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

July 2002 - Volume V, Issue VII

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

Dan's Desk

From Triangle's CEO

There will be no “Desk” this month. My apologies to our faithful readers.

Dan

***ISRAEL-JAPAN NEWS***

+MITSUI ENTERS VOD MARKET USING BITBAND TECHNOLOGY

Mitsui Co., Ltd. is going to present a video on demand (VOD) service that enables users to select and receive videos whenever they like, using Israeli company Bitband Technologies’ technology platform. Mitsui is going to market servers and related software to buildings such as large apartments, hotels and hospitals.

***BUSINESS NEWS***

+DATA VOLUME FLOWING THROUGH JAPAN’S LAN/WAN TRIPLES IN 3 YEARS

According to a survey by Nikkei Market Access, the data volume flowing through Intranets of Japanese companies has been increasing rapidly. As for LAN traffic and all WAN bandwidths, the survey showed that LAN traffic had increased by 26% year-on-year at the end of 2001, and all of WAN bandwidths by 18% Y-O-Y. 80% of surveyed companies changed their network environment, in order to ease congestion. It is expected that in 2002 LANs/WANs will see further increases of data.

+STORAGE MARKET UP 10% IN 2001

According to IDC Japan, the Japanese disk storage market grew by 10% year-on-year to reach $4.34 billion in FY2001. Capacity shipped jumped 78.1% to 36.2 petabytes. IDC says that the outlook for domestic shipments in 2002 is for an additional increase of 6.5%, which could be even bigger once the eGovernment data centers all over the country start activity.

+JAPAN’S PC SERVER SHIPMENTS RISE 15.7% IN 2001

Nork Research Co., Ltd. released a report on Japan's growing shipments of PC servers for fiscal year 2001. According to the report, shipments reached 333,000 units, for an increase of 15% from the previous period. In the first half, the year-on-year growth rate was as high as 22%, due to demand from medium- and small-sized enterprises (SMEs) for Internet servers and the deliveries to government and other public offices. The report also provides forecasts for fiscal year 2002: introduction of low-priced servers by SMEs will continue, and shipments of 363,500 units are expected, for a 10% increase from fiscal 2001. Linux servers are expected to gain a 12% share in fiscal 2002, while shipments of blade-type products are estimated to be around 10,000 units, mainly in science and technology fields.

+DOCOMO REGAINS TOP SPOT FOR MOBILE USER GROWTH

NTT DoCoMo regained the top spot in June for the number of new mobile phone subscribers in Japan after an offensive with new camera phones and other advanced. In May, suffering from a lack of attractive new handsets, DoCoMo fell behind rivals KDDI and J-Phone in subscriber growth for the first time since the Telecommunications Carriers Association started compiling data in 1996.

+AU GROUP’S 3G PHONES TOP 1 MILLION MARK IN 3 MONTHS

The number of subscribers for au group’s (KDD Corp. and Okinawa Cellular Telephone Co.) third-generation service, CDMA2000 1x, has passed the one million mark. The 1x is a part of the 3G service, which is an expanded version of cdmaOne mobile phone service. Au launched its 1x service on April 1, 2002, and won 334,100 subscribers by the end of that month. The group plans to sell seven million 1x-compatible terminals by the end of fiscal 2002.

+JAPAN’S STREAMING CONTENT MARKET TO REACH $1.35B IN 2006

IDC Japan said in a survey that the value of Japan's market for streaming content, including music and video clips, will expand to $1.35 billion in 2006, or 20 times larger than the market scale in 2001. According to IDC, as ADSL and other broadband connections prevail, the demand for video content is increasing faster than that of voice content. IDC Japan also says that a growing number of video content types, including movies and TV programs in particular, will be provided in the form of streaming instead of downloading to a user's PC.

+USEN’S FTTH USERS PASS 10,000

FTTH Internet subscribers passed te 50,000 mark at the end of May, representing an addition of 16,000 users in that month alone. Usen Broad Networks Inc. said the number of users of its fiber optic Internet access service had surpassed the 10,000 mark as of the end of May, a year and three months since its launch in March 2001.

+JAPAN’S INTERNET USERS TO JUMP IN NEXT FOUR YEARS

A government white paper says Japan can expect the number of people using the Internet to jump from 46.2 million to 87.2 million in the next four years. The report says that in 2001 an additional 8.9 million users began accessing the Internet, while 2.4 million users joined in the first two months of 2002. The fastest growing group of users were those using high-speed connections – that group numbered 3.9 million in March, which represents a fourfold rise over the year earlier.

+NEC, KDDI, MATSUSHITA FORM NET CONSORTIUM

NEC Corp., Matsushita Electric Industrial Co., KDDI Corp., Japan Telecom Co. and 27 other firms have established a consortium to provide Internet access services to consumers. Called "Mega-consortium", the grouping will be the nation's largest Internet service provider, or ISP, with about 12 million subscribers. A distant second will be Fujitsu's "nifty" Internet service, which had 5.2 million subscribers at the end of March.

+INCREASE IN REPORTS OF COMPUTER VIRUS

The number of reports of computer virus damage in Japan in the first six months of 2002 has already surpassed the total for all of 2001, according to software firm Trend Micro. The number of cases reported between January and June to the Tokyo-based firm stood at 28,938, topping the 25,644 reported throughout 2001. Trend Micro attributed the sharp increase to the longer periods individuals spend online, due mainly to the proliferation of broadband connection services.

+FUSION ANNOUNCES 1.5 MILLION IP PHONE SUBSCRIBERS

Following in the footsteps of Yahoo! BB Phone, Fusion Communications announced that it now has more than 1.5 million subscribers to its IP phone service, and that it expects the number to swell to more than 2 million by March 2003.

+FUEL CELLS SET TO BE THE NEXT BIG THING

Over the past few decades, Japan has managed to reduce its dependency on oil by shifting to more environmentally-friendly natural gas. Fuel cells seem to fit the bill: Japan's government expects the fuel cell market to reach $8 billion in 2010 and $64 billion in 2020. It has a target for 50,000 fuel cell-powered vehicles by 2010 and 5 million in 2020. Also, it's aiming for fuel cell-powered generation capacity of 2,100 megawatts by 2010 and 10,000 MW in 2020. Toyota plans to sell its fuel cell hybrid car to businesses and research centers by the end of the year, making it the first carmaker with a fuel cell vehicle on the market.

***GENERAL TECHNOLOGY NEWS***

+DOCOMO TO OFFER GPS PHONES

Japanese mobile phone giant NTT DoCoMo is to offer GPS handsets by the end of the year, in a bid to catch up with competitors. KDDI, Japan's second-largest telecom firm, has been gaining momentum with its GPS handsets rolled out in December, having signed up about 1.4 million users so far.

+NTT DOCOMO LAUNCHES M-ZONE WLAN SERVICE

NTT DoCoMo, Inc. announced that it will launch wireless LAN service, dubbed "Mzone," from July 1, 2002. DoCoMo has been providing wireless LAN trial service to monitors since this April to analyze the technology and collect information on usage. After assessing results of the trial, DoCoMo has decided that Mzone is commercially viable. Mzone conforms to IEEE802.11b format, and theoretically it can reach the maximum data transmission speed of 11Mbps.

+NTT EAST TO LAUNCH 12MBPS ADSL SERVICE BY AUTUMN

NTT East Corp., a regional carrier of Nippon Telegraph and Telephone Corp., has decided to raise the maximum access speed of its ADSL Internet services by 50% to 12mbps by autumn. NTT West Corp. is expected to quickly follow suit. The move by the two regional NTT carriers, which have a combined market share of 40%, will likely fuel competition among ADSL Internet service providers to boost connection speeds.

+FUJITSU TO START WIRELESS DATA SERVICE

Fujitsu Ltd. said it is considering starting mobile data services for business use by leasing bulk capacity from a telecom carrier to tap into a potentially lucrative corporate mobile market. A spokesman for Fujitsu, Japan's largest computer maker, said the company may offer such services to corporate users via the network of a unit of Japan's number-two telecom carrier, KDDI Corp.

+DDI STRENGTHENS ANTI-SPAM FUNCTION

DDI Pocket Inc. said it would substantially strengthen the function to protect PHS phones from nuisance advertising e-mails. The company is the first Japanese mobile phone carrier to create a function to reject e-mails by the subject. This function enables PHS users to reject e-mails that contain the word, "!advertisement!" or "unapproved advertisement."

+KDDI TO TEST MOBILE PHONE-IPV6 ACCESS

KDDI R&D Laboratories and KDDI Corp. announced a trial connection service, which enables the users of "au.NET" mobile phone Internet connection service to connect to IP version 6 (IPv6) network. For IPv6 connection, "tunneling" is adopted; that is to encapsulate IPv6 packets into IPv4 packets, thereby enabling IPv6 packets to be transmitted on IPv4 network.