GOVERNMENT & POLICY

PDA interoperability trials slated
The Ministry of International Trade and Industry (MITI) will launch personal digital assistant (PDA) interoperability field trials in the Tokyo area in October. The experiment will involve test data transmissions between PDAs made by Sharp, Casio Computer, Canon, and other manufacturers over cellular telephone circuits. MITI and the participating manufacturers are working to develop common software that will enable data to be readily sent and received by PDAs that use different operating systems. The ministry expects that the release of new "communications compatible" PDAs will greatly enhance usefulness for consumers and expand the market.

MPT discloses digital broadcast plans
The Ministry of Posts and Telecommunications (MPT) has disclosed its plans concerning the startup of terrestrial digital television broadcasts, slated to begin within the next decade. The ministry will give priority to NHK and the four other public service broadcasters in Tokyo by allotting them the same bandwidth they currently enjoy in the analog sector. The MPT will also approve flexible uses of the spectrum for two-way data and multichannel broadcasts. The ministry hopes to start digital broadcasts in Japan's three largest metropolitan areas and most other major cities by 2006.

Japan eyes ITS leadership
The Japanese government plans to prepare by October a Japan-specific version of an Intelligent Traffic System (ITS) architecture for presentation to the International Standardization Organization (ISO). Five ministries involved in various aspects of traffic information systems will determine specifications for nine functions currently under deliberation, including standardization on a single radio transmission methodology, enhanced car navigation systems, and automated charging systems. The ministries intend to disclose their specifications at an upcoming ISO meeting, and will call on equipment manufacturers in Japan and overseas to move forward with development efforts. Japan hopes these efforts will spur early adoption of the new standards. The initiative is certain to heat up ITS development competition between Japan, the US, and Europe.

Electronic disclosure proposed
The Management and Coordination Agency intends to approve information disclosure by government offices through electronic media, such as e-mail and floppy disk. According to the agency, rapid advancement in the use of computers at government offices has made information disclosure via electronic media more economical than conventional methods of submitting paper documents. It predicts that most government offices will resort to the new approach. The agency is expected to submit to the Diet this year an information disclosure bill that will pave the way for the introduction of the new information disclosure system.

PC inventories up
PC inventories in Japan remain bloated, even after improving somewhat following the year-end sales season, according to a market survey by consulting company Seed Planning. The survey covered 50 PC retailers and large consumer electronics retailers. The inventory ratio (units in inventory at month-end divided by number of units sold during the month), normally in the 0.5 to 0.7 range, soared to 1.11 in November as retailers stocked up with new models for the year-end sales season, but improved to 0.83 in December due to discounting. This was higher than the inventory ratio of December 1996. Consumer electronics retailers had more of an inventory problem than the PC retailers.

FTC investigates Microsoft
Japan's Fair Trade Commission (FTC) in January began investigating Microsoft Japan for allegedly requiring domestic PC manufacturers to not preinstall competitive software. The US Justice Department has been investigating parent Microsoft regarding possible anti-competitive practices with regard to its Windows 95 operating system and Internet Explorer browser marketing practices, but Japan's FTC is focusing its investigation primarily on application software packages such as Word and Excel. The FTC is basing its investigation on possible violation of Section 19 of Japan's Anti-Monopoly law. Should the FTC find Microsoft Japan guilty of anti-competitive behavior, the company may be forced to revise the bundling strategy that has so effectively supported its growth in Japan's PC market.

Yamaha expands CD-R/RW production
Yamaha will expand its CD-R (CD recordable) and CD-RW (CD rewritable) drive production by 40%, from 70,000 units to 100,000 units per month, in fiscal 1998. With demand from overseas and domestic markets soaring, the company cannot keep up with orders. Yamaha is considering commissioning production to other makers, including IMI of the Philippines (which already assembles thin-film magnetic heads for the company), by lending them production equipment. Yamaha also expects to invest up to \2 billion to revamp production equipment at its own Toyooka plant. Worldwide demand for CD-R and CD-RW drives is expected to jump from 2 million units in 1997 to 4 million or more units in 1998, and Yamaha hopes to grab a 25% market share this year.

PC server shipments grow
Japan's domestic PC server shipments soared 51% year-on-year, to 150,400 units, in 1997, according to Multimedia Research Institute (MRI). NEC increased its share to 29%, while Fujitsu ranked second with a 15% share, down slightly from the previous year. Compaq Computer's share shrank from 19% to 13%, and IBM Japan saw its share stay at about 13%. Fifth-place Hitachi saw its market share rise from 5% to 9%. MRI predicts that PC server shipments in Japan will grow by 13% year-on-year during the first half of 1998, and by 32% in the second half of the year.

TCO research effort
The TCO Consortium, a group of 18 computer manufacturers, system integrators, and computer-using firms dedicated to defining and reducing total cost of ownership (TCO) for computers, has teamed up with research firm Gartner Group Japan in an effort to accurately define TCO for the Japan market. As part of the effort, Gartner Group is conducting both mail and interview-based surveys of some 20 Japanese firms and making the results available to consortium members. TCO consortium members include Nihon DEC, CSK, Hewlett-Packard Japan, Nihon Cisco Systems, and IBM Japan.

Hitachi, ASCII offer Net-based training
Hitachi and ASCII have launched a new corporate training software business that makes use of the Internet. The two firms eventually plan to offer a service whereby corporate employees can use spare or idle time during their workdays to complete self-study English or computer courses. The corporate students would download programs and submit responses, and receive corrections, from servers managed by Hitachi and ASCII. The new partners are conducting an experiment with approximately 10,000 participants, and will develop the software content, service framework, and rates based on the results. They intend, by combining Hitachi's networking experience with ASCII's multimedia software expertise, to offer comprehensive in-house employee training programs that cover everything from system development to software production and distribution.

Cellular outpaces PHS in subscriptions race
Japan's cellular and PHS (personal handyphone system) service providers added 1,087,000 new subscribers in December 1997, up 3.9% from the previous month. According to the Telecommunications Carriers Association (TCA), total PHS subscriptions fell by 15,000 during the month, to 6.99 million, but the total number of mobile telephone subscribers grew to 28.74 million. For calendar year 1997, cellular subscriptions rose by 10.58 million while PHS subscriptions increased by 2.06 million. Going into 1998, subscriber losses among Japan's PHS carriers continued. In January, PHS carriers lost a total of 68,000 subscribers, the fourth consecutive month-to-month decline.

Net use grows in Ô97
The number of Internet users in Japan reached 8.84 million at the end of 1997, up 55% in only ten months, according to the Tokyo unit of research firm Access Media International (AMI). AMI's study found that 3.42 million consumers access the Internet from their homes, for a household usage rate of approximately 6.5%. About 6.79 million people go online from work or school, which means that 1.37 million (15%) of users access the Internet both at home and at work/school. Soaring use of the Internet in 1997 is noteworthy because PC sales started to slow that year, according to AMI, which predicts that Japan will have approximately 14.67 million Internet users by the end of 1998, a 66% year-on-year increase.

Online securities trading planned
New Japan Securities, Wako Securities, and Okasan Securities in October will launch a Web-based online trading service. The system will use the SECE (secure electronic commerce environment) common platform; the SECE system hardware will be developed by Fujitsu, and SECE verification operations will be outsourced to Japan Verification Service. The data and charts portion of the service will be tested starting in June, with account-related operations, such as trading, starting in August.

First foreign Type 1 carrier
US-based Worldcom is teaming up with NTT to start international and domestic carrier services in Japan in FY1998. Worldcom Japan became the first wholly owned foreign subsidiary to apply for a Type 1 carrier permit in Japan in February. The subsidiary, currently capitalized at \10 million, will boost its capital funding to \1.7 billion by 2000. Plans call for the company to offer domestic telephone, ISDN (integrated services digital network), and frame relay services using NTT's networks, as well as its own to-be-installed optical network, and to provide international service between Japan and six European countries via the US.

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