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

March 2006 - Volume IX, Issue III

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

Dan's Desk

From Triangle's CEO

Dear friends:

Yesterday's Wall Street Journal ran an article on the deep and persistent recovery of the Japanese economy: "Finally, a Healthy Japan Offers Lift for U.S., Asian Economies." Many times I had expressed my faith in the Japanese economy primarily due to the strong sense of responsibility to its citizens coupled with the highly intelligent and skilled bureaucracy (yeah, all bureaucracies are painful, but relatively speaking). Now that the world is modifying its view of Japan, I must switch to the cautionary side: the recovery is not over yet, and Japan (as well as the US) are deeply dependent on China's growth machine. That is a scary thought because the Chinese economic and political systems are not transparent and they hide numerous fundamental social, economic, political, moral, financial, and legal problems. In addition, in certain areas there is a big bubble occurring (see WSJ of March 13 or 14 on the overabundance of VC money in Japan - yikes!). I believe that China will create significant pain for us sometime in this decade.

Having said that, I recently asked our VP of Business Development, Dr. Tsutomu (Tom) Kobayashi, to offer his observations on the dramatic changes taking place in Japan's telecom market. Below is what he wrote - verbatim - READ IT AND THINK OF HOW TO MAKE MONEY THERE!

Good luck all, Dan

From Dr. Tom Kobayashi - ~ early March 2006:

1. The hottest news. Softbank is going to acquire Vodafone at a price somewhere between 1.5 and 2.0 trillion yen. It is said that it will cost Softbank 1 trillion yen to build new mobile networks nationwide. So it may not be too expensive to buy Vodfaone at such a high price. Besides, it will allow Softbank to jump-start.

2. All new mobile phone carriers are interested in dual-band handsets with WiFi. New mobile carries will use MVNO to increase coverage and if Softbank acquires Vodafone, it will provide the others MVNO services more aggressively.

3. Acca has begun an experiment with WiMax and the above three new carriers are also interested in WiMax. It is a matter of time that the government will officially allocate frequencies and approve WiMax license.

4. FTTH is the fastest growing broadband network.

5. Since the last hundred meter (not mile) is still expensive, a hybrid fiber copper (not coax) might become a next wave of high speed DSL. This approach is FTTC plus twisted copper pair from the curve (or utility pole) to the home.

6. Now the Japanese government is discussing how to converge (tele)communications and broadcasting. One thing for sure is that the broadcasters will be allowed to do what is called "server broadcast." It is basically web cast and VOD.

7. NHK will be restructured drastically. It will have to reduce the number of TV and radio channels (terrestrial and satellite). In the long run NHK will be broken up into at least two major bodies: one purely public and still operated with monthly fees and the other, more entertainment oriented, privatized.

8. One-seg mobile TV broadcasting which will start in April 1 will be the next major event in mobile phone industry and will bring a wave of new handset introductions. The competition would be in the area of picture quality and battery life. Hitachi's handset boasts of 3.5 hours while Sanyo's (said to be using Renesas chipset) lasts 2.5 hours. People are curious to learn the battery life of Sharp's model to be introduced in May.

Dan

***TRIANGLE TECHNOLOGIES NEWS***

No official news this time.

ISRAEL-JAPAN NEWS

+RENESAS TECHNOLOGY AND METALINK TO COOPERATE

(IsraelFocus@capitaliq.com, March 7th) - Renesas Technology Corp. and Metalink Ltd. announced that they will be demonstrating the integration of Renesas' SH4 processor and Metalink's 802.11n-compliant WLANPlus™ technology, enabling complete solutions for wireless home entertainment networks.

***BUSINESS NEWS***

+HUGE FOREX GAINS TO JAPAN

+JAPAN'S PROPERTY PRICES RISE IN THREE LARGEST CITIES

(Bloomberg, March 23) - Japan's three largest cities had their first gain in commercial land prices in 15 years, adding to evidence the property market is rebounding . Land prices nationwide fell by the smallest amount since 1991. Demand for property rose in larger cities as Japan's economy is set to enter its longest postwar expansion, with imports last month gaining the most in almost a decade. Property purchases by investment banks such as Goldman Sachs Group Inc. and a near doubling of real estate investment trusts to 26 from 14 last year drove up prices. The Tokyo region's residential land prices in 2005 were at the same level as in 1985, while commercial land prices for the region were at a similar level to 1975, the report showed. Tokyo's Marunouchi Building, a high-rise office and shopping complex, is the most expensive commercial space in Japan at 24.4 million yen ($208,000) per square meter, up 11 percent from 2004.

+SOFTBANK TO QUIRE VODAPHONE JAPAN

(Many sources, all over March) - SoftBank closed a deal with Vodafone to purchase the latter's Japan subsidiary in 1.75 trillion yen. It will be the largest leveraged buy out in Japan to be financed by SoftBank who obtains ordinary stocks for 200 billion yen and by Yahoo who obtains preferred stocks for 120 billion yen and the rest 1.1 to 1.2 trillion yen will be debt financed through a typical LBO set-up. SoftBank will obtain, 15 million Vodafone users in Japan, but still the third largest carrier(16.7% market share) after NTT (55.8% ), KDDI (27.5%). Now SoftBank is up to ears in debt.

***TECHNOLOGY NEWS***

+KDDI MOBILE WIMAX TRIAL PROVES SUCCESSFUL

(March 07) - KDDI has successfully completed field trials of Japan's first Mobile WiMAX system, in central Osaka. The trials verified Mobile WiMAX functionality in an urban environment, demonstrating practical communication speed along with basic performance and high-speed handover between base stations. The Mobile WiMAX system, which will be built in accordance with Wire Communications Standard IEEE802.16e, supports stable, high throughput communications in non-fixed environments at speeds of less than 120km/hour.

+8-MEGAPIXEL HIGH-RESOLUTION ROBOTICS TECHNOLOGY

(JCN) - The National Institute of Information and Communications Technology (NICT) and Victor Company of Japan (JVC) announced that they have co-developed a network robot vision system that achieves a vision resolution of 8 megapixels, close to the limit of the human vision. The system consists of a high-resolution robot camera and network humanoid robot. Developed by JVC, the camera has a single 8-megapixel color CSMO sensor, and is about 1/18 the weight and 1/19 the size of its predecessor with the same resolution the company developed in 2002. Developed by the NICT, the humanoid robot has humanoid arms and hands with five fingers with probing capability. A person wearing data gloves embedded with join bending sensors can manipulate the robot's arms and fingers via a network. The robotics technology is expected to be used for telemedicine and nursing care applications.

***LIFE SCIENCES AND ENVIRONMENT NEWS***

ANTI CHILDREN CRIME

(Kyodo, March 23) - Telecom service provider Ubqtus Corp will release on April a pendant-style signal emitter to enable the parents of schoolchildren to track their whereabouts every five minutes via cell phones or personal computers. The dolphin-shaped emitter also enables parents or guardians to confirm the routes taken by children from their starting points on maps projected onto the screens of cell phones or computers. The emitter can be either worn around a child's neck or attached to a school bag.

+BIRD FLU VIRUSES BREED IN HUMAN LUNG NOT NOSE, THROAT

(Kyodo, March 22) - The fact that avian influenza viruses replicate efficiently only in the lower region of the human respiratory tract instead of the upper region as in human flu may be the reason why human-to-human transmission of bird flu remains rare, a group of Japanese researchers from the University of Tokyo's Institute of Medical Science said. While human influenza viruses infect cells lining the nose and throat and are easily spread by sneezing and coughing, avian viruses were not prevalent in such mucus.

+AMANO RELEASES IONIZED ALKALINE WATER GENERATOR

(JCN, Mar 28) - Amano has begun marketing an ionized alkaline water generator, Delta 1500K. While providing strong detergency, ionized alkaline water is environmentally-friendly. The new device can generate strong alkaline water (pH11 or above), which is free from hazardous materials and suited for floor cleaning. By using potassium carbonate as an auxiliary substance for electrolysis, the 1500K produces no chlorine odor and rust, typical byproducts of chlorine gas.