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Japan Internet Report No. 13  February 1997 ********************************************************** In this month's issue: - Interview with TWICS President Craig Oda - Industry news briefs - Japanese Web user report ********************************************************** This month we enjoyed an e-mail chat with Craig Oda, President of TWICS, a longtime Internet service provider based in Tokyo. - Some JIR readers may not be aware of the key role you played in the founding of commercial Internet connectivity services in Japan. How about a quick bio? TWICS was established in the early 1980s as a computer networking system by Dave Fisher and Jeff Shapard. In 1993 TWICS was run by Tim Burress as he rushed to prepare for connection to the Internet with limited resources and a meager budget. I was volunteering at TWICS before the Internet was connected. However, in October of 1993, when the connection was established, I rushed to join TWICS as an employee. TWICS was the first to offer public-access Internet in Japan. In the beginning, I was an evangelist of the Internet. However, as the Internet began to be propelled by commerce, I focused more on applications of Internet technology and the relationship of technology to people. The original motto of TWICS was, "The People are the System." As President of TWICS, I continue to promote the importance of people in the network. - What single technological, competitive or social development do you see having the greatest impact on general use of the Internet in Japan in 1997? The proliferation of NTT's OCN network will drive down the cost of Internet access and force many of the smaller ISPs to go under. This will result in higher quality services from the players that survive and thrive. - In what Internet-related areas do you see Japan being ahead of the curve worldwide? Japan has widespread availability of ISDN lines that operate at 128Kbps. Usage charges for a single B-channel are the same as charges for an analog voice line. - As a general rule, Japanese corporate communications tend to take place on an "organization-to-organization" rather than an "individual-to-individual" basis. In what way do you see Japanese corporate culture affecting Internet usage and vise-versa? The current hype surrounding the intranet and extranet is based on a work group model that functions in the U.S. While a person might think that groupware such as Collabra would take off in Japan, this is not the case. Since the Japanese corporate structure is not conducive to shared information and open discussion, the groupwork model has to be changed. Individuals are sometimes reluctant to send individual e-mail, since it is a record of the conversation. Correspondence between companies usually requires additional authorization. - A number of JIR readers have written saying they are interested in working in Internet-related positions in Japan. As a longtime professional in this field, what advice might you have? Internet-related venture businesses are for risk takers. Network engineers are in short supply and wages are high. The people that get the most gains in the industry are those that establish a leadership position. For a newcomer to Japan, this leadership position could be in a niche market if the individual is creative and has guts. The Internet business and business in Japan has been a wonderful experience for me. Learning is done by doing. Like the Japanese language or computer programming, business must be done to be learned. Technology is a tool. I viewed technology as a tool of communication and helped to develop the Internet to promote communication among people of the world. We now live in a global communication where the ability to find information is a powerful skill. The Internet now presents enormous opportunities for people with the vision to connect people in new ways. Looking back on the early days of the Internet in Japan, I realize that many of us were blinded by the light of opportunity and failed to see the problems that would occur with the new technologies. This is perhaps why we succeeded. We entered into the game while others waited. I respect many of my competitors and am happy to see them doing well. I believe that there are individuals that find success and individuals that find an excuse. The early pioneers that were devoted to the development of a new market had the grit to find a way to reach their goals. As we enter into a new phase of opportunities presented by the proliferation of infrastructure, find the grit within yourself and seize the opportunity. ------------- Craig Oda craig@twics.co.jp TWICS - Japan's First Public-Access Internet System TWICS - IEC Building, 1-21 Yotsuya, Shinjuku-ku, Tokyo 160 JAPAN Main Reception: 03-3351-5977 Fax: +81-3-3353-6096 Customer Service: 3351-5481 Corporate Sales/Support: 3351-8452 ********************************************************** Industry briefs 50,000 may enjoy free Internet access Nissan Motor Co. will offer free Internet access to 50,000 people for up to three months under a new promotional scheme designed to encourage viewing of the company's online advertising. Under an arrangement with Internet connectivity service provider Sony Communications Network, Nissan will distribute 50,000 CD-ROMs that provide up to ten hours of access per month for up to three months. The promotion will start in February and will be repeated every three months, according to a Nissan spokesman. With communications and Internet connectivity costs plummeting in Japan, more information providers are likely to bear the expenses of connectivity in order to extend their messages to consumers online, say industry watchers. Most large Japanese organizations using e-mail, says study Most Japanese corporations and government offices with 500 or more employees are now using e-mail, according to a study conducted by the Japan Electronic Mail Council. The study, of 2,614 companies and government offices, found that 58.2% were using e-mail as of November 1996, up 14.7% from a year earlier, and that 25.9% plan to start using e-mail in the future. Corporate managers and executives are more likely to use e-mail than ordinary employees, according to the study. However,gmore than 60% of the companies surveyed that currently use e-mail said that such use is limited to a small number of employees, suggesting that full-scale business use of e-mail is still not widespread within Japan's corporations. Majority of Japanese ISPs are tiny, according to MPT A 1996 survey by the MPT of 237 domestic Internet service providers showed that 74% had revenues of less than 10 million yen ($86,957). Of those surveyed, 73.4% employed less than 10 people, 37.9% had 100-1,000 subscribers, and 62% had only one access point. Only two firms had revenues of more than 100 million yen ($869,565), and only three had more than 10,000 subscribers, according to the MPT. Notes sales reflect soaring demand for networked solutions Shipments in Japan of Lotus' Notes groupware package topped one million units at the end of November, the company announced. Lotus (Japan) saysuit has approximately 60% of the groupware market and that total Notes shipments will reach three million units by the end of 1997 amid skyrocketing demand for corporate client-server systems. Lotus released the first version of Notes in Japan in October 1993 and had only sold 220,000 units by the end of 1995, but sales soared starting in 1996 when the so-called "e-mail" revolution hit corporate Japan. Nifty-Serve has more than two million subscribers The number of subscribers to Nifty-Serve, Japan's largest commercial online service, reached 2.11 million at the end of November, according to service operator Nifty. Monthly new subscriber figures peaked at 70,000 in March of 1996, but continued to climb at a rate of 50,000-60,000 per month thereafter. Until September, those aged 30-34 accounted for the largest subscriber segment, but this was overtaken by the 25-29 year old segment in November. A Nifty spokesman said falling PC prices have encouraged more students to buy personal computers, lowering the average age level of Nifty-Serve users. ********************************************************** New report on Japanese Web users In April we will release Online Opportunities: Understanding the Japanese Web User, the second in our Online Opportunities series of reports on the Japanese Internet market. The new report will feature detailed Web user demographics and psychographics, based on survey responses from over 25,000 Web users in Japan, plus additional primary data on online transaction settlement methods, women Web users, online advertising and much more. The report will be available directly from TKA, as well as from Dun & Bradstreet in Japan and FIND/SVP in the U.S. Tim Clark Editor Copyright 1997 by Digitized Information and TKAI  All rights reserved