Great difference of Network Competition between the U.S.A. and Japan
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1 Great difference of Network Competition between the U.S.A. and Japan Yang Fan Nakamura gakuen University Befu Jonan-ku, Fukuoka JAPAN Kanji Sahara Nakamura Gakuen University Befu Jonan-ku, Fukuoka JAPAN ABSTRACT There is a great difference of Network industry competitiveness between The U.S.A and Japan. The beginning was the deregulation and dividing the ICT monopolistic company the AT&T in the U.S.A. in 1984, the NTT Japan in 1985, following England in 1984, France in 1985 and Germany in Then new private ICT companies made competition entries to the portable mobile phone industry or IT industries with new homepage or search engine technology. New contents business came into the Internet in the 1990 s with new images or animations or videos. After the 2000 s, they appeared new net communities like blogs or SNSs. This paper tries to trace the leading edge ICT technology competition between the U.S.A. and Japan and try to find the next direction of the competitions. Keywords: ICT industries, competitiveness, deregulation, new business, server business Introduction After the deregulation of 1985, they emerged portable phone companies in Japan, they established NTT Docomo, KDDI, or Softbank. Together with the market expansion, they developed new technologies in the industry like portable phone terminals. So far as portable terminals concerned, they introduced new input mode named kana-kanji Japanese mode. This mode is quite different from the traditional alphabetical input mode mainly applied in the computer or PC terminal input mode. It was unfamiliar for the most of the Japanese people to use the alphabetical input mode. By the shift from the alphabetical input mode to the kana-kanji Japanese input mode, they found the portable phones quite familiar and convenient tool for especially young people. This
2 mode shift triggered the portable phones very popular for the Japanese. They made rapid growth in the portable phone market in Japan. The young people are easy to handle portable phones as compared handling PCs. 1. Technology competitiveness about communication industry The market volume of the portable mobile phone is increased worldwide in the last 25 years. The biggest company is the Vodafone in the United Kingdam, and the next is Deutche Telecom in Germany and the 3 rd is the NTT Docomo in Japan. This table shows the portable phone market was enlarged, and the revenue volume became a big amount. Table-1 revenue of major portable phone Major portable phone companies revenue in the world in 2006 (in millions$) Vodafone(UK) 61,006 Deutsche Telekom(Germany) 41,284 NTT docomo(japan) 40,163 Telefónica(Spain) 39,748 Verizon(USA) 38,043 AT&T(USA) 37,506 China Mobile(China) 37,077 France Telecom(France) 35,300 Sprint Nextel(USA) 35,111 KDDI(Japan) 22,550 Telecom Italia(Italy) 18,691 Softbank(Japan) 12,118 Japanese Government Data: Thomson & Reuter The original purpose of the ICT Industry deregulation was accomplished and new entry of companies was stimulated in Europe, the U.S.A. and Asian countries. Portable phones innovation was done by countries through the world. The next point of innovation is the technology superiority of the portable phone components. Japan made technology initiatives in this area. That is traced by the report of the government named johoutsushin hakusho in The technology superiority was scored, high score is strong and low score is weak. Table-2 Technology Superiority by Areas
3 Technology Superiority by Areas (%) Asia w/o Japan Japan Europe USA others n/a portable phone note PC communication desk top PC components routers/switches server digital cameras video cameras digital image plazma tv components liquid crystal TV DVD Player Plazma TV ceramic condenser liquid crystal panel devices HDD DRAM ASIC CPU/MPU Japanese Government: tsushinhakusho 2007 p.81 The table shows the comparison of among Japan, Asia without Japan, Europe, the U.S.A. and others, in the 3 areas of portable phones, digital image components and devices. They have the superiority on the desk top PC, routers/switches, server in the U.S.A. On the other hand, they have the superiority on the portable phone, and note PC in the communication components in Japan. They have the superiority on routers and servers. They have the superiority in the most important components in the U.S.A. the superiority of Japan is relatively the second place. 2. The age of the Network In the Internet age, the network technology relatively increased its role. More directly, the roles of the computer server increased their importance. Servers make a variety of services through connecting clients. They have names proxy server, database server, super server, application server, commerce server, fileserver, dial up server, license server, print server, mail server, and so on. PC cannot provide users needs without the network of server systems. Servers roles became critically important not only its hardware but also its software. Routers/switches and servers are key technologies for the age of network. Japan has the superiority in the communication components, but those two technologies are dominated by the U.S.A. In the area of devices, the U.S.A. has the superiority in the area of CPU/MPU. As the CPU is the engine of computer, the competitiveness is the most important. Through the technology point of view Japan has the superiority a variety of
4 technologies, but the critical technologies are dominated by the U.S.A. The no1 technology is dominated by the U.S.A. and no2 or others are mainly proposed by Japan. 3. Industrial Performance Analysis The next analysis is the size of the Japanese ICT Vendors in the world. There is an interesting report on the government report named Johotsushinhakusho 2008 p.71. They can find the 9 Japanese ICT Vendors from the top 20 ICT Vendors in the world by the table-3. The 9 Japanese ICT Vendors make big sales amount. There are 7 U.S.A. vendors in the 20 ICT Vendors in the world. Japan leads 2(9-7) companies of world ICT Vendors in number over the U.S.A. Table- 3 World top ICT Vendors by Sales Sales ranking rank company nationality sales in billions$ 1 Siemens Germany Hitachi Japan HP USA IBM USA Panasonic Japan Sony Japan Toshiba Japan Dell USA Nokia Finland Microsoft USA Fujitsu Japan Motorola USA NEC Japan Hon Hai Taiwan Philips Germany Intel USA Cisco USA Canon Japan Mitsubishi Japan Sharp Japan 28.0 Source;Thomson & Reuters The next comparison is as to the vendors profit by the table-4. There are 12 ICT Vendors from the U.S.A. On the other hand, there are only 3 vendors from Japan. What do you mean the result? They make money in the U.S.A. vendors over 10% operating profit yearly, but they make money under 5% yearly in Japan ICT vendors. The rate of operating profit, Japan stays low level of under 5%. There is an important comparison between the U.S.A. and Japan. By the figure from 1997 to 2006 of the report of Thomson and Reuters, they made only 3.8% operating profit in Japanese
5 company, on the other hand the U.S.A. made 14.2% operating profit during the period. Japanese vendors make only 1/3 or 1/4 of profit against the U.S.A. vendors. Table-4 World Top ICT Vendors by operating profit Operating Profit rank company nationality operating profit in 1 Microsoft USA IBM USA Cisco USA Siemens Germany Nokia Finland HP USA Intel USA Oracle USA Canon Japan Apple USA Motorola USA Panasonic Japan Ericsson Sweden Google USA Texas Instr USA SAP Germany Dell USA Qualcomm USA Hon Hai Taiwan Toshiba Japan 2.3 Source;Thomson & Reuters Comments After the deregulation of the ICT industries started from the U.S.A. in 1984, there are many new company entries of ICT industries over the world, Japan invented several leading-edge technologies like communication components. Now that the network age, the crucial technologies like router/switches, servers, CPU/MPU, are dominated by the U.S.A. companies. As the result they make big profit against sales in the U.S.A. ICT vendors. The Japanese companies are making relatively big sales, but the profit is small as compared the sales.
6 <references> 1. Johotsushinhakusho 2007 Japanese government 2. Johotsushinhakusho 2008 Japanese government
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