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Corporate Governance Economics Finance Galapagos effect Leadership

Japan GDP growth and losses at Japan Post – Gerhard Fasol interviewed by Rico Hizon on BBC TV

Japan’s economy grows five quarters in a row, and Japan Post books losses of YEN 400.33 billion (US$ 3.6 billion) for an acquisition in Australia

Japan GDP growth, growth of 2%/year. Still, Japan’s economy is the same size as in 2000, while countries like France, Germany, UK today are double the size as in the year 2000

Japan GDP growth: We have seen 5 quarters of economic growth in Japan, for the January-March 2017 quarter the consensus is that the Japanese Government is likely to announce economic growth corresponding to an annual growth rate of around 2%/year (update: Japan’s Government announced an annual growth rate of 2.2%/year).

Generally the business mood in Japan is optimistic now, personal consumption and industrial orders are growing. We see investments in preparation for the 2020 Olympics. Venture start-ups and venture investments are growing, while still at a low level, we see venture businesses developing not only in Tokyo, but also in regional centers around Japan.

One mid-term risk to Japan GDP growth is the potential implementation of the postponed consumption tax rate increase.

The big picture however is, Japan’s economy today is approximately the same size as 17 years ago in 2000. During the same 17 years most major economies, e.g. France, Germany, UK have doubled in size. France, Germany, UK’s economies today are about twice the size as in 2000, while Japan’s economy today is about the same size as in 2000. Quarterly GDP figures just measure the short term fluctuations of this long term behavior.

Rico Hizon: so what would Japan have to do to restart long term growth?

Gerhard Fasol’s answer

Japan would have to do three things to restart economic growth long term:

  1. Population: Implement policies to make it easier for families to have children, shift spending from the aged to children, improve eduction, shorter work hours, build children’s day care centers, gender equality
  2. Implement Prime Minister Abe’s “third arrow”, the reforms. Deregulation not just in a few “special zones” but nation wide.
  3. Improve corporate governance to improve company’s growth, globalization and management.

Japan Post trips up on globalization: books YEN 400.33 (US$ 3.6 billion) losses due to an acquisition in Australia – with a Toshiba connection

Japan Post announced a loss of YEN 400.33 (US$ 3.6 billion), and a resulting net loss of YEN 28.98 billion (US$ 260 million) for the fiscal year ending March 31, 2017.

Japan Post Holdings was launched on the Tokyo Stock Exchange with the IPO on Nov 4, 2015.

Investors expect major growth of Japan Post Holdings into a global business, such as Deutsche Post has with privatization and later the acquisition and merger with the global logistics group DH about 20 years ago.

Around the time of the IPO Japan Post announced the acquisition of the Australian logistics group Toll for about YEN 620 billion (US$ 5.5 billion), while Toll’s market cap previous to the acquisition was about YEN 410 billion (US$ 3.7 billion).

Japan Post’s recent write-down at Toll is about equal its pre-acquisition market cap, or about 65% of the acquisition prize.

The deep problem of Japan Post’s steep write-downs at the Australian acquisition Toll, is that this casts doubts on Japan Post’s developments into a global business.

The Toshiba connection: Japan Post’s former CEO, Taizo Nishimuro (西室 泰三), previously served as CEO and Chairman of Toshiba

CEO of Japan Post at the time of the questionable Toll acquisition was no other than Mr Taizo Nishimuro (西室 泰三), former CEO and Chairman of Toshiba, now honorary advisor of Toshiba, who spent all his career at Toshiba, working at Toshiba since 1961. Toshiba is currently in severe difficulties caused primarily by Toshiba’s acquisitions of US nuclear construction firms, however Toshiba’s fundamental problems go back much much longer.

Japan Post Holding [6178]

Japan Post Holdings was founded on 23 January 2006, following the path to privatization of Japan’s national Post Office initiated by Prime Minister Koizumi.

Japan Post Holdings is listed on the Tokyo Stock Exchange (No. 6178), IPO was on 4 November 2015, and has five divisions (since October 2012 three divisions):

  1. Japan Post Service (日本郵便株式会社): mail delivery. Merged on October 1, 2012 with Japan Post Network to form Japan Post Co. Ltd.(日本郵便株式会社). Japan Post Co. Ltd is a 100% subsidiary of Japan Post Holdings (Tokyo Stock Exchange: 6178)
  2. (Japan Post Network (郵便局株式会社): Post Offices = retail and real estate. Merged with Japan Post Service to form Japan Post Co., Ltd. on October 1, 2012).
  3. Japan Post Bank (株式会社ゆうちょ銀行): Tokyo Stock Exchange No. 7182
  4. Japan Post Insurance (株式会社かんぽ生命保険): life insurance. Tokyo Stock Exchange No. 7181
  5. Toll Holdings: Australian logistics firm acquired by Japan Post. Toll Holdings is a 100% subsidiary of Japan Post Co. Ltd.

Copyright (c) 2017 by Eurotechnology Japan. All Rights Reserved.

Categories
games Mobile mobile music mobile payment SNS Software

Ericsson Mobile Business Innovation Forum – Tokyo

Ericsson Mobile Business Innovation Forum Tokyo:

summary by Gerhard Fasol

Ericsson held the Mobile Business Innovation Forum in the Roppongi Hills Tower in Tokyo on October 31 and November 1, 2013 delivering a great overview of the push and pull of the mobile communications industry: technology push, M2M and user pull, as well as how the mobile operators between technology and users can best make customers happy and at the same time monetize their investments, while “Over The Top” (OTT) new comers (Google, YouTube, Amazon.com, Facebook, Twitter and others) seek to disrupt the good old telecommunications world.

Here some key take-aways, read more below:

  • About 50% of global smartphone, mobile phone and mobile broadband subscriptions are in Asia-Pacific, making Asia-Pacific the most important region in the world, and Japan one of the most important LTE markets.
  • Switch from voice to data is a differentiator: forerunner telcos see rapid growth (10-12% CAGR) for both revenues and EBITDA over the period 2008-2013, while average telcos see stagnation. The key for telcos is to be a forerunner, rather than an average stagnating telco.
  • Many products such as XBOX or Apple’s SIRI are linked via networks to a data center. Networks and data centers are disruptive innovation for games and many other sectors. Maybe cars as well.
  • Open source is coming to software defined networks (SDN), the OpenDayLight community develops software for software defined networks.
  • Software defined networks create virtualized networks, SDN support “network slices” for different applications. API’s open SDNs to users.
  • Manufacturers and other industries have rationalized a long time ago, telcos have not yet rationalized, creating big opportunities.

For insights and detailed statistics read our reports on Japan’s telecom sector.

Society in transformation

Society is transformed by broad band data services.

Douglas Gilstrap, Chief Strategist, Ericsson
Douglas Gilstrap, Chief Strategist, Ericsson

Douglas Gilstrap

Chief Strategist, Chairman of BU Modems, Ericsson

Douglas Gilstrap emphasized the increasing importance of software: Ericsson today is the world’s 5th biggest software house.

Mats H Olsson, Head of Asia-Pacific, Ericsson
Mats H Olsson, Head of Asia-Pacific, Ericsson

Mats H Olsson: Overview of mobile communications in Asia-Pacific markets

Head of Asia-Pacific, Ericsson

Markets drive data consumption:

  • Japan
    • LTE Penetration: 25%
    • Smartphone Penetration: 76%
    • Mobile Penetration: 118%
  • China
    • LTE Penetration: -%
    • Smartphone Penetration: 29%
    • Mobile Penetration: 90%
  • Australia
    • LTE Penetration: 21%
    • Smartphone Penetration: 60%
    • Mobile Penetration: 134%
  • S-Korea
    • LTE Penetration: 51%
    • Smartphone Penetration: 67%
    • Mobile Penetration: 108%

LTE Markets – 5 out of 10 top LTE markets globally are in Asia-Pacific, and the top 3 are in Asia-Pacific (however this table shows the percentage penetration, does not reflect market size. In terms of market size, Japan is doubtlessly No.1:

  1. S-Korea: 51% penetration
  2. Singapore: 30%
  3. Japan: 25%
  4. USA: 23%
  5. Australia: 21%
  6. Kuwait: 16%
  7. Sweden: 13%
  8. Canada: 8%
  9. Hong Kong: 6%
  10. Austria: 6%

Mobile communications will dwarf the PC-world. By 2018 we will expect to have:

  • PCS and tablets: 260 million in APAC (31%) vs 850 million globally
  • smartphone subscriptions: 2.2 billion in APAC (49%) vs 4.5 billion globally
  • mobile broadband subscriptions: 3.5 billion in APAC (50%) vs 7 billion globally
  • mobile phone subscriptions: 4.5 billion in APAC (50%) vs 9 billion globally
Katsuya Watanabe, Deputy Director General, Information and Communications Bureau, Japan's Ministry for Internal Affairs and Communications (MIC)
Katsuya Watanabe, Deputy Director General, Information and Communications Bureau, Japan’s Ministry for Internal Affairs and Communications (MIC)

Katsuya Watanabe (Charley K Watanabe): ICT Growth Strategy for Japan

Deputy Director-General, Information & Communications Bureau, Ministry of Internal Affairs and Communications (MIC), Japan

Government of Japan – IT Strategic Headquarters:
The new internet world had a relatively slow start in Japan. In January 2001 the e-Japan Strategy was formed with the target for Japan to become the world’s most advanced IT nation by 2005, and the IT Strategic Headquarters where formed. In January 2006 the New IT Reform Strategy followed, and in July 2009, the i-Japan Strategy 2015.

The Ministry of Internal Affairs and Communications (MIC) formulated the u-Japan Policy in December 2004, followed by the x-ICT Vision in July 2008.

With the change of Government in September 2009, the New Strategy in Information and Communications Technology formulated.

With the advent of Prime Minister Abe’s Government in December 2012, in June 2013, the new IT Strategy was formulated: “The world’s most advanced IT nation creation”, by the Council on ICT Strategy and Policy for Growth, which was set up in February 2013.

The Ministry focuses on the following trends: Big Data, Sensor Networks, Cloud Computing, and smart phones.

  • Mission: to be the most active country in the world.
  • Vision:
    1. Creating new value-added industries
    2. Solving social problems
    3. Improving and strengthening common ICT infrastructure
  • Issues: economic growth, employment, information transmission capacity, development of cities, super-aging society, resource problems, open innovation, cybersecurity, utilization of personal data

Prioritized projects are:

  • Creating new value-added industries:
    • data utilization
    • broadcast and contents
    • agriculture
    • local revitalization
  • Solving social problems:
    • Disaster prevention
    • Medical, nursing, health care
    • Resources
    • local revitalization

Mr Watanabe introduced several industry-academia-government collaboration projects addressing these priority issues. The economic effects by 2020 of creating new industries stimulated by these government programs are estimated as follows:

  1. super-aging society sector: 23 trillion yen (US$ 230 billion)
  2. resource sector (minerals, water, food, infrastructure): 20 trillion yen (US$ 200 billion)
  3. geospace sector: 62 trillion yen (US$ 620 billion), from today’s 20 trillion yen (US$ 200 billion) market size

A further program is the creation of ICT Smart Towns in Japan, especially also to build towns resilient against disasters.

John Rossant: A people-centric vision for future cities

Founder and Chairman of New Cities Foundation

By 2050, around 70% of the world’s population is expected to reside in urban areas.

Mobile applications transform cities, and in the ideal case create “people centric cities”, an example: AppMyCity!

Panel (left to right): Mats Olsson (Ericsson), Katsuya Watanabe (MIC), John Rossant (New Cities Foundation), Douglas Gilstrap (Ericsson)
Panel “Society in transformation”(left to right): Mats Olsson (Ericsson), Katsuya Watanabe (MIC), John Rossant (New Cities Foundation), Douglas Gilstrap (Ericsson)

Business in transformation

Jan Signell, Head of North East Asia and member of Ericsson Global Leadership Team
Jan Signell, Head of North East Asia and member of Ericsson Global Leadership Team

Jan Signell: Ericsson in Japan, China, S-Korea

Head of North East Asia Region, President of Ericsson-Japan

The first Ericsson distributor travelled to Japan in 1894 – more than 100 years ago.

Super high smartphone penetration and usage in Japan+China+S-Korea: Japan has 76% smartphone penetration, 49% of Chinese make purchases on their smartphone every week, networks have to be prepared.

Hiroyasu Asami, Managing Director of Smart-Life Business Division, NTT-DOCOMO
Hiroyasu Asami, Managing Director of Smart-Life Business Division, NTT-DOCOMO

Hiroyasu Asami: “NTT-DOCOMO‘s smart-life partner initiative

Managing Director of Smart-Life Business Division, NTT-DOCOMO

NTT-DOCOMO aims to be the customer’s partner for smart-life.

In the transition from traditional feature phones to smartphones including tablets, NTT-DOCOMO sees a new potential market emerging: video, shopping, books, services and contents are booming.

The center of the mobile eco-system (and value creation) is shifting to higher layers.

NTT-DOCOMO seeks effective utilization of its business assets:

  • Postpaid subscriptions (99.7% postpaid)
  • VAS sales at mobile shops: DOCOMO has 2,400 carrier DOCOMO branded shops
  • Handset control: DOCOMO sells handsets with value added services (VAS)

DOCOMO seeks to create new markets in 8 business areas:

  1. Commerce
  2. Finance/payment
  3. Health care/education
  4. M2M
  5. Safety/security
  6. Environment/ecology
  7. Aggregation/platform
  8. Media/content

The basic concept is to bring smart life into reality, and to become a smart life partner. To improve customer satisfaction and to improve corporate value.

DOCOMO is in the process to transition from the traditional i-Mode and i-Menu services on feature phones, to d-market and d-menu for the multi-OS environment (with Google/Android, Tizen, iOS and other OS).

Revenues from new business of DOCOMO increased from US$ 4 billion (FY2011), to US$ 6 billion (FY2012) and is expected to increase to US$ 11 billion by FY2015.

Masashi Satomura, Chief Engineer Dept 3, Honda R&D
Masashi Satomura, Chief Engineer Dept 3, Honda R&D

Masashi Satomura: “ITS, Cooperative system”

Chief Engineer Dept 3, Honda R&D

About 300 parties participate in Japan’s ITS programs, lead by the ITS Promotion in the Cabinet office of Japan.

Major cooperative projects are:

  • ASV-5 (V2V, V2P) by the Ministry for Land and Infrastructure and Transport MLIT
  • Joint research (V21) by MLIT and NILIM
  • DSSS/Green wave (V21) by the Nation Police Agency

Key issues are:

  • Standardization
  • Common hardware
  • hybrid communication
  • sustainable business model
  • positioning technology

Key targets are to achieve fatality rates below 2500 by 2018, and to reduce traffic congestions to one-half by 2020 compared to 2010.

Honda develops autonomous driving with the aim to realize “the joy of mobility” with safety and freedom.

The vision: As Japan aiming for the safest transportation in the world, we hope to deploy cooperation system in collaboration with government and car OEMs, in four phases.
Phase 1: basic services
Phase 2: advanced services
Phase 3: integrated services
Phase 4: autonomous services

Panel (left to right): Akira Yamaguchi (Orient Corporation), Hiroyasu Asami (NTT-DOCOMO),Masashi Satomura (Honda), Jan Signell (Ericsson)
Panel (left to right): Akira Yamaguchi (Orient Corporation), Hiroyasu Asami (NTT-DOCOMO),Masashi Satomura (Honda), Jan Signell (Ericsson)(
Ulf Ewaldsson, CTO, Ericsson
Ulf Ewaldsson, CTO, Ericsson

Ulf Ewaldsson

CTO, Ericsson

A perfect storm:

  • Network coverage and quality is good enough
  • Business models make data affordable
  • App-centric services become mainstream
  • Smartphone penetration is reaching critical mass

however, for mobile operators there is a HUGE difference between the frontrunner’s revenue and EBITDA growth compared with stagnant revenue/EBITDA for average operators. Key for mobile operators is to be strongly growing frontrunner – not a stagnating average operator.

To move from an average no-growth operator to a fast-growing frontrunner, a mindshift is needed from:

  • problem focus to opportunity focus
  • maximizing old revenues to innovating new revenues
  • connectivity as a commodity (“dumb pipe”) to connectivity as differentiator
  • from tech silos to tech synergies

Ericsson uses six growth codes:

  1. “Streetwise metrics”, experience centric KPIs
  2. “Show casing”: quality led marketing
  3. Redefine subscription: “unboxing”
  4. Open-ended innovation: “ecosystematic
  5. Visionary collaboration: “co-partnering”
  6. Visionary investing: “gap minding”
Yung-Ha Ji, Head of Network Strategy Dept., KT Corporation
Yung-Ha Ji, Head of Network Strategy Dept., KT Corporation

Yung-Ha Ji: How to migrate to future ICT network

Head of Network Strategy Department, KT Corporation

In the IDI/ICT Global Development index ranking, S-Korea ranks 1st globally for broadband, while the Scandinavian countries rank 2nd, 3rd, 4th and 5th, and Japan ranks 8th, followed by UK on place 9.

kt will cover 99% of S-Korea’s population with LTE network based on 20MHz Bandwidth in the 1.8GHz band. With the BenchBee speed test, download speeds of 44 Mbps are achieved with a Category 4 LTE-A phone.

kt saw explosive growth of data traffic: 350 times increase over the 4 years from January 2009 to September 2013.
Monthly data usage is 2.2Gb for LTE and 1.2Gb for 3G phones. Total data traffic is about 20,000 TeraBit/Month in September 2013.

kt has the world-first LTE network using virtualization cloud technology.

kt introduced a series of services including Web-enabled IPTV, Giga-Internet FTTH premium services, olleh TV mobile, LTE broadcast, “Total Advertising Open Community” (TAOC) – using targeting of advertisements to differentiate from OTT operators.

Example of an innovative service: if you click an advertisement and watch an ad, you are rewarded with increased transmission speed.

Akira Yamaguchi: Mobile payment systems in Japan

Exec Officer Retail finance and credit cards, Orient Corporation

Jakob Navok, Director of Business Development, Square Enix
Jakob Navok, Director of Business Development, Square Enix

Jacob Navok: Games over the network

Director of Business Development, Square-Enix

Games are the ultimate application! Worldwide game industry revenues are US$77.4 billion in 2013, adding all segments from retail hardware to software and services.

Hardware used to be the driver in the past, but today the network drives everything, and networks bring disruption to game design, business models (“free-to-play” is a marketing model – not a business model). Business models include: micro transactions, subscriptions, advertisements and digital pricing.

Marketing disruption include: “free-to-play”, cross-promotional networks, and app-stores.

Video had a dramatic impact on networks, but games have not.

Interactive media bring the next revolution: SONY acquired Gaikai (US$ 400 million), and Microsoft announced Xbox Cloud services (US$ 700 million).

Server side rendering and developer innovation will create game demand on many devices.

Speed is key!

Dan Simmons, Reporter and Producer, CLICK, BBC
Dan Simmons, Reporter and Producer, CLICK, BBC

Dan Simmons

Reporter and Producer, CLICK, BBC

Dan Simmons showed how smart phones are a second screen accompanying movies, PCs and TV. 60-80% of Americans use a second screen, and 46% use a smart phone.

Eyeballs move to iPads… the question is: who owns the second screen!

CBS made US$ 10 million off advertising, but advertising ads during superball on the internet – not on TV!

TV is about raising emotions, and feedback at the moment, immediate feedback is incredibly valuable. A 2nd screen can give a 360 degrees view.

Dan mentioned the APP-movie, where visitors to the movie theatre downloaded an App to their smartphone and received message to their App during the movie. The messages need to be frame-accurate, and today’s networks are not good enough to ensure frame-accuracy. People with smartphones and using the App knew who the murderer was at 65 minutes into the movie, while visitors without smartphone and App had to wait until 80 minutes into the movie before they know who the murderer was. Initially it was thought that this could be a problem, but it turned out to be a positive part of the enjoyment for the audience. A further attraction was, that visitors could keep the App on their smartphone, and the movie owner could reach viewers long after the performance was over, and they had long left the movie theatre, keep the contact, and potentially create follow-on business.

Panel (left to right): Dan Simmons (BBC), Jacob Navok (Square-Enix), Ulf Ewaldsson (Ericsson), Yung-Ha Ji (KT Corporation)
Panel (left to right): Dan Simmons (BBC), Jacob Navok (Square-Enix), Ulf Ewaldsson (Ericsson), Yung-Ha Ji (KT Corporation)
Adrian Ionel, CEO, Mirantis
Adrian Ionel, CEO, Mirantis

Shoji Nemoto

Exec VP, SONY Corporation

Q&A

Question: SONY identity in 2020?

Shoji Nemoto: Our mission is to fulfill & inspire the desires of users

Question: 3D-TV failed. How can we know that 4k-TV will be successful?

Shoji Nemoto: 3D is not only a consumer product. 4k-TV also has industrial applications, such as telemedicine and other medical applications. SONY cooperates with Olympus for medical applications.

Adrian Ionel

CEO, Mirantis

Today for every new product you need a network and a data center:

  • SIRI: Apple invested US$ 1 billion in a data center
  • X-BOX: Microsoft built a data center

Open source is extremely powerful vs closed systems:

  1. opensource is created by users, users are involved from the beginning and users are extremely powerful
  2. Open: anybody can contribute
  3. Closed source vs open source:
    • closed source: traditional hierarchical industrial structure, waterfall model, top-down
    • open source: works like nature, social network, meritocracy and transparency, very different to traditional industrial structure

Examples for open source: Linux, JAVA, Big data.

Open source creates new business models. Facebook, Google, Amazon.com are only possible with open source. Gigantic data centers are only possible with open source.

Most major players invest in open source.

Taro Kodama, Country Growth Manager, Facebook Japan
Taro Kodama, Country Growth Manager, Facebook Japan

Taro Kodama

Country Growth Manager, Facebook Japan

No. 1 Facebook employee in Japan.

“We can’t just copy what we did in Japan – we must reinvent in Japan”

  • Facebook’s complacency about mobile is surprising. Its this kind of complacency that kills companies (Forbes.com, February 2012)
  • Facebook’s future is in mobile. Mobile is THE strategy for Facebook (Forbes.com, May 2013)

Facebook: over 874 million users on mobile, 49% of revenue is now generated from mobile, up from 0% last year.

  • Connect everyone
  • Understand the world
  • Build the knowledge economy

Facebook opportunity:
Facebook: 1.1 billion users
Online: 2.4 billion
World population: 7 billion

Internet traffic is shifting to mobile: 13% of global internet traffic is on mobile.

Panel 4
Panel (left to right): Ulf Ewaldsson (Ericsson), Adrian Ionel (Mirantis), Taro Kodama (Facebook)

Innovation and technology evolution

Ulf Ewaldsson, CTO, Ericsson
Ulf Ewaldsson, CTO, Ericsson

Ulf Ewaldsson: “Transforming networks

CTO, Ericsson

We see cities as organisms.

Trendspotting:

  • scarce spectrum
  • simplicity and automation
  • continued traffic growth
  • from nodes to systems
  • mobile entreprise
  • blurring of IT and telecom

Concept of “Network slices”:

Network performance needs depend on industry, beyond just smartphones.

A matrix of industry needs covering the following industries: cars, processing, utilities, transport, media, and NSPS, healthcare etc.
Which have different needs for: throughput, latency, QoS, volumes, coverage, capacity, security and location.

A common network platform includes dynamic and secure “network slices” with different specifications for different industries and applications.

Three new products:

  • Ericsson Radio Dot System
  • SDN on a chip: SNP 4000
  • Cloud on a blade: Ericsson Cloud System

Technology in-depth sessions

Erik Ekudden, Head of Technology Strategies, Ericsson
Erik Ekudden, Head of Technology Strategies, Ericsson

Network Slices: Service Provider (SP) Software Defined Networks (SDN), Network Functions Virtualization (NFV) and Cloud

Erik Ekudden

Head of Technology Strategies, Ericsson

Service Provider based Software Defined Networks (SP SDN) are on the way to deployment. The path to deployment includes: technology, business model development and operations. Currently we are still midway in the technology development phase, business model development is in the early phase, and we are just before operations and deployment.

Network functions are virtualized in the DC/cloud infrastructure. Functional layers of the network are virtualized, and networks become open to developers.

Networks are elastic and we have “network slices” for different applications.

OpenDayLight

Ericsson is leading participant/founder in the open source “OpenDaylight” LINUX community, the first release of the Hydrogen Code was on September 13, 2013. OpenDayLight is an open source community developing software-defined networking (SDN).

Daniel Ehrenstrahle, Head of Strategy & Portfolio, BU Networks, Ericsson
Daniel Ehrenstrahle, Head of Strategy & Portfolio, BU Networks, Ericsson

Connecting the dots in the Networked Society

Daniel Ehrenstrahle

Head of Strategy & Portfolio, BU Networks, Ericsson

Business cases and clear rationale why technology is introduced is necessary.

We need to redefine how network performance is defined: “app coverage” defines network performance not in terms of technical data alone, but in terms of usability of each app. App coverage for video will be different than for voice, or low intensity data applications.

70% of usage is indoors, therefore we need indoor coverage, and Ericsson does not believe in Femto-technology, and introduces the Radio Dot System. Launch will be in 2H 2014 for 3G and 4G and for WiFi later. Up to 4 channels per unit.

Component based architecture:
AIR = antenna integrated unit
SSR = Edge router

Ericsson
Ericsson “DOT”
Ericsson Radio
Ericsson Radio “DOT” System: RJ45 Antenna Mounting Unit and Active Antenna Element taken apart
Ericsson
Ericsson “DOT” system, RJ45 connector socket

Monetizing the network assets

Beau Atwater

Head of Strategy and Business Intelligence, BU Support Solutions, Ericsson

Tomas Ageskog, Head of Consulting and Systems Integration, BU Global Services, Ericsson
Tomas Ageskog, Head of Consulting and Systems Integration, BU Global Services, Ericsson

Business Transformation – Ericsson Consulting and System Integration (SI)

Tomas Ageskog

Head of SI Core, IP & Media, Ericsson

Manufacturing and other industries have rationalized decades ago. Telcos are not yet rationalized.

OSS/BSS need to be good and fast to make money.

A revolution will happen in the broadcast space when processes are being rationalized.

In Australia, Telstra spent US$ 1.1 billion for a billing system.

As another example, a Tier-1 European telco operator had 62 different billing systems.

Challenges:

  • Business agility,
  • time to market,
  • from network centric to customer centric,
  • Next generation networks, mobile broadband and cloud computing
  • Roles in new business models and eco-systems

Ericsson Global Services division grew from SEK 29 billion and 8000 people in 2003 to SEK 97 billion and 60,000 people in 2012.

Copyright (c) 2013 Eurotechnology Japan KK All Rights Reserved

Categories
electronics component makers Japan's electronics industry Japan's electronics multinationals

Sony earnings boosted by weak yen – BBC interview about SONY earning results

Helped BBC with the article “Sony earnings boosted by weak yen and smartphone sales

https://www.bbc.com/news/business-23527714

for detailed analysis of Japan’s electronics industry sector including SONY, see:

Copyright 2013 Eurotechnology Japan KK All Rights Reserved

Categories
Japan's electronics industry Japan's electronics multinationals

Intellectual Japan – BBC: “Japan has to become a brain country” – from mono zukuri to brain country

Intellectual Japan: Japan’s electronics companies need new business models – interview for the BBC

The BBC recently examined why Japan’s electronics sector has to create new business models, and quotes “Japan has to become a brain country”.

Japan’s top 8 electronics companies combined are as large as the Netherlands economically, but have shown zero growth and zero income over the last 14 years – thus represent “sleeping giants” – or dinosaurs, depending on the point of view, and depending on whether these companies succeed to reinvent themselves.

We have updated our report on “Japan’s electronic manufacturers: mono zukuri” to analyze Japan’s electronics manufacturing sector, and to explain who the winners and who the losers are. Read a short summary in this newsletter below.

Japan's electronics companies combined are as large as Holland economically
Japan’s electronics companies combined are as large as Holland economically

Japan’s top electronics companies combined are as large as the Netherlands economically, but have not shown any revenue growth over the last 14 years

Japan’s electronics sector still today is largely guided by national industrial policy, and by the management principles created long ago by charismatic founders such as Matsushita and Ibuka.

Intellectual Japan: smart transformation at Hitachi led by the CEO and by the Chief Transformation Officer CTrO

Hitachi’s “Chief Transformation Officer” (“CTrO”) at a recent presentation, explained that until 2 years ago Hitachi benchmarked its financial data purely domestically – until 2 years ago, Hitachi only compared performance with competitors such as Panasonic and Toshiba.

Only 2 years ago, Hitachi started to benchmark performance with global competitors such as GE and Siemens.

Read a summary of Hitachi’s “Smart Transformation project” in our electronics industry report.

Japan's top 8 electronics companies combined lose YEN 50 billion/year since 1998
Japan’s top 8 electronics companies combined lose YEN 50 billion/year since 1998

Japan’s top 8 electronics companies lost an average of YEN 50 billion/year over the last 14 years

Intellectual Japan: electronic component makers

Japan’s electronics component makers, such as Kyocera or Murata, which is on the official supplier list of Apple, report positive income – although margins are declining and the component industry sector is much smaller than the top 8 electronics manufacturers.

Drastic transformation is necessary to revive Japan’s electronics industry sector. Drastic change will happen one way or another and represents important opportunities. More details in our electronics industry report

Japan electronics industries – mono zukuri.

Copyright 2013 Eurotechnology Japan KK All Rights Reserved

Categories
Japan's electronics multinationals

SONY profits: 56% of profits are from selling life insurance and financial products (manuscript invited by BBC)

Games are 11% of SONY’s sales

SONY profits: Currently 56% of SONY’s profits come from selling life insurance and financial products

Games are 11% of SONY‘s sales – and currently 56% of SONY profits come from selling life insurance, consumer loans and financial products in Japan. Games are important, but are not going to make or break SONY at this time.

Technical specs of the next Playstation need to be fantastic. Specs alone however have not been the main focus for quite some time now. Smart phones, social games, smooth linking of all “screens” are disrupting the games sector. In Japan, the social games market is already twice the value of the traditional game console market (excluding software): in anticipation of their global success, GREE and DeNA combined have climbed to half the market cap of all of SONY.

SONY’s game business model also faces disruption by free and $.99 “snack-type” games, downloaded to mobile phones and tablets – to win in this sector SONY would have to beat Rovio’s Angry Birds brand and their galactic and Starwars games among others. Its hard for SONY to please both hardcore gamers, and the much larger audience of casual gamers looking for quick in-between low cost or free game “snacks”.

If I was CEO of SONY, another fact I would worry about is that there are currently about 800 games on Playstation, while here are about 130,000 games on iOS, and more than 100 new games submitted to Apple everyday. Now if Apple would take this enormous developer support to a next generation Apple-TV ecosystem, I would have sleepless nights about my whole game business division if I was SONY-CEO.

I like SONY’s acquisition of the cloud game platform Gaikai

Personally, I like SONY’s acquisition of the cloud game platform Gaikai. It will be key for SONY to keep a great team at Gaikai. Ultimately Gaikai might become SONY’s most important game platform. Improving the specs of SONY’s Playstations is necessary for SONY to remain a console player – however for business success SONY needs to drive disruption instead of reacting to others like Apple or Rovio. Gaikai could give SONY that chance. SONY’s own studios could also be a more important weapon in the game.

SONY is often taken as a poster child for Japan’s stagnation

over the last 15 years, SONY showed essentially no revenue growth and close to zero average profits and margin. However, CANON proves that even a Japanese electronics company can deliver consistent growth and good margins, but copying CANON of course is not the way to go. SONY will need to create its own way.

Read our report on Japan’s electronics industry sector:

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electronics component makers Japan's electronics multinationals

Japanese electronics groups need new business models (BBC-interview: Yen ‘not the cause of woes of Japan’s electronics firms’)

Japanese electronics groups combined as of similar size as the economy of the Netherlands

Over the last 15 years combined annual sales growth was zero, and combined annual loss was US$ 0.6 billion/year

Japan’s “Big-8” electrical groups (Hitachi, Panasonic, Sony, Mitsubishi-Electric, Sharp, Toshiba, Fujitsu, NEC) combined are of similar economic size as the Netherlands.

Over the last 15 years, their combined annual sales growth was zero, and their combined annual loss was YEN 50.6 billion/year (= US$ 0.6 billion/year).

Compelling evidence that new business models for Japan’s electronics sector present a huge opportunity – as explained in this BBC interview.

Japanese electronics: Sales growth of Japan's
Sales growth of Japan’s “Big-8” electrical manufacturers vs top 7 electronics component makers

Contrasting Japan’s “Big-8” electronics groups (Hitachi, Panasonic, Sony, Mitsubishi-Electric, Sharp, Toshiba, Fujitsu, NEC) with Japan’s 7 electronic parts makers (Murata, Kyocera, TDK, Alps, Nidec, Nitto, ROHM)

Over the last 14 years since FY1997, the combined growth in revenues (=sales) of Japan’s “Big-8” electronics groups was zero.
The compound annual growth rate (CAGR) of Japan’s top 7 electronic parts makers combined was +3.1%.

Japanese electronics: Net income/losses of Japan's
Net income/losses of Japan’s “Big-8” electronics giants vs top-7 electronics components makers

Net income (profit) of Japan’s “Big-8” electronics groups vs top-7 electronics parts makers

Over the last 14 years since FY1997, Japan’s “Big-8” electronics groups combined showed average losses of YEN 50.6 billion/year (=US$ 0.6 billion/year), while Japan’s top 7 electronic parts makers combined earned YEN 196 billion/year (= US$ 2.4 billion/year).

Japanese electronics: Net income/losses of Japan's top electrical groups
Net income/losses of Japan’s top electrical groups

Net after tax income of Japan’s “Big-8” electronics groups

This figure shows net after tax income for Japan’s “Big-8” electronics groups (Hitachi, Panasonic, Sony, Mitsubishi-Electric, Sharp, Toshiba, Fujitsu, NEC), for the years since FY1997. For 5 of these 14 years the industry sector reported combined losses, which in total exceeded the profits achieved in good years.
As a result, averaged over all 14 years, the industry sector shows combined losses on the order of US$ 0.6 billion/year.

Creating new business models for this very large industry sector (of similar economic size as the Netherlands) is a huge opportunity.

Japanese electronics: Net income/losses of Japan's top-7 electronic component makers
Net income/losses of Japan’s top-7 electronic component makers

Net income of Japan’s top 7 electronic parts makers

Japan’s top 7 electronic parts makers are in a much better financial situation than Japan’s electrical groups.

Over the last 14 years since FY1997, this industry sector only showed a net overall loss one single time – in the year following the Lehman shock, but showed combined net profits during all other years, resulting in average annual net profits on the order of US$ 2.4 billion/year.

BBC interview:
BBC interview: “New business models for Japan’s electrical groups needed”

BBC interview:
Watch an extract of the BBC interview about Japan’s electrical industry sector here: Yen ‘not the cause of woes of Japan’s electronics firms’.

More detailed data and analysis in our report on Japan’s electronics industry sector.

Japan electronics industries – mono zukuri

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