Back and Forward

By Ken Worsley

Back and Forward is a regular column that takes a slightly irreverent look at some of Japan’s biggest business stories.

Domestic mobile handsets just not worth it...

Competition amongst mobile phone handset makers has started to take its toll, as Sanyo, Mitsubishi and Sony have all decided to stop developing new handsets for the Japanese market. With the domestic market expecting to flatten out at sales of around 50 million units per year, firms are having an increasingly difficult time recouping the estimated ¥10 billion in development costs for each new handset. Sony has announced that it intends to focus on global sales, where it holds a 9% market share, and Sharp is looking at moving into the Chinese market in time for this summer’s Olympic games.

...but TVs and camcorders are

Sony’s withdrawal from the domestic mobile phone handset market should allow it to focus more on camcorder and flat-panel television development and sales. Sony’s newest high definition camcorder, which comes with a 60 gigabyte internal hard drive, is priced under ¥150,000 and expected to be in the hands of many Japanese tourists to China this summer. Sony hopes that those who watch the games from home will do so on one of the firm’s flat-panel televisions, which have been dropping in price.

Toshiba reeling...

Of course, all this video content can be conveniently transferred to Sony’s Blu-ray DVDs, which have won the format war over rival Toshiba’s HD DVD format. Toshiba intends to book a one-time loss of ¥45 billion due to the discontinuing of HD DVD operations. Combined with losses from its semiconductor unit, Toshiba expects its operating profit for the current financial year to be only 37% of its original projections. Toshiba recently sold its Toshiba Ginza Building to Tokyu for ¥161 billion. It used the cash from that sale to buy a microchip factory from—you guessed it—Sony.

Beware the Internet Service Providers

Expect the debate over privacy laws and the Internet to heat up: On the Ides of March, the Yomiuri reported that major Japanese Internet service providers have agreed to cut off the Internet connections of customers who repeatedly make use of Winny and other file-sharing software packages. In related news, demand is projected to increase for how-to guides explaining how to steal borrow wireless connections from unsuspecting neighbors...

Cut out the credit...

If you’re in the market for a spare computer, Shinginko Tokyo apparently spent about ¥12.4 billion of taxpayers’ money on computer systems that went unused in 2005. Shinginko Tokyo has lost over ¥28.5 billion in bad loans, loaned money to 2,300 firms that went bust over three years, has a deficit of ¥93.6 billion, and made about 20% of its loans to firms outside Tokyo. No word yet on the bank’s subprime exposure.

Down the pan

Making things more interesting, Shinginko Tokyo is now seeking a ¥40 billion capital injection from the Tokyo metropolitan government. Should you feel obligated to contribute to the bailout of Shinginko Tokyo, you can help by flushing your money directly down the nearest toilet, as the city’s sewer system and the bank are rumored to be one and the same. No word yet on where contributions to the legal funds of Shinginko Tokyo’s former executives can be made.

By Ken Worsley, author of www.japaneconomynews.com