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

May 2002 - Volume V, Issue V

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

Dan's Desk

From Triangle's CEO

Remember my last Dan's Desk, before my trip to Japan just during Operation Defensive Shield? I was nervous about what reactions I would encounter. Well here are some of my impressions:

1. The "situation" ("ha matsav") makes everyone over there nervous as well, and they don’t quite know how to deal with their nervousness. It creates embarrassment, awkwardness. Like a fart in a theater - they just want it to disappear as quickly as possible, and if they hold their breath, maybe it will dissipate. No one wants to call attention to it because it may go away, but on the other hand, it can’t be ignored, and it creates noise (I think I've pushed the metaphor - enough, no?). So after asking "How is the ‘matsav’ over there?" they would say, "well, let's not talk about politics, let's talk business."

2. As I expected, the Japanese execs I met are concerned about business success, not political morality. A business partner told one of my colleagues last week that their main concern is the continuation of supply, lack of disruption, getting prompt answers to their questions, etc. They are asking for closer tech support, people visiting Japan – read my last Dan's Desk...

3. There were two exceptions - two close friends of mine, both very senior figures in Japan's high tech world, came out of their corners swinging (over dinner/drinks, which fueled the flames). "What amazing damage your PM Sharon is doing over there!" almost shouted one of them. The other surprised me with a right-wing sounding right jab, "The US is acting like it owns the world," but then he swung left with "and the US should let the neutral UN lead the effort to calm things down and make peace." Well, I can punch too, and they have been good friends for many years, so we went at it. I won with my masterful judo tactics: agreeing wholeheartedly with their criticism, expressing sadness over the Palestinian suffering and shock at the devastation. So when they were disarmed and tired out, I countered with what it's like living with terrorist bombs going off in your ears, looking for names of people you know in the lists of dead, overhearing conversations of mothers whose kids have nightmares, etc.

My own conclusion - the MOST important thing is to go on with business, and to show that business goes on. Our Japanese execs want to be convinced that doing business with Israeli companies is SAFE, that they will get SUPPORT, answers to questions, visits by engineers, bug fixes and application patches, IMMEDIATELY if not sooner. The end customer Joe Sato does not care if his service sucks because Haim Shmegegy is in reserve duty on a Tsav 8 and won’t or can’t answer his cell phone or email.

AND to that end, I am particularly proud to announce two major new Triangle Technologies deals: Fujitsu announced the other day that it has launched a major AoD service based on Exent Technologies' application streaming platform; and Given Imaging announced yesterday the $4.2 million JV we formed with two stellar partners, Suzuken (#1 pharma distributor in Japan) and Marubeni (a top-6 trading company). Business does go on.

Good luck,

Dan

***TRIANGLE TECHNOLOGIES NEWS***

+GIVEN IMAGING PARTNERS WITH MARUBENI, SUZUKEN

Given Imaging (NASDAQ: GIVN), maker of the M2A capsule endoscope and the Given Diagnostic System, Marubeni Corporation, one of Japan’s largest trading corporations, and Suzuken Co., Japan’s largest pharmaceuticals distributor, announced the formation of a joint venture to commercialize the Given Diagnostic System in Japan. The joint venture, known as Given Imaging KK, will be responsible for introducing, launching, and marketing the Given Diagnostic System in Japan, as well as obtaining regulatory. Triangle Technologies assisted Given Imaging in forming the JV.

+EXENT TECHNOLOGIES SIGNS AGREEMENT WITH FUJITSU

Triangle Technologies Ltd. and Exent Technologies Ltd. announced that Exent, a leading developer of Applications-on-Demand (AoD) platforms, signed a strategic agreement with Fujitsu Ltd. of Japan, representing Exent’s first breakthrough into the Japanese market. According to the agreement, Fujitsu will expand its existing broadband-based applications service using Exent’s AoD technology. Exent expects the Fujitsu deal to yield several millions of dollars of revenues to Exent in the coming 3-4 years. Triangle Technologies initiated the relationship with Fujitsu and helped negotiate the agreement.

***ISRAEL-JAPAN NEWS***

+TECHNOMATIX EXPANDS CAPABILITIES IN JAPANESE AND CHINESE

Tecnomatix Technologies’ eM-Assembly Expert, a key component of the company's eMPower solution suite for electronics manufacturing, is now available in Japanese and Mandarin Chinese language versions. The versions include local language menus, as well as the importing, exporting and editing of Chinese and Japanese language bills of material.

+VOCALTEC TO COLLABORATE WITH JAPAN’S COMMUTURE

VocalTec Communications and Commuture Corp., a Japanese provider and system integrator of info-communications solutions, announced the signing of a distribution agreement intended to bring VocalTec VoIP solutions to Tier 1 carriers.

+EMBLAZE SIGNS WITH MITSUI & CO.

Emblaze Systems signed a distribution agreement with Mitsui of Japan, via its wholly owned subsidiary Orca Interactive. According to the agreement, Mitsui will pre-purchase Orca's software licenses for the Emblaze RiGHTv software, enabling broadband interactive television and video on-demand over FTTH, CATV and xDSL lines, and will undertake a nationwide distribution of its products.

***BUSINESS NEWS***

+BROADBAND USERS INCREASE FIVE-FOLD IN ONE YEAR

According to a report by Nomura Research Institute (NRI), the number of users of broadband services rose nearly five-fold in one year. Among Internet users, the number of broadband users rose by 19.6 points from the previous year to 27.5 %. Of these, CATV users accounted for 14.4 % (7.4 % in 2001), while ADSL users accounted for 12.2 % (0.0 % in 2001). In another survey conducted by NetRatings Japan, the number of home users rose 46% year-on-year. According to the survey, use of the Internet has begun spreading notably among children and middle-aged people. Length of usage also rose significantly during the period.

+CELL PHONES NEARING 70M, KDDI REGAINS NO. 2 SPOT WITH 3G

Cellular phone subscriptions totaled 69.8 million at the end of April, and are expected to top 70 million next month. KDDI, overtaken by J-Phone in March, narrowly recaptured second place, accounting for 17.8% of total subscriptions. This was due mainly to the April release of its 3G CDMA2000 1x service, and to a rise in subscriptions to services featuring GPS systems. DoCoMo remained the leader with a 58.8% market share, albeit subscriptions to its 3G FOMA service totaled just 105,500.

+CRM MARKET SET TO GROW 18.3% ANNUALLY

IDC Japan has released numbers showing that the local CRM solution market reached sales of $2.76 billion in 2001. Banks and other financial companies accounted for about 37% of this figure. CRM spending split 14.7% on software, 54.5% on IT services, and 30.8% on hardware, networking, and communications. IDC predicts the CRM market will grow about 18.3% a year over the next five years.

+SURVEY: 36% OF USERS DON’T USE FOMA FEATURES

According to a survey done by Asia Biztech among DoCoMo users, about 50% of users complain that the service area in FOMA (DoCoMo’s 3G cellular service) is very limited, and 23.1% of users claim there is no significant difference in usability compared to regular handsets. As for the most popular new functions, 28.2% of users choose "multi-access," 25.6% choose "motion picture," and 15.4 % choose "TV phone." However, 35.9% of users answered that they do not use any of the new functions.

+ONLINE TRADING ACCOUNTS REACH 3M

A recent Bloomberg survey has found that there currently 3 million online stock trading accounts in Japan, a 4% rise from January. This is accredited mainly to the low interest rates set by the central bank.

***GENERAL TECHNOLOGY NEWS***

+3 MORE ISP JOIN WIRELESS-LAN EXPERIMENT AT MAJOR JR STATIONS

JR East and Japan Telecom Co. announced that their experimental wireless Internet service at Tokyo station and other major JR stations would be offered to subscribers of other ISPs. The new ISPs to join the trial are Matsushita Electric Industrial Co.’s “hi-ho", Dream Train Internet and "@nifty" by Nifty Corp.

+SOFTBANK, MCDONALD’S COOPERATE ON WIRELESS BROADBAND

For roughly $13 a month, diners at McDonald’s Tokyo branches can connect their laptops to a wireless broadband connection. The deal, brokered Softbank and the Japanese division of McDonald's, is the first of its kind for the international food giant and part of Softbank's plans for Wi-Fi launch throughout Japan.

+HITACHI LAUNCHES MOBILE PHONE APPLICATION PROCESSOR

Hitachi Ltd. launched the "SH-Mobile1" (SuperH mobile application processor, SH7290). This product is an application processor for 2.5G and 3G mobile phones. The SH-Mobile1 processor is a revision of Hitachi's 32-bit RISC microcomputer, the "SH3-DSP," aiming to attain the advanced characteristics of lower power dissipation to be suitable for mobile phones and to install peripheral circuits in it.

+TOYOTA TO PROVIDE OPERATION CONTROL SYSTEM USING GPS CELLPHONES

Toyota Motor Corp. plans to provide TIME@NAVI, a simple operation control system using mobile phones, from June 1. TIME@NAVI is a system that uses an Internet-accessible PC with KDDI Corp.'s GPS-support cell phone. It can be used for positioning and motion management, schedule management, business liaison, making daily reports and calculating business results, etc.

+NTT EAST ADDS NEW FIBER-OPTIC SERVICE TO COMPETE WITH TEPCO

NTT East Corp. said it will add a new fee plan to its fiber-optic Internet connection services, to cope with growing competition in Japan's high-speed Internet services market. The move is expected to spark a price war in the market, which became more crowded with TEPCO’s (Tokyo Electric Power Co.) entry in March.

+NTT TO CONVERT TO IP IN 10 YEARS

NTT will convert its long-distance telephone network, run by NTT Communications , to IP within five years; in 10 years, it will convert its remaining three networks: the mobile network of DoCoMo and its fixed-line networks operated by its two regional arms, which include local services.

+OKI ELECTRIC, AGILENT TECHNOLOGIES TO PROMOTE IP TELEPHONES

Oki Electric Industry and Agilent Technologies have agreed to cooperate to popularize IP telephone solutions. Oki has established an in-house IP Telephony Promotion Center (IPTPC) with 300 people, intended to provide an end-to-end voice-quality monitoring service and educational service to foster experienced IP telephone engineers.

+DOCOMO STARTS 3G VIDEO TRIALS

NTT DoCoMo said that it has launched a trial version of its forthcoming streaming video service. The company, along with a handful of supporting vendors, has been testing the video-streaming platform since last September. The service, dubbed V-Live by the carrier, streams both live and archived video content to phones and PDAs via its third-generation (3G) FOMA system.

+J-PHONE TO DELAY 3G LAUNCH

Japan's number-two mobile carrier, J-Phone, said it would delay the commercial launch of its third-generation commercial mobile service to December from June, its second postponement. The company will start a trial service on June 30 for metropolitan areas instead.

+KDDI TO TEST 3G CREDIT CARD PAYMENT SYSTEM

KDDI, the second-largest telecom operator in Japan, announced it will launch a field trial for credit card settlement using third-generation (3G) handsets in the fourth quarter. Four leading credit card companies in Japan, including JCB Company and UC Card Company, will join the field test. KDDI launched nationwide 3G service based on cdmaOne 1x on 1 April.

+TOSHIBA DEVELOPS COMPACT BLUETOOTH SERVER FOR DEVICES

Toshiba Corp. revealed a trial product called “Bluetooth Pocket Server”, a small-sized storage device that can hold a maximum of 5GB of data. The product is made for wireless data transfer of music files and moving images saved in the MPEG4 format to PDAs and PCs. Toshiba aims to launch the server this fall.

+SHARP, DOCOMO DEVELOP E-BOOKS FOR PDA, CELL PHONES

NTT DoCoMo plans to begin in autumn distributing electronic books based on mobile document format, or XMDF, which will be developed by combining Sharp's image technology and NTT DoCoMo's expertise in telecommunications. The format enables the display of novels and text for language study with vocal instruction and animated illustrations.

+COCA-COLA, DOCOMO TO START C-MODE CONSUMER SERVICE

Coca-Cola Japan, NTT DoCoMo, and Itochu will launch a new consumer service that combines Coca-Cola vending machines and DoCoMo's i-mode mobile phone Internet service. "Club Cmode" members will be able to buy admission tickets to amusement facilities and local area information such as maps and pay for downloads of i-mode content, including screen savers, ring-tone melodies and game applications.