In a move aimed at strengthening its presence in the overseas enterprise server and storage markets, on July 30 Fujitsu announced a merger agreement with enterprise computing software/hardware company Amdahl Corporation. By this agreement, Amdahl will be come a wholly-owned subsidiary of Fujitsu.

Fujitsu views the merger as a strong affirmation of its commitment to the enterprise server and storage business and to Amdahl's extensive customer base. "We see this transaction as an opportunity for Fujitsu to significantly extend its solutions-oriented business in the United States and Europe," says Tadashi Sekizawa, president and representative director of Fujitsu. "The addition of Amdahl to other companies within the Fujitsu group, such as ICL (Fujitsu's European affiliate), significantly expands Fujitsu's role in the worldwide market for the full range of information technology solutions."

Management consultant and IT strategist Domicity Ltd. suggests that the Amdahl buyout is part of a wider global strategy of Fujitsu. While the merger agreement states that the Amdahl name and management team will be retained, Domicity has issued a report saying it believes that "within two years, Fujitsu will merge Amdahl with ICL, its European computer subsidiary, and the combined operation will use the Fujitsu brand."

Amdahl Corporation, founded in 1970, started out selling large-scale IBM-compatible computer systems to such clients as NASA, General Motors, and Chrysler. In 1995, sales of software and services overtook sales of equipment; Amdahl bought out DMR and Trecom, in 1995 and 1996, respectively, to position itself more strongly as a global-solutions company providing information processing systems, software, and services. This area accounted for some two-thirds of Amdahl's $1.63 billion revenue in 1996, and will provide well over $1 billion in revenue in 1997.

Amdahl sees the merger with Fujitsu (which has been sharing technology with Amdahl for more than 25 years) as a way to stay competitive in the current market; the company has been experiencing declining profits in recent years. According to William Stewart, Amdahl's vice president, public relations, the merger will allow Amdahl to present itself from a position of financial strength - important especially in face of large competitors who have sometimes tried to present Amdahl's financial viability as a point of concern to potential customers. Furthermore, "Fujitsu, now that they own 100% of us, can also justify investing more R&D money in products that will be of mutual benefit - particularly in new storage and mainframe hardware."

Regarding the strengths Amdahl will bring to the merger, Stewart continues, "We believe one of our greatest strengths can be seen in the large customer base and close, long-term customer relationships we've built over the last 25 years in North America and parts of Europe."

John C. Lewis, chairman and CEO of Amdahl, has pointed out that in today's computer industry, product cycles are becoming shorter, and declining product prices make higher business volumes necessary to fund R&D or pursue new business opportunities. "In short, both our capital requirements and the need to expand our marketing reach are growing. This merger will give us the financial staying power, the access to superior technologies, and the greater global presence we need to effectively compete in today's changing marketplace."

Soon after the merger agreement was announced, Amdahl Corp. shareholders filed a class-action lawsuit to prevent Fujitsu from acquiring the outstanding 58% of Amdahl stock it did not already hold, citing the "unfair and grossly inadequate" $12.00 per share tender that only offered a small premium over Amdahl's stock price of $11.875 on the American Stock Exchange. The litigation was resolved three weeks later by an agreement in principle to increase the price to $12.40 per share in both the tender offer and subsequent merger. The two companies denied any wrongdoing in connection with the tender offer and proposed merger, saying they agreed to amend the tender offer to avoid the cost and disruption of further litigation.

Nihon Sun, JRI to Tie Up for Java Integration

Nihon sun microsystems and the japan research Institute have agreed that the two companies will jointly promote the Java Integration Partner scheme for development and verification of advanced system integration technology by using Java. Through the tie-up, according to the Japan Integration Partner scheme, the companies will work together on:

• Development of Java-related technology through experimental projects;
• Preparation of a joint verification system for the development of Java-related technology;
• Planning and execution of the Java-related technology promotion program; and,
• Promotion of information exchange for the Java-related technology.

Telecom Becomes Latest Japan-US Trade Dispute
US insists NTT international procurement agreement be extended

At the annual japan-us review meeting of the NTT (Nippon Telegraph and Telephone) international procurement agreement - which was originally signed in 1980, and is scheduled to expire in September 1997 - the US government "requested" that the Japanese government extend the agreement as well as make the procurement procedure more "transparent." At the meeting held in San Francisco in early August, participating on the US side were members of the USTR (United States Trade Representative), Department of State, and Department of Commerce. Participants from Japan included representatives from the MPT (Ministry of Posts and Telecommunications), Ministry of Foreign Affairs, and NTT.

The official purpose of the meeting was to review the 1996 results of international product procurement by NTT. Regarding the 1996 procurement level, which reached ¥173 billion (up 14% from the previous year), an MPT official declared that both governments view the situation favorably. Discussion went beyond the official topic, however, to include an unofficial exchange of opinions about extending the agreement beyond its September 1997 conclusion, and whether NTT's current procurement procedure is too exclusive.

The US government has formally requested an extension of the agreement, explaining that this would be "beneficial" for telecommunications-related vendors in the US and for NTT as well. The Japanese government, however, refutes the need for an extension, pointing out that NTT's procurement of foreign products has drastically increased, which was the goal of the original agreement. The value of international product procurement by NTT in 1996 was almost 40 times that of 1981. Japan now imports from abroad more network equipment (except for facsimile machines) than it exports. The Japanese government also complains that NTT is the only telecommunications carrier in the world on which such a requirement for procurement of foreign-made products has been imposed.

Under the surface are other smoldering frictions between the two governments. One topic of concern to the US is the continuing foreign-ownership restriction on NTT and KDD, which is set at 20%. Japan agreed to abolish foreign ownership restrictions on Type 1 carriers, except NTT and KDD, at the WTO (World Trade Organization) meeting held in February 1997. The US government reportedly intended at that time to force the Japanese government to remove all ownership restrictions, including those for NTT and KDD. If so, however, the attempt ended in failure.

A major topic of concern for Japan is the holdup of US government licensing for subsidiaries of NTT and KDD to operate in the US. The two companies applied for operating licenses to the FCC (Federal Communications Commission) early this year, but the granting of those licenses has been on hold because of the US government's unspecified "concern with [Japan's] trade policies."

In typical bureaucratic fashion, the Japanese government on the one hand insists that these items are all independent issues, and that discussions about the NTT international procurement agreement should not be confused by bringing in irrelevant topics. On the other hand, though, regarding the prospects for extending the NTT procurement agreement past September 1997, the MPT has proclaimed that the Japanese government is perfectly willing to meet with the US to discuss the possibility - if, that is, the US government duly issues the requested licenses for the NTT and KDD subsidiaries. (The MPT hastened to add, however, that it was agreeing only to discuss the extension; whether or not Japan would accept an extension of the agreement is another issue.)

In addition to extending the NTT international procurement agreement, the US government has asked the Japanese side to improve certain "unsatisfactory" points in the current NTT procurement procedure. These include providing more detailed information about the procurement requirements for foreign vendors, and simplifying and standardizing NTT's network interface. The Japanese government, however, has replied that it "sees no insufficiencies" in the current status of NTT procurement, and that NTT has been adequately opening its procurement procedure to foreign vendors and has already taken steps to simplify and standardize its network interface.

Informal talks are likely to continue until the issues are resolved.

Justsystem Unveils New Data Search Technology

Justsystem announced in late July that it will implement a revolutionary data search technology, Justsystem ConceptBase, in its new products to be released this fall. Unlike conventional search engines that require Boolean operators (AND, OR, and NOT), Justsystem's new technology can use plain-language text as a query. It also ranks retrieved documents in order of their relevance to the query.

"Justsystem's ConceptBase is a technology that supports the ultra-high-speed and highly accurate retrieval of information requested by the user from within a large collection of documents. This will make the categorizing procedure required by existing document management systems a thing of the past," declares Kazunori Ukigawa, president and CEO of the company.

The technology was jointly developed by Justsystem and Claritech, a Pennsylvania-based software company bought by Justsystem in August 1996. Claritech was originally started as a research project at Carnegie Mellon University in 1988. The company is headed by David Evans, who also serves as a professor of computational linguistics at the university.

Justsystem is considering integrating the new technology into its JOSS (Just Office Server System) intranet software. The company expects that the advanced features of ConceptBase will create broad sales demand among financial research groups, educational institutions, government agencies, and mass media organizations worldwide.

An introductory search service using Justsystem ConceptBase's Japanese version can be found at http://www.justsystem.co.jp/.

NTT Invests in Asian Net

Japanese telecom giant ntt announced in August that the company has invested in Asia Internet Holding (AIH), an Internet service company for Asia-Pacific operation. NTT has taken a 15% share in AIH, the third largest behind the 21.3% stake of Sumitomo Corp. and the 20.9% share held by Internet Initiative Japan (IIJ).

AIH was established in November 1995 to build and operate an Internet backbone network for the Asia-Pacific region. The network currently connects such countries as Japan, Hong Kong, Singapore, Korea, Taiwan, Indonesia, Malaysia, and Thailand. Also, via IIJ's network, it connects with the US. By the end of 1997, the network connection is scheduled to be expanded to China, India, Vietnam, the Philippines, Australia, and Europe.

Besides Sumitomo, IIJ, and NTT, other leading AIH investors include Pacific Internet Pte. (10.3%), Hong Kong Super Net (9.4%), Itochu (6.3%), Matsushita Electric Industrial (3.1%), Toyota Motor (3.1%), and Telecom Malaysia (3.1%).

Mass Production of Blue Lasers Expected by 2000

In late july, fujitsu laboratories Limited announced development of a technology that will enable, by the year 2000, mass production of blue lasers. Blue lasers are an essential component for the manufacture of next-generation, high-density MOD (magneto-optical disk) and DVD (digital versatile disc) devices. Blue lasers have a shorter wavelength than the red lasers (414 nanometers versus 630-680 nanometers) used in current optical storage media.

This new technology is significant because it is the first process used to produce a laser diode that lends itself to mass production. Furthermore, the laser diode will sustain a blue laser pulse using a silicon carbide (SiC) substrate.

Very roughly speaking, a laser is produced by passing an electrical current through a laser diode, of which a key component is the substrate (the base for the diode) with crystals on its surface. Until recently, a sapphire substrate had been used to produce laser diodes - such as for red lasers. According to a Fujitsu Laboratories spokesperson, the new silicon carbide substrate, which has several advantages over the sapphire substrate, has been successfully used only once before to produce a short-lived blue laser pulse. Fujitsu Laboratories, however, has now succeeded in producing a continued, stable pulsation (laser) of over five hours.

The previous method used to produce blue lasers required complicated controls, untenable for mass production. This new process uses a conventional, low-pressure Metal-Organic Vapor Phase Epitaxial (MOVPE) growth method at room temperature - the same method used to produce red laser diodes. In the process, gallium nitride gas crystallizes on the surface of the SiC substrate. The use of SiC substrate allows for a smoother cleavage, which in turn produces a better laser, and because the difference between the lattice constants of gallium nitride and SiC are very small, the chances of defects on the surface of the substrate are reduced. Fujitsu hopes to commercialize the blue laser by 2000.

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