Four Foreign Software Success Stories

by John Boyd

Did you hear the one about the Englishman, Irishman, American and Russian?

The Englishman

Russell Willis, 30, cofounder and president of eigoMedia, a language learning software company based in Edogawa-ku, Tokyo. His story begins in 1993, not long after he arrived to Japan. He was teaching English as a second language when he came across multimedia running on a Macintosh, and realized how it could be used to help Japanese students learn English. "When I saw how you could interact with multimedia -- just click on a button and hear a phrase repeated -- and saw authoring tools like HyperCard and Macromind Director, I got excited," says Willis.

Excited enough to convince a bunch of his teaching colleagues that multimedia was the future of learning, and to get them to join him in coughing up \10 million in seed money to make it happen.

EigoMedia conveniently fused together Willis's interests in education, computers and publishing under one roof -- his own roof. In order to make the working capital last, he used his living room as an office and set about learning how to create multimedia language programs on the Mac, back in the days when Apple Japan was No. 2 in market share, and before Windows 3.1 had entered the picture. He also hired part-time professional programmers who had some language learning background, and together they created a language learning kernel.

Twelve months further on, Willis approached Heinemann ELT, a British publisher of language learning text books, and negotiated a deal to convert one of its texts into software. Heinemann was happy at the chance to explore multimedia, but after the project entered the final stages, the author of the text suddenly raised the issue of digital copyright. The deal fell through.

"We had a number of false starts, but that was a big blow," remembers Willis. "The incident caused Heinemann to rewrite all contracts with its authors to cover digital copyright."

Fortunately, the publisher was able to come up with another text, "Word Games With English," which eigoMedia published on floppy disk in 1994. The company's big break came when it won a contract to supply the Tokyo Metropolitan Institute of Technology with language learning software, training and support to run on a state-of-the-art network of Macintoshes in the Institute's language lab.

The year-long project was completed in 1995. It's become so popular that the Institute has asked eigoMedia to develop a new language course to take advantage of recent developments in hardware, software and the Internet. The new system is being designed to run on a 100BaseT (Fast Ethernet) network and uses Internet publishing software like ShockWave, RealAudio and RealVideo, as well as speech recognition technology from Apple and Microsoft.

"With a 100BaseT network, everything, including speech recognition, can be run off the server, which makes it easier for us to install and support, and easier for the teachers to use," said Willis.

The company also publishes hybrid CD-ROMs for Windows and the Macintosh. A recent title is The U.K. Festival '98, an ongoing celebration of British culture in Japan, which is packed with video as varied as Mr. Bean and Shakespeare. Another title published in April is an English language learning adventure CD-ROM for Japanese children called Finding Out. Heinemann now plans to publish this title in other languages.

The company is still privately held, so revenues are not made public, but Willis estimates annual sales are now in the millions of dollars. Compared to the big names in Japan's software industry, Willis says they are still small fry, and are now looking for a major investor to help lift them into the big time. "With the right backing we can become the dominant publisher of language learning software in Japan," says Willis.

The Irishman

Paul Greenan was born in Monaghan, on the south side of the Irish border. A 13-year veteran of Japan, Greenan is the Japan country manager for Aldiscon, a Dublin-based vendor of telecommunications software. The company was recently acquired by Logica Plc, a U.K. systems integrator, and has been renamed Logica Aldiscon Japan.

The company was founded in 1988 to exploit messaging possibilities in the deregulating European telecom markets opening up to second-generation digital mobile communications, after a century of analog technology. "The move to digital communications opened up the market to small companies like Aldiscon," says Greenan. "And we've found a place in messaging."

Aldiscon markets Short Message Service (SMS) technology in a hardware/software turnkey system dubbed Telepath SMSC (Short Messaging Service Center). Typical clients include telecom carriers, telecos and operators of digital wireless networks in Europe, the U.S. and Asia-Pacific, while end users include cellular phone subscribers and users of PCs and PDAs.

Think of SMS as an enhanced paging service that includes two-way alphanumeric messaging and additional features like routing and confirmation of delivery. When a mobile phone subscriber switches off the handset, or is out of range of a base station, Telepath stores any undelivered messages in a database. As contact is reestablished, the messages are automatically delivered to the phone's or the wireless PDA's display.

But the "short" in SMS is exactly that. Messages are currently limited to 128 Bytes in length, which means only 64 kanji can be used with Japan's two-byte character code. To compensate, users can employ a number of predefined messages such as: "Call Tokyo office immediately: 03-1234-5678."

Telepath runs on UNIX System V, Release 4, and is compatible with major cellular communications systems, including Europe's GSM, PCS and IS-41 in the U.S., and more recently Japan's Personal Digital Cellular standard; it's also used with a variety of common communications technologies, including TDMA and CDMA.

Aldiscon, which has a presence in the U.S. and Asia-Pacific, established offices in Tokyo in 1996. The move here came after lengthy negotiations with Tokyo Digital Phone, provider of the J-Phone cellular service. The negotiations resulted in Aldiscon signing a contract with the telecom operator to provide a turnkey SMS system initially worth \420 million.

"The mobile phone business is tremendously competitive in Japan," says Greenan. "So operators are looking for new services to differentiate themselves. Even though we're a small company, Tokyo Digital Phone was enthusiastic, because we have leading technology."

But localizing the technology to run on Japan's Personal Digital Cellular standard was "a very significant development project for us, "says Greenan. "It took many months with many engineers to complete."

The hard work and investment is now paying off. Tokyo Digital Phone is loudly touting Aldiscon's technology, under its own Sky Walker brand name, as Japan's leading messaging service. And, as a member of The Digital Phone Group, Tokyo Digital Phone has partner operators in Nagoya, Kansai and Kyushu, which have also begun using the messaging service. With competition heating up further, Greenan is hopeful that some of the other mobile phone operators will want to do a deal. "We have a foothold here now," says Greenan. "And with the Sky Walker name, we're working to leverage off that, and supply other players in the industry."

The American

Enter Cliff Miller, who hails from Salt Lake City, Utah. While still a grad student in computer science at the University of Utah in 1992, Miller got into the software business when he and some fellow students published the InfoMac series of shareware programs for the Macintosh on CD-ROM.

But when Miller's wife was laid off by her company, the couple decided to try their luck in Japan. Miller had previously gone to a Japanese junior high school, and later spent time at Fujitsu Laboratories in Kawasaki as a research fellow for the American Electronics Association.

Returning to Japan rekindled his interest in UNIX when he took up Linux as a development tool. Linux is a freeware version of the UNIX operating system and has created a wide and fervent following in the UNIX and hacker communities. It can be downloaded free over the Internet, or bought at low cost as a commercial package bundled with additional software.

Four years ago Miller, now 40, began publishing a commercial version of the OS, called TurboLinux on CD-ROM, bundling it with other products, and targeting Japanese users.

"There were a number of commercial Linux packages out there, but they were almost exclusively designed for Western users," explains Miller. "They didn't provide for multibyte input suitable for Asian markets. Our goal is to internationalize Linux, not just produce one bilingual version. Future versions will be easy to localize for the Chinese and Korean markets."

The TurboLinux CD-ROM includes kana-kanji conversion software, kanji fonts and a Japanese word processor, and retails for \29,800. According to Miller, the bundled commercial programs cost more than if bought separately. Pacific HiTech also publishes a competing version of Unix called Free BSD, which comes similarly bundled, but with the addition of Kenkyusha's English/Japanese dictionary.

"Linux is very big in the U.S., but in Japan, Free BSD is ahead by a ratio maybe as high as two to one," says Miller. "But TurboLinux is our flagship product. It now sells in computer stores in every major Japanese city. It's easily the most popular version of Linux here, and some book publishers and magazines have bundled a lite version with their publications." With 10 employees now on board, including four engineers in development, Miller says this year they are going after the corporate business with an updated TurboLinux 2.0 version that was due to be released in later this year.

"We're talking now with a couple of Japanese computer companies, including one major player that intends to preinstall and support TurboLinux," says Miller. "This will be the first time in Japan (Linux has received such an endorsement). It will be a turning point for us and for the Linux industry."

The Russian

When the topic of foreign software companies active in Japan comes up, Russia probably doesn't even spring to mind. Andrew Sviridenko, 30, is out to change all that.

"Too many people still look at Russia only as a source for natural resources," says Sviridenko, a cofounder of SPIRIT Corporation, a Moscow-based software developer and agent for Russian software houses. "Yet we have much to offer in technology." To back up that claim, Sviridenko estimates that overall revenues for Russia's computer industry in 1997 was about $3 billion. Over 200 major foreign IT companies are now active there, including R&D teams from IBM, Hewlett-Packard, Intel, Silicon Graphics and Samsung. He also stresses the long history of his country's space and defense industries, and the country's strength in natural sciences, especially mathematics.

In an effort to promote Russian software abroad, Sviridenko established SPIRIT in late 1991 with several graduate buddies from Moscow State University. The company has had some success licensing Russian software in the U.S., counting Northern Telecom as one of its customers. But it's the Japanese market, which SPIRIT entered in 1995, where things are really buzzing. The company represents about 50 Russian clients in Japan, while Japanese clients include NEC, Toshiba and Namco. "A big difference between U.S. and Japanese companies is the emphasis the U.S. puts on price," says Sviridenko. "Price seems even more important than the technology. For the Japanese, price is less of an issue."

He explains that many in the U.S. believe they already have a monopoly on all the best technology, so it only makes sense to do a deal with foreign suppliers if there's big savings involved. Since experienced programmers in Russia can be hired for around $12,000 a year, price is something SPIRIT can compete on.

The company has a variety of ongoing projects and licensing agreements with NEC. NEC's Picture Studio and Album Factory are running on image processing software licensed from SPIRIT. Sviridenko has also licensed games to some of Japan's top game companies, including Atlus, Data East, and Namco. Other deals include providing communications libraries to modem and fax manufacturers, and Sviridenko says he's wrapping up a couple of deals to license its own Global Positioning Satellite software.

SPIRIT's showcase client is GOST, who made headlines after it licensed its 256-Kbit encryption software to Sun Microsystems. Sun is reportedly using the software to circumnavigate U.S. government restrictions on the export of home-grown high-end encryption software systems. In Japan, Trans Cosmos, a systems integrator, has licensed the encryption technology for its Safe Box product.

Back to the table of contents