government & policy

MPT protests US FCC restrictions
Japan's Ministry of Posts and Telecommunications (MPT) has formally petitioned the US Federal Communications Commission (FCC) to postpone the introduction of rules it claims are aimed at limiting the activities of international telecommunications carrier KDD in the US market. KDD has approval for its local affiliate to resell leased lines, but its services will be subject to restrictions because of an FCC ruling regarding lack of openness to American firms in the Japanese market. The ministry is disturbed at what it sees as a distorted view by the US government of the situation in Japan, and it charges that the US position violates the spirit of the World Trade Organization.

Creating a virtual lab
A Multimedia Virtual Lab Development Association has been established to promote the creation of a "virtual laboratory" linking university, industry, and government R&D facilities worldwide. The project is backed by the MPT, which plans long-term tests of the virtual lab system from 1997 in preparation for full implementation in 2001. The aim is to create an environment in which researchers from different institutions can collaborate seamlessly at low cost. The MPT has requested FY1997 budget allocation of JPY1.9 billion for the project, and is calling for participation by other ministries.

MPT launches satellite project
The MPT will launch a project to develop dedicated software that will enable any PC to receive satellite data broadcasts. The project, aimed at boosting the popularity of satellite data broadcasting (begun here in October), is thought to be the first of its kind in the world. The software is scheduled for development by the end of March 1997 in collaboration with NEC and IBM Japan. An overriding feature will be platform-independence. No such software is yet in commercial use outside Japan, and the MPT hopes to have its development accepted as the international standard.

Silicon island
The Ministry of International Trade and Industry (MITI) is promoting a "New Digital Island" initiative designed to stimulate the economy of Okinawa. The initiative is intended to encourage greater use of the Internet and digital media among Okinawan firms and government organizations, and eventually develop the prefecture as a region attractive to information industry enterprises. Hoping to develop the island into a Japanese version of California's famed Silicon Valley, MITI sees Okinawa as a natural center from which to initiate electronic commerce with the booming economies of Southeast Asia.

products and services

More storage capacity
Mitsubishi Chemical will expand its data storage device business by OEM-procuring 5.25- and 3.5-inch magneto-optical (MO) disk auto-changers from Fujitsu and other makers. To be marketed through Mitsubishi Chemical Media, the 5.25-inch auto changer can handle up to 78 MO disks (for a data storage capacity of 202GB), while the 3.5-inch unit can accommodate 35 MO disks (a capacity of 22GB). Mitsubishi Chemical hopes these new products will boost sales of its data storage device division by 60% year-on-year, to JPY16 billion.

Secure e-mail planned
Tokyo-based NTT Electronics Technology (NEL) is licensing encryption technology from RSA Data Security, the US-based leader in the field, and in spring 1997 will release e-mail software that incorporates a security function. Browsers equipped with RSA security features are available today, but NEL expects to be the first in the industry to add the security feature to Eudora, a popular e-mail software package. NEL plans to sell a special security-enhanced Eudora package for about JPY10,000.

New suites from Justsystem
Justsystem was to release, by year-end 1996, new versions of its JustOffice Server (a corporate Internet/intranet package) and Justsystem Advanced Office (a suite of applications including Ichitaro 7, the latest version of the company's popular Japanese word processing application). JustOffice Server, the company's first entry into the corporate server software market, was developed in cooperation with Oracle Japan. Based on Windows NT 4.0J, released in November, the Justsystem Advanced Office package includes Ichitaro plus spreadsheet, database, and presentation software. These strategic products are competitively priced to challenge rival Microsoft products.

business briefs

DOS/V machines from PB-NEC
Packard-Bell NEC (PB-NEC) launched its IBM-compatible PC sales operation in October. Capitalized at JPY200 million, the 50:50 joint venture established by NEC and PB-NEC of the US was expected to put IBM-compatible PCs on sale in Japan by December 1996. Initially staffed by 40 employees, PB-NEC will market individual and home-use desktop PCs under its own brand name through Chiba Electronics, and will sell desktop and notebook units to corporate users through NEC's systems division. The company hopes to ship 300,000 units, and grab a 3% share of the Japanese PC market in fiscal 1998.

Outsourcing is in at Fujitsu
Fujitsu will open an outsourcing center within the compound of its Akashi plant. The company has begun construction of the JPY10 billion Fujitsu Akashi System Center, with the capacity to store 120 mainframe computers on 16,000 square meters of floor space. The facility, an earthquake-resistant five-story building, with two basement floors, is slated to begin operations in October 1997. Fujitsu hopes to recruit about 100 companies over three years.

Toshiba targets network computing
Toshiba intends to position network computing as a second mainstay of its multimedia operations (with DVD as the flagship business). The company in October established a Network Computing Promotion Office, which will coordinate related activities across the organization. The office's main activities will be to develop ties with domestic and overseas companies, with the aim of releasing network computer hardware and Java-based software in FY1997. The move comes as part of Toshiba's Advanced-I strategy for new business development, in which initial concentration will be on information sharing and networking.

Who profits from the Net?
Rocked by intense competition and severe price erosion, Japan's smaller Internet service providers (ISPs) are considering consolidation as a means of survival. The number of ISPs more than quadrupled in 1996, to over 1,100. Yet according a research survey by Daiwa Research Institute, nearly 60% of them are losing money, and another 35% are barely breaking even. Industry experts say it will be nearly impossible for smaller providers to survive by offering access services alone. In recognition of market realities, which include the impending introduction of NTT's Open Computer Network (OCN), a growing number of ISPs are moving to merge their operations, or adding content production and other value-added services.

Nihon Cisco eyes WAN market
Nihon Cisco Systems will broaden its line of network products designed for communications carriers and Internet service providers. From January the company will start releasing a series of routers and switches equipped with newly-developed "tag switching" technology that speeds up the exchange of data between routers and ATM (asynchronous transfer mode) switches. The new technology substantially reduces data relay time. Nihon Cisco recently merged its operations with the Japan subsidiary of Stratacom (a company acquired by parent Cisco Systems) -- a move that, together with the new product releases, is designed to win customers in the wide area network sector.

international news

T-Zone goes to Taiwan
Ado Electronic, well known for its T-Zone computer stores in Japan, will market PCs in Taiwan. The company has established Pacific T-Zone in Taipei with local company Pacific Electric Wire & Cable. Ownership of the venture, capitalized at about JPY200 million, is split 30% and 70% between Ado and the Taiwanese company's group firms, respectively. Pacific T-Zone was to open its first PC shop, with 1,300 square meters of floor space, by year end (1996). Plans call for setting up 15 stores over the next two or three years. The company is aiming for first-year sales of JPY1.8 billion.

Software development moves offshore
Fujitsu will expand its software production base in India as part of a strategy to accelerate its overseas shift of software development. The company, which aims to produce software in the most suitable locations and at the lowest available cost, will also boost production in China. Fujitsu plans to place orders on behalf of ICL and Amdahl, creating a global development system among the Fujitsu group. Fujitsu sold some JPY200 billion of system development software in 1995, and plans to produce 30% of its software outside Japan.

telecom topics

CSK company offers callback, Net access
CSK group company Kyodo VAN has started a low-cost international callback service. Kyodo VAN will buy callback lines from MTC Japan, a subsidiary of MTC of the US, and resell them to Japanese corporate users. Rates for the service, on average, will be 42% cheaper than those now offered by KDD. Users with monthly bills of at least JPY50,000 will receive additional discounts of 6% or more.

Kyodo VAN has also launched an Internet access service using Teleway's Data On Demand network. The aim is to establish access points throughout Japan at a standard access charge of JPY30 per minute. Kyodo VAN already has 11 access points in major cities, and will rely on Teleway for access from the rest of the country. While all three long-distance new common carriers offer Internet access services, Teleway's success in attracting Kyodo VAN as well as IIJ (Internet Initiative Japan) makes it the current leader in the field.

KDD to loop the nation
KDD will, by 1999, lay a submarine cable loop around the Japanese archipelago in preparation for entering the domestic telecommunications market. The company will invest approximately JPY100 billion in an 8,500-km loop that will reduce its dependence on NTT for connections to users in Japan. This will provide KDD with a level of domestic infrastructure similar to those of long-distance new common carriers such as Japan Telecom. Diet approval of changes to the telecommunications law that will enable KDD to provide domestic services were considered a foregone conclusion. Completion of the KDD network is likely to intensify price competition in the Japanese telecom market.

NIFTY ups access lines
NIFTY-Serve, Japan's largest online service with 2.1 million subscribers as of September 1996, plans to boost the number of its access lines to 33,000 by March 1997. At the same time, the company will increase from 48 to 100 the number of access points that can accommodate 28.8K-bps modems. NIFTY-Serve plans to upgrade all its access points to accommodate 28.8K-bps speeds within 18 months. It also began offering 64K-bps ISDN access points in Tokyo, Osaka, and Nagoya in late 1996.

Cellular/PHS sales rise
Sales of cellular and PHS (personal handyphone system) handsets continue to set a blistering pace. Combined unit shipments totaled 7.54 million in the first half of FY1996, easily exceeding the total number of handsets sold in all of FY1995. The installed bases of cellular and PHS handsets now total 15.3 and 3.9 million, respectively. At the current pace, the total installed mobile telephone base is likely to reach 26 million by April 1997. Low usage fees and dramatically lower handset prices are fueling the explosive growth.

in 50 words or less

Hitachi won orders for 400 mainframe systems in the US between April and September 1996. With US sales likely to surpass 900 systems in fiscal 1996, the company expects global sales of its MP5800 series of large mainframe computers to nearly triple.

To cope with the expanded sales anticipated for Windows NT 4.0J, which was released in November, Microsoft KK will increase the number of its technical support staff in 1997 from the current 370 to about 1,000.

NTT DoCoMo aims to boost its pager business by introducing in FY1998 a stripped-down pager that will retail for just JPY500, one-tenth the price of current models. The monthly subscription fee will be abandoned as well, with the cost of calls to the pager being charged to the caller.

Kojima and Apple Computer Japan will jointly market a PC that runs both MacOS and Windows 95 software. The Performa 5410/DOS-compatible will be distributed through Kojima's 167 stores across Japan.