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| Japan Internet Report No. 17 July 1997 ********************************************************** In this month's issue: - Online shopping is here now - Interview with George Arriola of Macromedia - Industry news briefs - Thoughts on the content business - Who you are ********************************************************** Online shopping is here now Japan's fascination with online shopping and security - and the commonly held belief that "security" is the key to widespread online shopping - never ceases to amaze me. Thousands of Internet shoppers in Japan already understand the security of the Internet and are buying over a million dollars a month worth of merchandise from U.S. online vendors. In my view, the key obstacle to widespread online shopping, therefore, is not security but rather compelling utility. Today such utility is provided only to purchasers of computer products, books, CDs and other information-intensive merchandise for which online search mechanisms are truly more efficient compared to traditional retail options. The "computer-centric" nature of these product categories is certainly another key reason for success in the online sales arena. ********************************************************** We had a great time meeting George Arriola of Macromedia in San Francisco last month for a tour of Macromedia's wild headquarters, then an incredible lunch. Here's George: - Please provide our esteemed JIR readership with a brief overview of the events that lead to your becoming Japanese Web development manager/information architect at Macromedia. Before leaving for Japan in 1991 I studied film in Los Angeles, and while attending school I was an intern at a local animation studio working on the Emmy award winning television show 'The Simpsons'. It was here that I discovered my passion was not with film direction, but with graphical communication. In late 1991 I left for Kanazawa University, located in Ishikawa Prefecture. Here I received my Bachelors of Fine Arts in Graphic Design and it was around this time I really got my first taste of the Internet with TWICS of Tokyo being my first public ISP. During and after college I worked for a small studio named AnimEigo in Tokyo which took mainstream Japanese animation, and subtitled/dubbed it into English for worldwide distribution on VHS and laser disc. One would be surprised just how much Japanese culture and history you can learn while working on Ryumiko Takahashi's Uruosei Yatsura television series and movies, 'da-cha'. I left AnimEigo to go freelance as a multimedia designer/director for local Yokohama based clientele. I eventually found myself working as a full-time multimedia localization supervisor and designer for WIRED Japan. While working at WIRED I became one of the original alpha/beta testers for Shockwave Director; the only tester for Shockwave in Japan at that time. It wasn't long before a certain event took place that brought my name to the attention of the Japanese office of Macromedia in Tokyo. Shortly after I was headhunted into their Japan K.K. office as the New Media Product Manager for Shockwave and Director 5J. After working in Macromedia's product R&D department, I was promoted and relocated to their head office in San Francisco just this last November. After living in Japan for the last five years I'm now going through reverse culture shock! Now I'm the Japanese Web Development Manager, Senior Designer and Information Architect for Macromedia, Inc. I am responsible for marketing and market research, planning, architecture, cultural localization, graphic design (or GUI design), and DHTML - HTML authoring on the Japanese Web site. I am also the Senior Graphic Designer for the graphical user interface found across Macromedia's English Web site. - What is your assessment of the state of the Japanese Internet today and how do you see it evolving? Currently the Japanese Internet market is still in its infantile state. The average user places priority on graphical elements, rather than contextual content. Also only recently has the telecommunication infrastructure been implemented that will allow just about everyone fast, reliable connectivity to domestic content and paving new roads and possibilities for electronic commerce. Although this change is occurring rapidly and placing more emphasis on content-driven sites such as newspapers and wire services much like those in the States, there is still much education needed on how to effectively market and communicate within this new medium. With the ever increasing education about computers in Japan, I predict within three to four years time major broadcasting giants like NHK will be seriously experimenting with live NetCasting for local major events. I also see WebTV, or Internet dedicated workstations, possibly outdoing television as the major form of entertainment. - You've done freelance Japanese Web work for both U.S. and Japanese clients, and mentioned that in this capacity you prefer Japanese to U.S. clients. Why? I prefer doing business with Japanese clients because of the way business is conducted in Japan. I have assimilated with their culture and find that my Japanese clientele tend to be more focused and sensitive on solving problems that might arise during the development process, whereas a U.S. client tends to care more about making the set deadline then the final outcome of the project, or product. - Corporate awareness in the U.S. of international Internet markets seems to be quite low. Aside from the obvious U.S.-centric nature of the Internet itself, why do you think this is so, and how do you see this situation changing over the next few years? I really have to agree with you here that the U.S. sees itself as the core of Internet development. It has yet to acknowledge the advancements made, or ones that are being made from other countries worldwide. I think that is because those individuals who are making the technological advancements in foreign countries are getting snatched up by U.S. based high-tech companies like Microsoft. As the need for information technologies increases, so will the U.S.'s awareness of foreign-based markets, and potential foreign-based revenue. The log files from major U.S. Web servers are out there, and in them lie the page view statistics, IP addresses, and global domain names to make ven the most skeptical U.S. CEO a believer. Pursuit of foreign markets is inevitable. But because of logistics it is even more important to culturally localize your information for your target market and base your server(s) within your target country. - george a. arriola (jOrge) / macromedia, inc. - japanese web development manager - senior designer & information architect - +1.415.252.4041 voice / fax +1.415.626.0554 - mailto:jOrge@macromedia.com / http://www.macromedia.co.jp ********************************************************** Industry news briefs All of these stories appeared within the last three weeks, demonstrating how fast the market is moving. Please don't rely on JIR alone if you need comprehensive coverage of the Japanese Internet/telecom markets. This is really just a random sampling of news - if you need comprehensive coverage, you may want to consider subscribing to Digitized Information's daily service. A completely overhauled Digitized Information Web site will be available soon. In the meantime, send e-mail to diginfo@gol.com or call 33465-7069 in Tokyo. Japan's phone market loosening up The MPT will in August eliminate restrictions on so-called international Internet phone services whereby subscribers use ordinary local dialup telephone lines to connect to the Internet, then place international calls over the global computer grid. The ministry is also planning to relax restrictions on international telephone services whereby corporations link international leased lines to the local public telephone network. More than 30 domestic and international providers will enter the market as a result of the ministry's rulings, meaning that telephone charges from Japan to the U.S. may drop dramatically, say industry watchers. The MPT has been implementing a phased relaxation of restrictions on telecom connections since fiscal 1995, and the completion of this next phase means Japan's international telephone market will make the transition to full-fledged competition, according to a ministry spokesman. So what else is new? Internet users in Tokyo pay 80% more than those in New York on average, according to an MPT survey of prices of telecommunications services in London, Paris, Dusseldorf, New York and Tokyo. The ministry calculates that Internet users in Tokyo, New York, London, Paris, and Dusseldorf pay average monthly rates of 5,459 yen ($48.31), 2,974 yen ($26.32), 3,926 (34.74), 5,009 yen ($44.33), and 8,619 yen ($76.27), respectively More good telecom news JAPAN TELECOM and ITJ, which are set to merge on October 1, will launch a PR campaign in September to publicize their services as the first new common carrier to offer integrated domestic and international service. Immediately after the merger, the new company plans to start a seamless service that provides phone, leased line, frame relay and other services, for both domestic and overseas connections. Billings will also be integrated. JAPAN TELECOM deepening involvement in cable JAPAN TELECOM plans by April 1998 to forge new interconnection partnerships with two of the 26 cable television operators in which it already has capital stakes, as part of its "direct access" initiative to bypass NTT's local telephone grid. The company will seek cooperation from at least two CATV operators that are interested in moving into Internet connectivity and other communications arenas, and will start by linking its Open Data Network (ODN) Internet connectivity service to the new partners' CATV circuits to create an interactive communications infrastructure. The company plans eventually to deepen and expand the partnerships to include CATV- based telephone services. Their projections are wildly optimistic, but sounds like a great service Computer equipment sales and Internet service provider BESTONE of Tokyo will in July start a low-cost Internet phone service. Users will pay no subscription or monthly fees, and will be able to call between Tokyo and Osaka for 40 yen (35 cents) for three minutes. The company has developed a telephone switch based on a PC with a built-in DIALOGIC voice processing board, and plans to install the switches in eight major cities by October and link them over the Internet. The switches will be installed in 18 cities by year end and 64 cities by May 1999. BESTONE also plans to introduce a prepaid card and an international Internet phone service offering three- minute calls for 60 yen (53 cents) within the year. The company is aiming for first-year revenues of 1.2 billion yen ($10.5 mil) and hopes eventually to sign up hundreds of thousands of users. NTT getting into Web television market NTT will release in early July a TV Internet access device. The 28-inch, wide-screen display Infojack Vision is made to be hooked up to NTT's INS Net 64 ISDN service, which provides 64Kbps access. Users can surf the Web and exchange e-mail messages while watching TV programs at the same time. Since it has a DSU-equipped terminal adapter, users can also talk on the phone while they surf the Internet. The unit is to be priced at 345,000 yen ($3,026). The company plans to ship 500 units annually. So is NISHIDEN NISHIDEN has developed a dedicated Internet terminal which can be hooked up to a home TV. Slated for release in late August, the Gaisurfer enables the user to simply turn on the switch to access the Internet. The user can also exchange e-mail messages using an optional remote controller or wireless keyboard. The terminal will likely be priced at about 50,000 yen ($439). The company, which has already released an English version, claims to have already won orders for 100,000 units in the U.S. NISHIDEN is aiming to ship 200,000 units globally the first year. It's about time Japan got some lower local phone rates Cable television operator JUPITER TELECOM, a joint venture of SUMITOMO CORP. and TCI of the U.S., presented to the MPT on June 24 its proposed rates for cable-based telephone services it plans to offer in Tokyo's Suginami Ward starting July 1. JUPITER will become the second CATV operator to offer CATV phone services, following TITUS COMMUNICATIONS, an ITOCHU affiliate that started services in Kashiwa in June. JUPITER plans to offer a basic monthly rate of 1,330 yen ($12) with a 600 yen ($5) discount to current cable subscribers. TITUS currently charges 1,600 yen ($14) for its telephone service, but offers discounts on call waiting and other value-added services that will make certain packages cheaper compared to JUPITER. Daytime, weekday per- minute call charges will be 15-40% lower compared to NTT, according to a JUPITER spokesman. Much needed ISP exchange point to debut KDD, AT&T JENS, NEC, FUJITSU, SONY SYSTEM DESIGN, NIHON CISCO SYSTEMS and TOKYO INTERNET will in mid-July establish JAPAN INTERNET EXCHANGE (JPIX), a firm that will operate an Internet service provider interconnection service starting in October. The new firm, which will be capitalized at 250 million yen ($2.2 mil), will be only the third exchange point in Japan, following exchanges operated by the WIDE academic consortium. The new firm will initially set up the exchange at KDD's Otemachi Building, providing exchange services to 20 ISPs using a 100Mbps interface. It plans to set up a similar facility at KDD's headquarters building in Tokyo's Shinjuku district in January 1998. WORLDCOM making moves in Japan Tokyo-based WORLDCOM JAPAN, a wholly owned subsidiary of Mississippi-based WORLDCOM, the fourth largest telephone carrier in the U.S., has started a Global Transit Service whereby Internet service providers in Japan can connect directly to Japan-U.S. trunk circuits operated by UUNET TECHNOLOGIES of Virginia, a firm WORLDCOM acquired last year. The new service is less expensive than leasing a line to connect to UUNET's backbone, according to WORLDCOM JAPAN. UUNET has established a 6Mbps Japan-U.S. line and is offering bandwidth ranging from 64Kbps to 6Mbps. (At TKAI, we pay $0.36 per minute to Japan seven days a week, 24 hours a day through WORLDCOM - great service... Ed.) Yet another Internet telephone system Tokyo-based Internet connectivity service provider RIMNET and VIENNA SYSTEMS, a communications equipment manufacturer based in Ontario, Canada, have cooperatively developed an Internet telephone system that runs on workstations. Most currently available Internet phone systems work on PCs, but the new system is suitable for larger corporations. RIMNET started selling VIENNA's PC version of the system in April, but realized there was more demand from corporate prospects for a workstation version. A typical system supporting 6-10 telephones will cost approximately 3.0 million yen ($26,087). The two firms foresee first-year sales of 1.0 billion yen ($8.7 mil). MITSUBISHI, HITACHI to build WebTV boxes WEBTV NETWORKS has reached a basic agreement with MITSUBISHI ELECTRIC and HITACHI under which the two Japanese firms will build and release in the U.S. set-top boxes based on WEBTV technology. The boxes will be developed and manufactured by subsidiaries MITSUBISHI CONSUMER ELECTRONICS AMERICA and HITACHI HOME ELECTRONICS, respectively. WEBTV claims to have 85,000 subscribers, 67% of whom access the Internet daily via set-top boxes attached to ordinary television sets. Industry watchers predict that the Internet television market will move into high gear this fall when leading consumer electronics manufacturers enter the market, and say a battle to create a de facto standard is inevitable between WEBTV and the ORACLE-led network computer camp. ODN rockin' and rollin' JAPAN TELECOM will set up 31 Open Data Network (ODN) access points by fall. To be installed from July, the new access points will cover most major cities where the ODN service will be accessed for 10 yen (8.7 cents) for three minutes. The long-distance carrier plans to expand the ODA service to make it accessible to 70% of phone subscribers across Japan by the end of March 1998. It was only a matter of time: Internet schools to debut Tokyo-based ARCHITECT, operator of a franchised chain of retail PC stores, will develop a franchised chain of "multimedia schools" in cooperation with partners OBUNSHA EDITOR, MIURA PRINTING and K-NET. Schools that are limited to teaching word processing, spreadsheet and other basic computer functions are having a hard time in Japan today, and ARCHITECT plans to diversify its own curriculum by offering English conversation, Internet and other subjects. The company plans to open more than 50 classrooms in the Tokyo Metropolitan Area between July and September, and have 40,000 students attending classes in 200 locations two years from now. NCCs aiming to become comprehensive Internet solution providers New common carriers (NCCs) such as DDI and JAPAN TELECOM are teaming up with package vendors and systems integrators to provide comprehensive Internet connectivity solutions to corporate customers. DDI, which on July 1 will start offering DION (DDI Integrated Open Network), a menu of services for small and midsized companies that want to build intranets, will team up with 15 systems integrators by the end of July. Meanwhile, JAPAN TELECOM is forming partnerships with several LAN and other vendors. Both NCCs want to offer so-called "one-stop shopping services" that include not only circuit use but system design and hardware supply. ********************************************************** Thoughts on the content business Based on our own experience at TKAI with this model and talking with/observing others, I offer the following thought: Unless you're already in the business of producing content (such as magazines or newspapers), a business based on drawing visitors to a Web site by constantly providing fresh information is a recipe for disaster in most cases. The continuing cost of providing such information is extraordinary - far beyond the initial investment in planning, designing and launching a site. The only way most smaller companies can be successful with this model is to get their audiences to help provide content for them - after all, the collective wisdom of the audience far exceeds that of the information provider. That's why we're so thankful for our JIR interviewees, who generously give of their time and expertise to share their knowledge with all readers. Let us know if you have someone in mind who has high level Japanese Internet-related expertise and who might be willing to participate in an interview. ********************************************************** Who you are This month we welcome new JIR subscribers from Pakistan, Hungary, Poland, Argentina, China and Denmark, and from companies including Ipsilon, Inktomi, Dataquest, ModemMedia, Claris, Netscape and Apple Computer. Tim Clark Editor Copyright 1997 by TKAI and Digitized Information, Inc. All rights reserved NOTE: Some JIR industry briefs appear later in Computing Japan magazine under modified titles. JIR is co-sponsored by Digitized Information, Inc. of Tokyo, a leader in providing daily English language coverage of electronics industry developments in Japan. For more information on monitoring electronics industry developments in Japan, or to receive a free e-mail sample of service offerings, please contact Digitized Information at diginfo@gol.com |
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