Tomen, and Fujikura have won an order for a 300,000-line optical
subscriber communications network from International Communications Corp.
(ICC) of Manila. The $81 million project will build the network in the Manila
metropolitan area, where ICC plans to invest almost US$150 million to add
300,000 telephone lines over the next three years. The Philippines plans
to expand the number of subscriber lines from the current 1.3 million to
6.2 million by 1999. DISPLAYS
Displays for editors
NEC has developed an on-screen text editing system that allows character errors and omissions to be corrected by tracing the corrections on the computer screen with a pen. The system comes with a dictionary to help make appropriate corrections. When the correction is made on the LCD screen with a pen, the sentence's entire structure changes. The system also makes it possible to change expressions. NEC's research department is now using the system on a trial basis, and commercialization of the system is expected in the near future.Canon develops
head-mounted display
Canon has developed a color display for movies and games that is worn in
the same way as eyeglasses. The smallest ever head-mount display (HMD) of
its type, it incorporates special lenses and small LCDs (liquid crystal
displays) to magnify images. The device uses separate 0.7-inch, 180,000-pixel
thin-film transistor LCDs in left and right eyes, and supports 3D viewing.
The unit weighs 80 grams and is said to offer a viewing experience similar
to watching a 30-inch television from a distance of 1 meter. In addition
to entertainment use, Canon sees medical and military applications for the
HMD.
Lightening-fast liquid crystal
A research group at the Tokyo Institute of Technology has developed a liquid crystal that responds quickly to light. The new liquid crystal is an organic polymer, called azobenzene dielectric, that is normally transparent, but turns opaque in 200 microseconds when exposed to 360nm ultraviolet light. This is 250 times the response speed of conventional types. It is expected that this characteristic can be exploited to develop an optically driven LCD that is especially suited to the display of animated images.New entry for the plasma market
NEC intends to enter the color plasma display panel (PDP) market. The company established a Color PDP Division Head- quarters in July, and plans to invest ¥5 billion to build a mass production line with a monthly output of 1,000 40-inch units. It will release a 40-inch color PDP, which will be priced at about ¥450,000, as early as the fall of 1996. NEC intends to invest some ¥85 billion in the PDP business over the next five years to boost its output capacity to 150,000 units per month by 2000. By that time, it expects the market will expand to ¥260 billion annually, and NEC is aiming for sales of ¥100 billion. In fiscal 1997, the company hopes to build a new ¥10 billion facility with output capacity of 10,000 units.GOVERNMENT & POLICY
A push for technology
The Telecommunications Technology Council has recommended in a report submitted to the Minister of Posts and Telecommunications that Japan needs to spend ¥1 trillion annually on development of state-of-the-art data communications technology through the turn of the century. The Program for Developing Advanced Data Communications Technologies identifies 293 priority research items covering seven fields, ranging from optical communications to devices; the report focuses on 53 of these items. Citing the fact that Japan's technology trade deficit has reached ¥54 billion, the council says that research spending will have to be quadrupled to ¥1 trillion in the near future. The council also estimates that Japan will need 17,000 additional researchers and engineers for data communications research and development.MITI rules on intellectual
property
In July, the Ministry of International Trade and Industry (MITI) issued
its final report on a two-year study concerning intellectual property right
rules in a "multimedia" society. The ministry adopted the principle
that digitization of an author's work does not constitute additional creative
input, and therefore an author does not need to take additional protective
measures in order to continue to claim authorship rights. The report also
calls for the creation of new rights related to the prevention of unauthorized
network access and unauthorized displays of works. MITI is strongly advocating
the establishment of several digital data centers that would centrally manage
issues relating to author's rights and reduce the need for government involvement
in such matters.
Open circuits requested
for US companies
The US government has asked the Japanese government to guarantee that NTT
will provide interconnections to US carriers operating in Japan. The request
came amid telecommunications sector negotiations now underway at the World
Trade Organization (WTO). The US asserts that interconnections with NTT
are essential for carriers wanting to develop their businesses in Japan.
The current round of discussions is aimed at creating guidelines for deregulation
in the communications services sector (which includes voice telephone communications).
Some observers say the US request is likely to spark newfriction.
THE INTERNET
Virtual city on the
electric frontier
The Internet Project Executive Committee (IPEC), a group whose members include
Tokyo Internet and the Institute for the Arts, has created a virtual city
on the Internet. NetCity began formal operation in late July with approximately
100 manufacturers and service firms seeking to provide everything from mail
order sales to electronic publishing and entertainment services. The new
World Wide Web site will include "residents" such as schools,
shops, and individuals who will be encouraged to provide their own information
within the site. The purpose of the project, according to IPEC, is to seek
out new ways of using the Internet for business.
Phone by Internet
Mitsui Knowledge Industry of Tokyo in mid-July released Internet Phone, a Japanese language version of a software package developed by VocalTec of New Jersey. Internet Phone enables Internet users to hold real-time conversations using their PCs. The software eliminates the cost of a long-distance or international telephone call, with the only costs being those for the local Internet connection at each end. Mitsui plans to use the software to develop related businesses, including a new online service.IBM to push Internet computers
IBM Japan will expand sales of PCs bundled with the communications software necessary for users to subscribe to the People network (which is operated by People World of Tokyo, a firm partly owned by IBM Japan). Now, only IBM Japan's Aptiva and Hitachi's Flora PCs come bundled with the software, but IBM Japan plans to broaden the bundled software system to include Toshiba, Mitsubishi Electric, and Apple computers. People World recently added two 28.8K-bps access points to its service in an attempt to gain ground on market leaders PC-VAN and Nifty-Serve.IIJ upgrades connection
In what has become a industry trend, Internet Initiative Japan (IIJ) has doubled its backbone speed with a new 1.5M-bps leased line between Japan and the US. IIJ's usage has been growing at 20% to 30% per month, and some users had begun complaining of access delays. To counter this, the company has also upgraded its two domestic leased lines (linking Tokyo with Yokohama and Osaka). In a separate move, IIJ has halved its nighttime and holiday access rates (from ¥30 to ¥15 per minute) for individual subscribers.NTT puts Japanese
databases online
NTT has developed WWW Interface Software, a product that enables databases
to be queried online, with results being quickly displayed in graphic format
on a World Wide Web browser. The software allows multiple users to simultaneously
query a database and display the results in different ways on their browsers.
NTT claims the new software greatly eases the labor-intensive task of preparing
database information for presentation on the Web. The product is an expanded
version of the company's VGuide database management software.
Internet-connected condos
Secom, Softbank, and Sumisho Electronics have begun marketing the idea of "multimedia condominiums" to housing developers. The companies want to install leased lines for PC communications in new condos to support cable TV, integrated home management services, and value-added services such as home shopping. The first condo to be developed under the program will be built in Saitama this autumn; each separate unit will be supplied with a multimedia PC housed in a fold-away desk unit. Each of the three partners has a particular interest: Secom's is development of home health management and education systems, Softbank wants to supply application packages, and Sumisho Electronics is interested in overall system design and installation.MULTIMEDIA
NTT Data to test financial services
NTT Data Communications intends to undertake a large-scale multimedia experiment late this year in cooperation with approximately 30 companies, including Tokyo metropolitan area banks and travel agencies. The experiment will use 156M-bps lines provided by NTT to link asynchronous transfer mode (ATM) switches at company headquarters and nine branch offices with experimental LANs set up at participant offices. The experiments will involve "multimedia banking" using IC cards, multimedia shopping, and delivery of newspaper articles and weather reports on demand, among other applications.MITI plans for an aging population
The Institute for Personalized Information Environment, an external affiliate to MITI, plans to develop a multimedia satellite office system targeted at older people. It aims, by 1997, to create a network that supports job hunting, database searches, and research from a PC. The system, which is scheduled for nationwide use in 1998, is intended to create greater flexibility in the job market and expand the opportunities for over-50 white-collar workers to continue working from home or a satellite office. The project is supported by Chambers of Commerce in each area, who will coordinate the job vacancy information. The network will focus on smaller companies that would otherwise lack the resources to operate such a system.Wireless networking
The MPT is launching development of a radio-based "mobile multimedia access" (MMAC) network that it says will feature performance on a par with fiber-optic networks currently being developed. The ministry set up a study group in early July, consisting of representatives from industry, academia, and government, to work on defining the communications format, frequency to be used, and other technical standards. The MPT hopes to develop MMAC into a high-speed communications infrastructure that will enable users to transmit and receive data and full-motion video anytime and anywhere. The network would probably involve installation of radio base stations at airports, post offices, and other public facilities.Can 3DO be saved?
3DO is fighting to expand its base into multimedia as its game system falls to the immense pressure maintained by Sony's Playstation and Sega's Saturn machines. Matsushita Electric will bolster 3DO machine sales by targeting business applications. The company, which had shipped 850,000 Real game machines worldwide as of the end of May, expects those used for business applications will account for 30 to 40% of total units sold. Matsushita intends to promote the Real M2, a 64-bit machine slated for release within the year, as a network terminal.Matsushita Electric has also decided to enter the 3DO software market. The company will establish a software development company with selected Japanese and American firms within the year in order to start developing software for the 64-bit next-generation 3DO game machine. Matsushita hopes to convince other companies to develop 3DO software.
Multimedia industry to get a boost
The MPT has put together a proposal to stimulate the Japanese economy with support for the growing multimedia industry. It will seek a ¥600 billion provision in the government's fiscal 1996 budget for multimedia and data communications. The move is finding support among coalition Diet members; the creation of a special budget provision would mean that the ministry would not have to compete for funds with other agencies. The MPT has concluded that the conventional public works budget is limited in its effectiveness for developing a multimedia infrastructure.Japanese art and culture
on CD-ROM
MITI has recorded ukiyoe painting and woodblock prints, antique books, magazines,
comics, and other graphic-intensive national treasures on 2,500 CD-ROM disks
as part of an electronic library project. The ministry will allow experimental
access to the data starting in September, and from November it plans to
allow experimental network access. Amid growing publishing industry interest
in electronic books, MITI's experiment seems likely to draw attention to
the potential for commercial applications. NETWORKING
Localizing LAN wiring
Hitachi Cable, in collaboration with AT&T Bell Laboratories, has developed a new integrated wiring system for Japanese offices. The Systimax-IBCS combines the Japanese maker's zone wiring system with the US telecom giant's Systimax-PDS individual wiring system to achieve greater flexibility. The new system, which allows mixed use of individual and zone wiring, supports high-speed LANs, including 100M-bps Ethernet and 155M-bps ATM (asynchronous transfer mode) networks.New voicemail entrant
Tokyo-based LAN system seller Netway was to release a low-priced, PC-based voicemail system in August. The system, which can be connected to the Internet for voice communications with overseas sources, costs less than half the price of larger systems that make use of PBXs, according to Netway. The system uses a PC LAN and New Jersey-based VocalTec's VocalChat voice mail software. Netway hopes to sell 50 systems per month, primarily to mid-sized offices.NEC releases middleware
NEC has begun releasing a new series of middleware products, including its SQL Base multimedia database software for client/server environments and 17 network environment packages designed for its PC-9800 series computers. Software designed to boost client/server system performance includes SQL Base Server 5.2J (middleware developed by Gupta Japan), SQL Windows 5.0J (an application development tool with a graphical user interface), and Quest 3.0J (a database access package for clients).OVERSEAS PRODUCTION
Japan's manufacturers
continue to emigrate
Japanese chip makers are expanding their overseas procurement. With the
exchange rate pegged at below 90-yen to the dollar, Japanese firms are more
aggressively taking advantage of the strong yen. Mitsubishi Electric, for
example, will buy 8-inch silicon wafers from Walker Siltronic of Germany.
Mitsubishi, which is constructing a wafer processing plant in Germany, plans
to launch 16M-bit DRAM production there from early 1997. This autumn, Fujitsu will start procuring from Airtron of the US 10% of the 3,000 4-inch GaAs (gallium arsenide) wafers its IC production subsidiary Fujitsu Quantum Devices uses monthly. The US wafers are now about 30% cheaper than Japan-made ones. Toshiba, meanwhile, will increase imports of lead frames, IC package resin, and production equipment supplies from Japanese-affiliated firms in Southeast Asia, intending to raise overseas procurements from about 4% in fiscal 1994 to 10% in fiscal 1995.
Oki Electric will double the semiconductor assembly capacity of its US subsidiary, Oki Semiconductor of America, from the current 1 million units per month to 2 million. The decision on a ¥2 to ¥3 billion investment in production increase was based on the fact that the capacity of Oki's Thai plant cannot be readily expanded, and on projections that the greatest demand for 16M-bit DRAMs will come from the US.
NEC plans to procure 100% of hard disk drive (HDD) components from overseas suppliers in fiscal 1995, up from 50% the previous year. NEC Ibaraki produces 500,000 HDDs annually, and NEC Technologies Hong Kong commissions the same number of HDDs to a Filipino maker. Plans call for expanding overseas production to 1.5 million units to increase total annual output to 2 million units by the end of this fiscal year.
PERSONAL COMPUTERS
NEC ties with Packard Bell
NEC reached basic agreement with Packard Bell of California to acquire 19.99% of the US's No. 1 PC maker for $170 million in August, when Packard Bell issued new stocks. Bull of France, in which NEC has a 17% stake, already owns 19.99% of Packard Bell. NEC and Packard Bell had agreed that NEC will increase parts supply to the US company. The companies have also started mutual procurement of parts and are engaging in joint production to reduce costs. Together, they hope to cooperatively develop multimedia terminals and PCs, create multimedia standards, and cooperate in marketing and sales. NEC and Packard Bell will ship a combined total of 7.3 million PCs worldwide in 1995.JPCSA announces
1994 software sales
PC software sales increased 19.5%, to ¥167.3 billion, in fiscal 1994 -- this according to the Japan Personal Computer Software Association, which surveyed 248 member firms. Of total sales, package software sales expanded 22.4%, to ¥134.5 billion. Package software shipments soared 61.3% in volume, but sales rose only 22.4% because of an average 24% decline in package price. CD-ROM software sales by 49 firms reached 908,200 copies and ¥10.2 billion. One indication of market trend is that of 194 firms that do not now carry CD-ROM products, 129 plan to release their first CD-ROM product within the next two years.
Microsoft and Oracle
do well in Japan
Microsoft Japan reported a 44% boost in sales, to ¥42 billion, for
the year to June 1995, while Oracle Japan anticipates a 60% jump, to ¥27.5
billion, in the year to May 1996. With domestic PC shipments now passing
the 3-million per year mark, the two US subsidiaries are expanding sales
of software to business users. Microsoft has benefited particularly from
the popularity of Windows, while Oracle has captured the market for relational
database software. Both companies expect to sustain similar rates of growth
next year and are expanding their staffing levels: Microsoft from 600 to
700 people, and Oracle from 600 to 800.
Apple extends
distributor network
Apple Japan has started expanding its software distribution network, signing
authorized dealer agreements with leading software distributors Softbank
and Catena. Apple currently sells software through approximately 3,000 retailers
that already handle Macintosh computers and peripherals, but it plans to
add 3,000 outlets through the new deals with the software distributors.
Apple Japan will also step up sales of software through Computer Wave, one
of its leading distributors. Through these moves, Apple hopes to counter
the growing popularity of Windows in Japan, though some distributors worry
that the expansion means a shrinking share of the Mac market for themselves.
Gateway 2000 mooooo-ves
into Japan
Gateway 2000 has established a Japan subsidiary. Capitalized at ¥100
million and headquartered in Yokohama, Gateway 2000 Japan will start operations
in October and initially employ 170 people. The subsidiary of the No. 5
US PC maker will focus on mail order sales of its Pentium-based PCs, and
is aiming for annual sales of $90 million within a few years. Gateway 2000
will initially supply units made in Ireland, but is considering production
in Asia. SEMICONDUCTORS
Japan investment edges up
Eleven leading Japanese chip makers are likely to invest a total of some ¥900 billion in fiscal 1995, up from an investment of about ¥750 billion last fiscal year. A large portion of the investment will go to 16/64M-bit DRAM production expansion. Several makers will also start producing 0.35-micron-feature microprocessors and install more ASIC production lines in order to respond to the growing ASIC market, where supply remains tight.This comes as microprocessor prices continue to fall amidst a glut of cloning. With Advanced Micro Devices, Cyrix, and Texas Instruments offering low-priced MPUs compatible with the Intel DX Series, and a growing number of Japanese PC makers adopting compatible MPUs for their entry-level PCs, leader Intel's share is being eroded. Prices of 100-MHz i486DX4-compatible chips average about ¥10,000, nearly half the price of the Intel chip. Compatible MPU prices are expected to decline another 20% by year end.
The supply of other semiconductors remains tight, however. Major chip makers are said to be able to satisfy only 80% to 85% of demand for 4/16M-bit DRAMs from hardware makers. One reason the supply of memory chips remains so tight is that Pentium-based PCs and sophisticated operating systems consume a large amount of memory. An increase in sales of peripheral devices, mobile communications equipment, and game machines is also contributing to the memory shortage. The supply of logic chips satisfied only 75% of demand in June, down from 90% last December, while the supply of microprocessors met only 80% of demand in June, down from 90% last December.
SOFTWARE
First-quarter US software sales highest ever in Japan
Sales of US software in Japan totaled $160 million between January and March 1995, the highest quarterly level ever. In volume terms, software sales more than doubled; in value terms, though, growth was only 38% because of falling prices. The strong sales benefited from the rapidly growing penetration of PCs in Japan. According to the US Software Publishers Association, sales of US software were strong not only in Japan but also in other parts of Asia.Software collateral
policy decided
The Industrial Bank of Japan has reported a software collateral-based financing
system for software firms. So far, no other bank has introduced a system
that allows use of computer software as collateral for loans. The system
will enable software houses with limited tangible assets to upgrade their
applications quickly by using them as collateral. The bank was to institute
the system in late mid- or late-summer. STORAGE MEDIA
The DVD standards
struggle continues
The DVD (digital video disk) group led by Toshiba and Matsushita Electric
launched an SD (super density) Format Promotion Forum in late June. The
forum will promote the SD disk format, which uses two 0.6-mm-thick disks
annealed together and features two specifications: SD5, which allows 5GB
of data to be stored on a single side, and SD9, with a single-sided capacity
of 9GB of data stored in two layers. The forum will have hardware, media,
software, and regional committees; Toshiba expects the hardware and media
committees to have memberships topping 100 and 70 firms, respectively. Further expansion of the Toshiba standard may be in the works. Hitachi and Nippon Columbia have jointly developed a DVD-ROM with four recording layers. The 12-cm SD18-format DVD can store 18GB of data, enough to record more than 2-hours of high-resolution video pictures.
NEC Home Electronics (NEC-HE), meanwhile, has decided to support a digital video disk based on the multimedia CD (MMCD) standard proposed by Sony and Philips. NEC-HE plans to release an MMCD-format CD-ROM drive in summer 1996. Since the firm supplies most of the CD-ROM drives sold by NEC, the NEC subsidiary's decision may affect NEC's yet-to-be-made decision on the standards. The announcement further improves the position of the Sony group, which has garnered the most support from CD-ROM manufacturers.
DVD battle to force
overseas production
Toshiba and Sony will produce PC-use DVD drives in Southeast Asia. Realizing
that it is important to set prices below $200 per unit in order to encourage
US PC makers to adopt DVD drives, both firms will rely on offshore production.
Toshiba is expected to release its first DVD drive in June 1996 and plans
to produce 100,000 to 200,000 units per month. Sony is also aiming for a
commercial release by July 1996. However, both companies have declined to
manufacture overseas their high-end image processing DVD drives, which may
be priced in the $600 to 800. In a report released in July, Sakura Research Institute estimates that Japan's DVD player market will reach ¥150 billion in 2000. Other related technologies, like high-definition TV (whose turn-of-the-century market is estimated at ¥600 billion) will be boosted by DVD development.
TELECOMMUNICATIONS
PHS powers up
Personal handyphone system (PHS) service provider NTT Chuo Personal Communications Network has developed a PHS base station with a high output of 100 mW, which it will start deploying from October. A completed prototype is capable of supporting services across a radius 1.5 to 2.5 times larger than the 20 mW stations currently in use. NTT's PHS service is more restricted than that offered by competitor DDI Pocket, which uses 500-mW base stations; the development of a higher-output model is one way of closing the gap. NTT aims to have the 100-mW units make up 20% of the 48,000 PHS base stations installed by the end of this fiscal year.PHS enters Asia
Hutchison Telecom, the communications subsidiary of Hong Kong conglomerate Hutchison Whampoa, has decided to adopt the Japanese personal handyphone system (PHS) standard as its next-generation cordless telephone system. The company plans to begin service in Hong Kong in mid-1997, expanding steadily through Southeast Asia. It chose the Japanese PHS over the European DECT and US PCS standards principally because of the wide choice of terminal equipment available from some 20 Japanese suppliers. It plans to invest HK$1 billion in developing the Hong Kong PHS network, the first to be built outside Japan.Cellular still running strong
New cellular phone subscriptions totaled 423,700 units in June, passing the 400,000 unit mark for a single month for the first time ever. Lower initial subscriber fees and the corporate bonus season boosted demand, this in spite of concerns by analysts that users would delay buying cellular handsets due to the startup of personal handyphone system (PHS) services. Some observers say that, rather than becoming rivals as many analysts had expected, PHS and cellular services are creating an unexpected synergistic effect.US-Japan effort for
undersea cable
MITI and the US Import-Export Bank have agreed to cooperate in guaranteeing
export credit for what will become the world longest undersea fiber-optic
cable. Work on the mammoth $1.2 billion project was expected to begin in
July as a result of the agreement. Companies from five different nations,
including Japan and the US, will lay the 27,000-km cable, which will stretch
from Japan through the South China Sea to India, across the Middle East,
and up to the Mediterranean Sea to France, linking 25 nations en route.
NTT turns profit, government may turn tables
NTT's local telephone service operations will turn a profit in fiscal 1995, for the first time since the company was privatized in 1985. The turnaround in performance is due primarily to a rate increase implemented in February, larger traffic volumes, and improved revenues from new common carrier access charges. The profitable performance weakens NTT's assertions that it needs to raise local telephone rates, and in fact is likely to create pressure for price cuts, which the government may enforce.Sprint enters long-distance race
Sprint, the third-largest long-distance telephone carrier in the US, will enter Japan's international voice service market. The company plans as early as September to offer Japan-US voice services using leased lines. Leased line-based international voice services were deregulated in Japan in April this year, and Sprint will be the first leading US telecommunications carrier to make a full-scale entry into this segment of Japan's communications market.ç