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A monthly review of the latest developments in Japan’s IT, telecom, and life sciences sectors

December 2003 - Volume VI, Issue XII

Triangle Technologies is the leading Japan Israel business development and investment advisory firm
www.triangletech.com

Dan's Desk

From Triangle's CEO

Japanese ARE INNOVATIVE!

Stop saying that the Japanese are not creative!

There is a myth, perpetuated by comments by many Japanese themselves, that "We Japanese are not creative or innovative, culturally or technologically." And the (we) Japanese are "certainly not entrepreneurs!" I have often argued against these simplistic statements as unfounded or polite modesty, or lack of insight into either the Japanese or the process of innovation. I think I know where it comes from - in their daily behavior, Japanese businessmen appear similar, this alikeness seems "square", and social norms in Japan do not blatantly reward individuality. And social norms in Japan reward predictability and frown upon risk-taking and failure.

But if you look at the reality you can see that there is now and has historically been tremendous innovation and entrepreneurship in Japan, on many dimensions. In the business world just look at the iMode, game console content and technology, 3G deployment, nano-technology research. Japan is second only to the US in the development of globally successful pharmaceuticals, and Japan's drug discovery process is both different and relies heavily on individual creativity.

Japan has outstanding world wide success in architecture (Tadao Ando), art (Takashi Murakami), anime (Hello Kitty, Pokemon), fashion (Issey Miyake), food (sushi), interior design (ikebana), cinema (Kurosawa, Hayao Miyazaki's 2003 Oscar), music (Glay), video games (The Way of the Samurai), and the list goes on - don’t forget karaoke! Don’t believe just me - take a look at the W-Post article last week http://www.washingtonpost.com/wp-dyn/articles/A33261-2003Dec26.html - Japan is becoming the "Empire of Cool."

And just one ride on any of Japan's urban subway systems should make you realize that someone sure knows how to write some pretty hairy software.

According to Marubeni Research, Japan exports 3 TIMES AS MUCH CULTURAL CREATIVITY AS TV'S, and whereas Japan's exports have grown 15% in the past 12 years, cultural exports have grown 300%. (I have a secret for you - Japan became a net exporter of technology - patent licenses - back in the mid-1990's)….

So don’t underestimate Japan's innovative force, and don’t OVERestimate the near-clich? about Israeli creativity!

Good luck

Dan

***TRIANGLE TECHNOLOGIES NEWS***

+NET ONE SYSTEMS AND SHEER NETWORKS TO PROVIDE JAPANESE MARKET WITH TOP OSS SOLUTION

Net One Systems Co., Ltd. a leading network solution provider and Sheer Networks a leading provider of service management solutions for carrier networks and large enterprises, have signed a strategic partnership agreement, addressing the Japanese market.
Under the terms of the agreement Net One Systems and Sheer Networks will offer Japanese service providers the Sheer™ BOS solution. The two companies already met the leading DSL providers in Japan.
Triangle Technologies who formed this strategic relations believe that cooperation with the #1 Cisco system integrator worldwide is the best partner for Sheer’s products in Japan.

***ISRAEL-JAPAN NEWS***

+ANNUAL MEETING OF ISRAEL-JAPAN FRIENDSHIP SOCIETY

The Israel-Japan Friendship society and Chamber of Commerce made its annual Gala Diner on December 11th in collaboration with the Israel Ministry of Foreign Affairs and the Israel Export & International Cooperation Institute. Almost 200 guests attended this event including the Japanese Ambassador, 5 Israeli Ambassadors (current one, next one Mr. Eli Cohen, three formers) and many others.
Two important points we wish to emphasize are (1) the pick of the bilateral trade was in 1995 and Since then we are going down and (2) Zoran and ITRAN are among the outstanding exporters in 2003.

***BUSINESS NEWS***

+GOOD YEAR FOR GOING PUBLIC IN JAPAN

The 3 venture markets in Japan: Mothers, JASDAQ, and Hercules (previously NASDAQ-J) in Osaka, are expecting at least 101 IPOs this year, the first increase since 2000. The Mothers market, run by the Tokyo Stock Exchange, in particular is experiencing strong demand from companies looking to raise funds. Mothers has slated 32 IPOs for this year, 5 more than in the dotcom boom of 2000.

+JAPAN AND CHINA

Morgan Stanley has just put out an analysis about Japan's dependence on China for continued export growth. MS analyst Stephen Roach says that in the first 8 months of this year, 73% of Japan's exports were to China, and thus represents a worrying over-dependence on one country. The latest numbers show, however, that Japan's share of exports to other destinations is starting to recover, and that in the last 3 months the share to China is 49% -- still a lot, but clearly the rest of the country's global trade is picking up as well.

+NTT TO STRENGTHEN IP OPERATIONS THROUGH NEW BROADBAND FIRM

NTT Corp. has announced its plans to bolster IP-related operations by setting up a company in December to oversee broadband services and by acquiring the operations of a struggling data communications firm. The company is targeting a customer base of around 1 million and sales of 40-50 billion yen in three years.

+JAPAN'S DSL SUBSCRIBERS EXPECTED TO SURPASS 10 MILLION IN DECEMBER

According to the Ministry of Public Management, Home Affairs, Posts and Telecommunications, the number of subscribers of xDSL services in Japan, including ADSL, reached 9,590,349 at the end of October, up 361,663 from the figure recorded a month before. The previous monthly gain was at 340,000 – meaning that at this rate, the total number of xDSL subscribers may exceed 10 million within this year.

+SOFTBANK ASKS FOR 3G LICENCE

As a result of its recent successes in signing up more than a million subscribers to its BBPhone service, Softbank has realized that it has the numbers to become a player in the open telecomms market. The company has applied to the Ministry of Telecommunications for a 3G cell phone licence -- one which will use TD-CDMA technology instead of W-CDMA (DoCoMo and Vodafone) or CDMA2000 (KDDi).

+BUSINESS BANKRUPTCIES IS DOWN

Corporate bankruptcies in Japan are fewer in the number, but those that are failing are racking up larger amounts of debt, the latest measurement of these indicators finds.
Teikoku Databank Ltd reported that there were 20.7 percent fewer business bankruptcies in Japan during November than there were in the same month last year, the eleventh straight month with fewer new receiverships.
The total debt left by such companies, however, topped the $1 trillion yen mark for the first time in two months. In U.S. dollars, that's $9.27 billion. It's 75.2 percent more debt than was racked up by bankruptcies in November 2002.

+NTT DOCOMO TO PULL OUT OF AOL JOINT VENTURE

Japan's top mobile phone operator NTT DoCoMo is considering ending its business ties with America Online Inc. (AOL) by pulling out of its investment in their Japanese joint venture, a press report said.
DoCoMo, which owns a 43.2 percent stake in DoCoMo AOL Inc., currently valued at 17 billion yen (157 million dollars), will likely complete its exit plan by the end of the year. A spokesman for NTT DoCoMo Inc. declined to confirm the report.
DoCoMo's investment was meant to boost synergy between its popular i-mode mobile phone-based Internet service and AOL's Internet access service, but the deal failed to generate the intended results due to strong competition in the market.

***GENERAL TECHNOLOGY NEWS***

+CASIO, HITACHI TO MERGE CELL PHONE DEVELOPMENT

Casio Computer Co and Hitachi have announced that they have agreed to merge their cellular phone design and development activities, and establish a joint venture company in April 2004. The joint venture, to be owned 51% by Casio and 49% by Hitachi, will take over development, design, procurement and other functions. The new company will focus on the development of the cellular phone handset platform.

+NTT DATA FORMS ALLIANCE TO MARKET ADVANCED GPS SOLUTIONS IN JAPAN

NTT DATA Corporation, Geosurf Corporation, Thales Navigation Inc., and Geodetics Inc. have reached an agreement in November to carry out joint market development efforts in Japan, in the area of advanced GPS applications. Among the GPS solutions to be offered to Japanese customers are highly precise monitoring of movements in the earth's crust and behavior tracking. The four companies plan to implement the agreement starting in December. NTT DATA estimates the Japanese market scale in these business areas will reach approximately 7 billion yen in 2005, and has set a sales target of 1 billion yen for that year.

+JAPAN RANKS 14TH ON ITU'S RANKINGS ON INFORMATION ACCESS

Japan ranks 14th on a list of information and communications access-friendly nations, according to the International Telecommunication Union (ITU). Sweden topped the list, followed by Denmark. The rankings are based on the ITU's Digital Access Index, rank informationing and communication technology access.

+Sharp Develops Electronic Document Display System for Zoomable Viewing of Business Documents on Mobile Phones

Sharp Corporation and BitFlash (Canada) have developed an Electronic Document Display System for mobile phones that enables business documents and graphics such as word processing files, spreadsheets, presentations, etc., used on the PC desktop to be displayed with zoom-in/zoom-out viewing on mobile phones by converting the files to the international standard SVG-Tiny*3 format.

+SHOWA DENKO DEVELOPS FOUR-ELEMENT LEDS WITH EXCEPTIONAL BRIGHTNESS

Showa Denko K.K. (SDK) has developed aluminum indium gallium phosphide (AlInGaP) light-emitting diode three times as bright as existing ones. The new product, developed at SDK's Chichibu Plant, features a flip chip structure and is expected to fulfill a growing demand for use in outdoor displays, illumination, mobile phones, traffic light and automotive devices.

***LIFE SCIENCES AND ENVIRONMENT NEWS***

+NITTO DENKO DEVELOPS WORLD'S FIRST BIODEGRADABLE GENE CARRIER; NEW POLYMER MATERIAL SAFELY DELIVERS GENES INTO CELLS

The Nitto Denko Group has developed the world's first biodegradable gene carrier, a polymer material that can be used in cellular experiments and other bio-related areas. The carrier, which can transfer foreign genes into animal cells, exhibits extremely low cell toxicity due to its biodegradability and enables transfer efficiency to an equal or higher degree than traditional methods.

+TWO-LEGGED WALKING CHAIR

While it's still a primitive prototype, researchers from Waseda University and robotics firm Tmsuk have succeeded in creating a bipedal walking chair to help incapacitated riders to negotiate stairways. The battery-powered chair has two sets of telescoping poles which can "walk" in all four directions while carrying someone weighing up to 60kg (132 pounds). The researchers say it will take another 2 years to create a proper working model.

+ MITSUBISHI HEAVY INDUSTRIES TO LAUNCH NEW ANTIALLERGIC AIR-CONDITIONERS

Mitsubishi Heavy Industries announced on December 16 that it will add new models to its Beaver Air-conditioner series in January. The new products are equipped with the "Allergen Clear Filter," MHI's proprietary filter which uses enzymes to degrade and inactivate mites, pollens, and allergens.

+NIPPON PAPER INDUSTRIES DEVELOPS INNOVATIVE RECOMBINANT DNA TECHNOLOGY

Nippon Paper Industries (TSE: 3863) has recently announced that it has successfully developed a new recombinant DNA technology called "SDI (Site Direct Integration) System."
This new technology enables genetic exchanges in genetically-engineered products to replace a new whole-gene with the already-existed gene without inducing changes in a DNA.