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Every day, we are bombarded by the media with news about information technology, or IT, and the Internet. It's all we seem to hear about in Japan at the moment. But has IT really only emerged recently ?
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| B: |
Not at all. The IT revolution began forty years ago when people first started to use computers. Initially, IBM mainframe computers were used. In the eighties, however, small Apple computers hit the market, and computers began to be hooked up to form networks. Around this time, changes were taking place in core sectors. Yamato Transport Co., Ltd. (Kuroneko Yamato) developed its "Neko" system and downsized, ATMs took the place of over-the-counter services in banks, JR computerized its ticket and service operations, and Seven-Eleven introduced a point-of-sale (POS) system for unit control. |
| A: |
When did the Internet start to take off.
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| B: |
In the mid-nineties. Internet commerce and trade between companies in tangible goods, i.e. B to B commerce, began, giving rise to the IT revolution we are familiar with today. Then in February 1999, NTT DoCoMo launched its i-mode wireless Internet service for cellular phones, and the IT revolution became even more of a part of our everyday lives. |
| A: |
What is the state of e-commerce in Japan at the moment ?
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| B: |
A survey conducted by the Japanese Ministry of International Trade and Industry and Andersen Consulting indicates that e-commerce business between consumers and businesses, or C to B commerce, was worth 65 billion yen in 1998 and 300 billion yen in 1999. As the annual turnover of recently bankrupted supermarket Nagasakiya was 350 billion yen, e-commerce in Japan is worth only less than the business of a single supermarket. As the pachinko industry is worth 25 trillion yen a year, e-commerce is still clearly on a very small scale. Nevertheless, the market is expected to grow to be worth 3.2 trillion yen in 2003 and 5 trillion yen in 2005. |
| A: |
In what fields is there currently a high level of e-commerce?
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| B: |
E-commerce is commonly used for purchases of tickets for concerts, theaters and sporting events, purchases of rail tickets, making hotel reservations, buying books and magazines, and dealing in shares. Somewhat surprisingly, it is not so much used for buying daily necessities. |
| A: |
Why is that?
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| B: |
Japanese people are reluctant to buy products without seeing and feeling them for themselves first. They like to check them for themselves first, but they cannot do this online. |
| A: |
I understand that 80% of the dot.com firms in U.S.A. are in the red.
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| B: |
That's correct. Amazon.com, for example, has an excellent reputation, but has been in the red ever since it was founded eight years ago. |
| A: |
Why?
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| B: |
Amazon mainly deals in books, which can be ordered online. As in the past, however, delivery still depends on traditional freight carriers. Moreover, production and distribution processes remain as in the past, preventing industry from taking advantage of the benefits of the Internet. |
| A: |
So why don't investor's pull out?
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| B: |
Because they hope that things will get better in the future. How they will go about getting into the black will, however, depend on the individual company concerned. |
| A: |
But even so, people still go on about IT?
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| B: |
The Internet is a means of communication offering a number of advantages enabling productivity improvements to be made in industry. It's global, cheap, highly interactive, offers a variety of new functions, and can be accessed on the move using cell phones. |
| A: |
Could you give some examples?
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| B: |
Using IT, physicians can examine patients in long distance remotely. To give another example, trial models of dies and moulds in the past had to be handmade. Now, however, data can be fed into a computer and trial products cut out by laser from blocks of synthetic resin. |
| A: |
Thus making craftsmen redundant ?
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| B: |
Right. Doing B to B business online allows you to reach firms around the world, removing the need for allied wholesalers and trading companies. And as presidents and employees can communicate directly, this renders middle management superfluous. IT will thus transform the industrial structure. |
| A: |
People are starting to say that the age of e-commerce has come to a close, and we are entering an age of mobile commerce, or m-commerce.
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| B: |
We are moving from an age of networks accessed using computers, to an age of mobile networks and m-commerce. |
| A: |
Could you explain what you mean in a little more detail ?
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| B: |
A year after NTT DoCoMo had launched its wireless i-mode service, enabling people to access the Internet anytime, anywhere and for anything, the number of subscribers in Japan had reached five million. We are thus heading toward an age when people use cell phones to access networks. And in the future, people will get online using not only cell phones, but also game consoles and in-car navigators. |
| A: |
Japan lagged behind U.S.A. in e-commerce, but seems to have a lead regarding wireless online services.
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| B: |
Compactness, precision and mobility have been traditional Japanese strengths. The penetration rate of cell phones in U.S.A. is 20%, but over 50% in Japan, and 80% in Finland in Scandinavia. Cell phones do not require expensive-to-install telephone cables. In U.S.A., there are always telephone lines nearby and people use cars to move around, so it is practical to use heavy PC terminals. In Japan and Scandinavia, though, there are no telephone lines nearby, which accounts for the greater popularity of "wearable" networks. |
| A: |
What about the future of mobile commerce in Japan?
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| B: |
According to U.S.A.-based Internet market research consultant Jupiter Communications, the m-commerce market will be worth 39 billion yen in Japan by the end of 2000. It will take another two years before U.S.A. and Europe reach that level. By the end of 2000, users of Internet-compatible cell phones will reach 30 million. The number in Europe and U.S.A. will be 6 million, and the market there will be worth around 1 billion yen, or one fortieth of the value of Japan's. In 2003, the global m-commerce market is forecast to be worth 826 billion yen, and the number of cell-phone subscribers will be 88 million in Japan, 115 million in U.S.A., and 254 million in Europe. But while smaller in terms of number of users, the Japanese market will have big lead in terms of value: whereas the market will be worth 69 billion yen in U.S.A. and 180 billion yen in Europe, it will be worth 380 billion yen in Japan. This is mainly because it is thought that companies in Europe and U.S.A. will be unable to make similar one to NTT DoCoMo's business model. |
| A: |
The prospects look good for Japan in that field, then.
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| B: |
Yes, but it's not good to get too caught up in IT. IT and the Internet are simply a means to an end, just as expressways are useful means from the point of view of the transport and freight sectors. Just remember, IT and the Net are tools, and no more than that. |
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