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May 6 th, 2013 Harry Takeichi 1 ATIE 2013 New Delhi Cloud Impact in Japan ~ Government, Carriers and Vendors ~

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Presentation on theme: "May 6 th, 2013 Harry Takeichi 1 ATIE 2013 New Delhi Cloud Impact in Japan ~ Government, Carriers and Vendors ~"— Presentation transcript:

1 May 6 th, 2013 Harry Takeichi 1 ATIE 2013 New Delhi Cloud Impact in Japan ~ Government, Carriers and Vendors ~

2 2 Can Japan end ‘Lost Decades’? ABENOMICS is making psychological upturn J-Yen/1USD Rate 79 99 (Nov.13, 12) (Apr.24, 13) NIKKEI Stock Average 8,661 13,766 (Nov.13, 12) (Apr.23, 13) 25.3% 58.9% LT Interest Rate 0.73% 0.32% (Nov.13, 12) (Apr.5, 13) 43.8% Fiscal: Big Gov’t Investment in infrastructure ( 2 Trillion USD for Resilient-Japan Project) Monetary: BOJ targets 2% inflation by 2years BOJ supplies double money to market Growth: PM leads growth measures & deregulation TPP, EPAs (EU, RCEP, China/Korea)

3 3 Economic Growth Scenario Unprecedented Experiment Kuroda, the Governor of BOJ explains 2% (inflation) in 2years, 2 times of money supply. Ends Deflation? Promote ICT Solutions for issues i.e. Energy, Aging, Food and Environment Government makes big public Investment to social Infrastructure ICT Deployment to Social Infrastructure Spending & Investment maybe stimulated…. but Will competitive products & services emerge?? TPP, Japan-EU EPA Japan/PRC/Korea RCEP (ASEAN+6), TISA - Drastic De-regulation? - Lower Corporate Tax? Government Task Forces for Growth

4 4 Mikitani-Paper ~ New Japan KPI Proposal ~ Mr. Mikitani, president of Rakuten, proposes new national KPIs for new business innovation by IT at the Council for Industrial Competitiveness Repeal ‘Face to Face’, ‘Written Document’ Rules WEF ‘ICT Regulation Ranking’ 42  10 or upper New KPI Internet/ICT ‘Autobahn’ Policy - Speed (Fixed/Mobile) - Autobahn=no speed limit/no fees LTE 7.1M/s  World Fastest Almost Free (or Nationalized) Cloud Service Expansion - Cloud Service % to Government IT spending - Government Service Cost /GDP 25% by 2018 23.1%  20% or less Encourage Engineers & Ventures in Number / Quality / Tax -Number of IT engineers - Foreign IT Experts entry with working visa/year - Start-ups ratio 0.9mil  2mil 2,852  20,000 3.2%  10% Present  Target

5 5 Mikitani-Paper ~ New Japan KPI Proposal ~ Mr. Mikitani, president of Rakuten, proposes new national KPIs for new business innovation by IT at the Council for Industrial Competitiveness Repeal ‘Face to Face’, ‘Written Document’ Rules WEF ‘ICT Regulation Ranking’ 42  10 or upper New KPI Internet/ICT ‘Autobahn’ Policy - Speed (Fixed/Mobile) - Autobahn=no speed limit/no fees LTE 7.1M/s  World Fastest Almost Free (or Nationalized) Cloud Service Expansion - Cloud Service % to Government IT spending - Government Service Cost /GDP 25% by 2018 23.1%  20% or less Encourage Engineers & Ventures in Number / Quality / Tax -Number of IT engineers - Foreign IT Experts entry with working visa/year - Start-ups ratio 0.9mil  2mil 2,852  20,000 3.2%  10% 20.3% 25.3% 21.2% Government Service Cost /GDP Designate 25%($20Bil) of government services to shift to cloud in 2011 By 2015, 50% of Central Government’s new IT spending must be shifted to cloud Present  Target By 2015 11.1% 11.5% Start-ups % (2008)

6 Telecom Operators make Good Profits, Electronics Makers make Huge Losses Manufacturing non-manufacturing (Source: Nikkei)

7 7 Who is your rival? ~ Interviews with Carrier Tops ~ ‘Customers’ as a fast-changing marketing target ‘Silicon Valley’ as a innovative group of synergy ‘Verizon Communications’ as a cloud servicer

8 8 Verizon Show at CES 2013 ~No Phones There~ Running shoes that Uploads runners data without smartphone Foot ball helmet that uploads detailed data of shock for players so that a team can monitors their health Trash can in Allentown, PA, advises city sanitation department of the suitable timing to be emptied so that garbage truck routes can be optimized Heads-up PC that makes a worker`s both hands free Plug-in On Board Diagnosis (OBD) module that gathers various car data so that rental-car company monitors for efficient maintenance

9 9 NTT DoCoMo keynote at MWC 2013 ~ $11B revenue from New Business in 2015~ Mr. Kaoru Kato (President, 2012- )

10 10 Why carriers move toward Cloud 1.Network Concept has changed. Services are provided by Data Centers (not by network nodes) IAAS SAAS DC PAAS Cache Server for popular video contents 2. Major OTT players own & operate dedicated DCs and backbone network, that push telecom carriers down to access conduit and deprive their revenues. Global WAN to connect own DCs DC IX Peering with ISPs ISP Telecom Carrier Job Scope DC

11 11 NTT Invests to transform themselves to a CLOUD Player ‘Be A Valued Partner of Inter-service’ Focuses ‘Global Cloud Services’ as its core business Supports Business Model Innovation and Quality Life Style Further expands Overseas business (US$20B revenue by 2017) Acquired Mr. Satoshi Miura (President, 2007-2012) Mr. Hiroo Unoura (President, 2012- ) ‘Driving for Service Creation Group’ Focuses on Solution Services Creation Expands Overseas Business (US$10B revenue by 2012) Acquired

12 Acquisitions to be a Cloud Player Ms. Meg Whitman (President & CEO) US$1.6Billion by HP (2007) US$13.9Billion by HP (2008) Mr. Glen F. Post (CEO) US$2.5Billion by Century Link (2011) Mr. Lowell McAdam (Chairman &CEO) US$1.4Billion by Verizon (2011) US$0.445Billion by Verizon (2007)

13 13 ICT Value Shifts Rapidly Connecting A with B Easy Access to Information Search Information Sharing Information Mobile BB Internet with intuitive UI smartphone Utility IT Service (Public Cloud) Convenient Shopping Behavior / Preference Analysis & Target Marketing Solution - Single Answer ( find my best one from crowdsourcing) - Intelligent Answer (avoid known failures) Delightful Experience - Impossible to Possible - Unaffordable to Affordable - More Human-front Services (ICT-innovated analogue services) - High Social Value Game Changer, Black-box - Creation of Industry, Market, Social Structure - Users can be Servicers by sharing their own resources

14 14 Competition of Customer Experience ~ Retail Market in Japan~ Pleasure like mall window shopping Logistics Centric - minimum delivery time by its own huge warehouse - Support purchase decision by personalized line-up Active Tenants Centric - Ultimate support to tenant shops Pleasure to make the simplest shopping with the quickest delivery and long- tail line up. Face to face interaction with real human clerks ease and pleases net- phobia customers Human Service centric value -Shop clerks’ face to face support service -Internet order with pick-up / layaway at shop -outsourcing for home kitchen/fridge & store -Multi-purpose hybrid terminal (ATM, Government Service, Entertainment tickets etc) Cost and After-Sale Service Centric -Networking local SMCs as decentralized warehouse and sales-support resource -Strong ASKUL’s B2B (wholesale and logistics) -Yahoo’s attracting portal and auction Pleasure to make the most economical shopping

15 Telecom Operators make Good Profits, Electronics Makers make Huge Losses Manufacturing non-manufacturing (Source: Nikkei)

16 16 FY2011:1us$=80yen FY2012:1us$=94yen All-Rounder ICT Consumer Electronics All-Rounder ICT Consumer Electronics Japan Electronics - Financials

17 17 Panasonic Net loss 2011 ($9,652M) 2012 Forecast ($9,562M) Sharp Net loss 2011 ($4,700M) 2012 Forecast ($5,625M) 1US$=80yen Mr. Tsuga, president of Panasonic, targets $20Billion automobile related revenue in 2018. Assuming $70-80B of total Panasonic revenue in 2018, automobile and house related revenue is expected to consists its majority. Mr. Okuda, president of Sharp, tries to change its culture of growth by one-strong-product. He aims to become a leading hitter from being a slugger (home-run hitter). 2012 Financial Fiasco Drives Them to Different Places Sony Net loss Net Profit 2011 ($5,708M) 2012 Forecast $250M Mr. Hirai, president of Sony, commits to revive original Sony DNA, which product stimulates peoples curiosity and move users emotionally.

18 Marketing Real Value oriented  Differentiate from competitors Statistic Analysis of Point of Use (Big Data) Co-creation with partners Software Developer / Systems Integrator Vendors deliver service  Deliver complete software No more huge scale effort basis contract Vendor continue to develop while it is on service (No user requirements. Nobody knows final specification) Mashup and Customization service business will grow 18 Tough Paradigms for Vendors Servers / Storages 20% of servers sold world-wide is bought by design servers and manufacture them by ODM Low power consumption is a key ARM processor server  Intel, SSD (Flash memory drive)  HHD Network Platforms Generic LSI  Customized LSI make 10GPS OpenFlow switch by themselves Data Centers Standardize specs of DC => DC as commodity DCs Interworking and service orchestration is key technology Scale-out  Scale up ( 15,000 servers/ 1 operator) DC PAAS SAAS IAAS Terminals Voice I/F on all things Terminals For illiteracy (48% of Indian people )

19 Conclusions -Government:- Regulation reform for new business emergence & government cost reduction -Telecom: - Cloud-infra (DC/Platform) Provider  Total Application Servicer -Service:- Social value oriented - Human-oriented service -ICT Vendors: - Tough time for restructuring …. - Higher Technology  Service Value - Seeking for new value by vertical integration

20 Thank you नमस्ते Namaste Harry Takeichi takeichi@ciaj.or.jp


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