government & policy

Next-generation cellular phone development
The Ministry of Posts and Telecommunications (MPT) has begun working with private-sector communications equipment manufacturers to develop a next-generation cellular phone that will enter commercial service in 2000. The phones are intended to be usable worldwide and will support image as well as voice signals. The ministry, which hopes to create an international standard for such phones, includes non-Japanese firms such as Motorola, Ericsson, and Northern Telecom in its development group. The MPT is aiming for a handset that transmits at 2M bps using the CDMA (code division multiple access) format.

EMR research proposed
The MPT will conduct full-scale investigation and research beginning in FY1997 on the effects of electromagnetic radiation upon the human body and other electronic (such as medical) equipment. The ministry has requested JPY1.5 billion in its FY1997 budget for the construction of a radio "dark room." Of particular concern is the electromagnetic radiation emitted by the cellular and PHS (personal handyphone system) phones, which are now used by one out of every seven Japanese. There have been reports of such phones interferring with hospital life-support systems. The ministry also plans to contract university research labs to conduct long-term animal experiments.

Info on unused patents
Japan Technomart, a government-affiliated organization established in 1985 with assistance from the Ministry of International Trade and Industry for the purpose of encouraging technology transfers and purchases, plans from April 1997 to make available via the Internet a database of approximately 200,000 patents that are not yet in use. The organization hopes that making the database widely available will spur purchases of unused patent rights and thereby encourage the exploitation of untapped technologies.

Post offices to get on the Net
The MPT plans, from 2000, to enable citizens to purchase commemorative stamps, deposit funds in postal savings accounts, and access pension accounts via the Internet. The new service will enable people to use the post office from their homes. In 1997, the MPT will test the user-friendliness of the system with approximately 150 volunteers. It will establish some 350 "electronic post offices" by April 1998, and proposes to have approximately 3,300 such facilities nationwide by 2000.

market news

Terminal adapter sales soar
The Japanese terminal adapter (TA) market is expanding rapidly, and will likely surpass 600,000 units in 1996, a six-fold increase from 1995 sales. Strong growth in demand for dial-up Internet connectivity, higher-quality digital connections, and equipment for the SOHO (small office/home office) market are credited for the soaring sales of TAs, especially those with built-in DSUs (digital service units). Prices for units with built-in DSUs, meanwhile, have at last dropped below JPY50,000, and price competition is certain to intensify in coming months. Several large and midsize firms, including NEC, Oki Electric, NTT-TE, Itochu Communications, and Omron, have released TA products, and others, such as Aiwa and Nextcom, intend to enter the terminal adapter sector soon.

Notebook sales to top 3 million in FY97
Domestic demand for notebook computers is likely to soar 40% year-on-year in FY1996, to 2.4 million units, forecasts the Japan Electronics Industry Development Association (JEIDA). Notebook sales, which accounted for 30% of total PC sales in FY1995, will likely reach 3.1 million units (33%) in FY1997. Of those purchasing notebook computers, 68% plan to use them primarily for business, according to JEIDA. When asked whether they are satisfied with the notebook they are using now, 40% of respondents to JEIDA's survey answered "unsatisfied."

NEC's Akihabara sales sag
NEC has established an 80-strong dedicated sales force at its NEC Personal Systems sales subsidiary to promote sales of the company's products in Tokyo's Akihabara district. The team will strengthen ties with volume PC retailers in an effort to prop up sales of NEC products in Akihabara, where they account for only 31% of the market, compared with NEC's national average of 43%. The sales team hopes to gain a 40% market share in Akihabara by the end of March 1997, and NEC will devote a third of its se cond-half FY1996 sales promotion budget to the effort.

BASIC to the future
For companies that rely on legacy BASIC applications, Fujitsu and Fujitsu Middleware have jointly developed a 32-bit BASIC language converter that enables users to run their MS-DOS BASIC programs in the Windows 95 environment. Three or more times faste r than a 16-bit version of BASIC, F-BASIC 4.1 generates 32-bit code execution modules and provides over 64KB of continuous memory area. Other features include a graphical user interface environment, a database processing function, and an image editor for designing icons. The companies anticipate annual sales of 30,000 units.

Free software with every system
IBM Japan has begun selling client/server systems loaded, free of charge, with business software for use with Lotus Notes. The aim is to expand sales of systems to small and midsize companies, few of which now use the well-known groupware product. The complimentary software, EasyPack, provides document storage and editing capabilities as well as distribution and electronic bulletin board capabilities. The client/server systems will include IBM Japan PC servers and PCs for use as corporate data-sharing systems.

business briefs

Internet business-use study group formed
The Central Federation for Societies of Commerce and Industry Japan has established the Small and Mid-sized Corporation Multimedia Association to study use of the Internet for conducting business among small and midsize corporations. The group members include academic and industry leaders as well as about a dozen corporations (including NTT, NEC, Fujitsu, and Hakuhodo). The new organization will conduct surveys and research on use of the Internet by the approximately 1.3 million corporate members of the federation, focusing on Web-based mail-order purchases, inventory queries, requests to manufacturers for production plans, product advertisements, and other applications.

Mac clones from Motorola and Mitsubishiand Mitsubishi
Motorola and Mitsubishi Corporation have agreed to form a data communications business alliance. Motorola has begun manufacturing, under its own brand name, Macintosh-compatible computers that Mitsubishi will start marketing in Japan by year-end. Mitsubishi will become Motorola's PC distributor in Japan, and will sell the computers to corporate users in Tokyo through its MC PC Sales subsidiary and to individual users through the T-Zone PC specialty shops operated by Ado Electronic Industrial. Mitsubishi expects to ship 210,000 units in the first year.

Matsushita opens intranet subsidiary
Matsushita Electric Works has set up an intranet development support subsidiary. Capitalized at JPY40 million, V International Operations is owned 82.5% by Matsushita and 17.5% by its employee group. Initially staffed with 10 people, the new company wi ll provide a complete scope of intranet support business services, ranging from design to operations. V International Communications is targeting first-year sales of JPY130 million, and hopes to reach annual sales of JPY3.5 billion by 2000.

Staying in the office
Hewlett Packard Japan has decided to postpone development of a home-use PC by more than one year and will continue to focus on corporate sales in the domestic market. Although parent Hewlett Packard enjoys strong sales of home-use PCs in Europe and the US, the company is wary of tumbling prices in Japan. HP Japan currently has an estimated 3.5% share of the Japanese PC market, making it the sixth largest supplier, and has a strong reputation in peripheral equipment. However, it lacks a full customer su pport system and believes that falling prices do not justify making the investment needed to develop one.

Cisco switches market emphasis
Nihon Cisco Systems is hoping to grab a 50% share of the domestic network switch market by July 1997. The company, which more than tripled sales to JPY43 billion last year, is shifting its focus from routers to switches. Although routers previously acc ounted for over 70% of the company's sales, Nihon Cisco does not think that sales of its Cisco Pro Series of network equipment for midsize firms are growing quickly enough. While router sales growth may exceed 50% year-on-year, the company hopes that swit ch sales volume will increase by 300%. Especially brisk sales of high-end models are expected. Plans call for doubling the company's staff, to 170.

Novell revamps strategy
Novell Japan is reviewing its sales organization in response to a mounting challenge from Windows NT. The company set up a 30-strong sales support department in October that has begun providing product information directly to users. Novell's products a re carried by five software distributors, including Softbank, and PC hardware makers such as NEC. It intends to use the new internal organization to better understand user needs by establishing direct contacts.

international news

Direct Internet links to China and Malaysia
KDD has been negotiating with China's telecommunications bureau and Telecom Malaysia to establish direct links with those countries via Internet KDD, the international gateway service provider that KDD established in April 1996. Pending successful completion of the talks, the new links are expected to be in place before winter. Both links are likely to start as 128K-bps lines. Internet KDD serves several secondary Internet connectivity providers in Japan with links to the US, Singapore, Hong Kong, Taiw an, and Korea, but growing traffic to China and elsewhere in Asia is creating the need for direct lines to those nations. Internet KDD will be the first Japanese provider to have direct circuits to China and Malaysia.

Omron enters China software market
Omron has started selling computer software in China. The company released in September a front-end processor (FEP) for Chinese-language word processing packages that will sell for 48 won (about JPY600). The FEP is being offered through a bookstore cha in with about 10,000 outlets in China's major metropolitan areas. Omron has also established a joint venture in Shanghai, through which it will carry out separate marketing activities. China's PC software sector has ballooned to approximately JPY60 billio n annually, with Microsoft holding the lion's share of the market.

Japan pulls ahead in car navigation race
The International Telecommunication Union (ITU) is expected to adopt Japan's Vehicle Information and Communications System (VICS) as the international standard for car navigation systems. Japan leads the US and Europe in the development of such systems, and VICS, which was promoted by Japan's Ministry of Posts and Telecommunications, has emerged as the most promising domestic standard. If adopted by the ITU, VICS will follow PHS (personal handyphone system) in becoming an original international telecommunications standard from Japan that opens new export markets for Japanese firms.

telecom topics

OCN sparks competition
Tokyo-based Internet service provider Tokyo Internet will participate in an effort led by new common carrier Tokyo Telecommunication Network (TTNet) to develop Computer Network Service (CNS), a new backbone service designed to compete with NTT's planned Open Computer Network (OCN). CNS will be priced lower than OCN, but services may not be commercially available until fall 1997, a half-year or more after OCN debuts.

Osaka Media Port, meanwhile, plans a similar service from August 1997, to be called the World Computer Network (WCN). WCN will be priced at rates equivalent to or lower than NTT's, but will offer a larger menu of services as well as midrange 192K- to 7 68K-bps circuits that, at least initially, will not be available through OCN.

KDD develops new intranet protocols
KDD has developed new intranet technologies that it claims are capable of transmitting audio and video signals at high speed: a protocol for transmitting to a single party on an intranet, and one for broadcasting to multiple parties simultaneously using a communications satellite. A separate feature converts the signals to TCP/IP protocol for linking to the Internet. KDD developed the technologies hoping to reduce the delays that occur when "broadcasting" over long distances using the standard TCP/IP protocol.

NTT to cut back on staff
NTT plans to shed an additional 35,000 jobs by closing its late-night directory inquiries service and rationalizing its software development operations. The moves are part of the corporation's strategy to reduce its staffing to 150,000 persons. NTT has been talking with its labor unions about the latest initiatives, and preparing for public opposition to the cutback of the directory inquiries service. The moves are seen by some industry observers as an attempt by NTT to influence the debate on whether or not the telecom giant should be broken up.

New data encryption technology
Hitachi is developing a system that automatically encrypts data that travels beyond a corporate firewall to the Internet, then returns it to its original form upon arrival at a destination behind another firewall. The company claims the new system will enable sensitive data to be securely transferred between corporations over the Internet, thus eliminating the need to acquire heavy-duty encryption technology that currently cannot be legally exported from the US. The company plans a commercial release of its system before year-end.

in 50 words or less

Datong Japan, a subsidiary of Taiwan-based Datong, will, from December, market a network PC equipped with a Cyrix CPU and a Macintosh-compatible computer (PowerPC) that supports Windows NT.

PHS (personal handyphone system) carriers are boosting base station installation in fiscal 1996 to over 220,000, which will push the aggregate number of base stations to 400,000 by the end of March 1997. The number of PHS subscribers has surpassed 3 mi llion.

Matsushita Communication Industrial will expand cellular phone production in Japan and the UK in an attempt to boost its global share, from the current less-than-10%, to 15% by 2000. The company is aiming to ship 5.5 million cellular phones worl dwide this year, up from 3 million units last year.

The number of subscriptions to urban cable TV services in Japan rose by 1.8 million during FY1995 (through March 1996), to finish the year at more than 3 million. The number of broadcasters increased by 20, to 183.

NTT plans, by spring, to add 27 new access points for the Microsoft Network (MSN), bringing the total number of access points in Japan to 72. NTT has a partnership with Microsoft whereby subsidiary NTT PC Communications owns and operates Japan's MSN access points.

PC shipments in first-quarter 1996 expanded by 34% year-on-year, to JPY520 billion. PC shipments accounted for 47% of total computer shipments, which reached JPY1.10 trillion. Mainframe shipments declined by 22%, accounting for 29% of total computer sh ipments.

According to a summer survey by Daiwa Research Institute, 59% of Japan's Internet service providers (ISPs) are losing money. There are now more than 1,000 ISPs nationwide.

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