ATIE 2013
New Delhi
Cloud Impact in Japan
~ Government, Carriers and Vendors ~
May 6th, 2013
Harry Takeichi
1
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
(Nov.13, 12)
 Fiscal:
13,766
(Apr.23, 13)
LT Interest Rate
0.73%
0.32%
(Nov.13, 12) (Apr.5, 13)
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)
2
Economic Growth Scenario
Unprecedented Experiment
TPP, Japan-EU EPA
Japan/PRC/Korea
RCEP(ASEAN+6), TISA
Kuroda, the Governor of BOJ explains 2%
(inflation) in 2years, 2 times of money
supply.
Ends Deflation?
Government makes big public Investment
to social Infrastructure
Government Task
Forces for Growth
- Drastic De-regulation?
- Lower Corporate Tax?
 Spending & Investment maybe stimulated….
but
 Will competitive products & services emerge??
Promote ICT Solutions for issues i.e. Energy,
Aging, Food and Environment
ICT Deployment to
Social Infrastructure
3
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
New KPI
 Repeal ‘Face to Face’, ‘Written Document’ Rules
- Speed (Fixed/Mobile)
- Autobahn=no speed limit/no fees
 Internet/ICT ‘Autobahn’ Policy
 Encourage Engineers & Ventures
in Number / Quality / Tax
 Cloud Service Expansion
WEF
‘ICT Regulation Ranking’
-Number of IT engineers
- Foreign IT Experts entry
with working visa/year
- Start-ups ratio
- Cloud Service % to Government IT spending
- Government Service Cost /GDP
Present  Target
42  10 or upper
LTE 7.1M/s 
World Fastest
Almost Free
(or Nationalized)
0.9mil 2mil
2,85220,000
3.2% 10%
25% by 2018
23.1%  20% or less
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
Start-ups % (2008)
Designate
25%($20Bil) of
Competitiveness
Government
Service Cost /GDP
government services
to shift to cloud in 2011
New KPI
By 2015, 50% of Central
Government’s new IT
WEF
 Repeal ‘Face to Face’, ‘Written Document’ Rules
‘ICT Regulation Ranking’
spending must be shifted
20.3%
to cloud
- Speed (Fixed/Mobile)
- Autobahn=no speed limit/no fees
 Internet/ICT
20.3% ‘Autobahn’ Policy
21.2%
 Encourage Engineers & Ventures
in Number / Quality / Tax
25.3%
 Cloud Service Expansion
-Number of IT engineers
- Foreign IT Experts entry
with working visa/year
- Start-ups ratio
- Cloud Service % to Government IT spending
- Government Service Cost /GDP
11.1%
Present
Target
Present  Target
By 2015
42  10 or upper
11.5%
LTE 7.1M/s 
World Fastest
Almost Free
(or Nationalized)
0.9mil 2mil
2,85220,000
3.2% 10%
25% by 2018
23.1%  20% or less
5
Telecom Operators make Good Profits,
Electronics Makers make Huge Losses
US$ Billion
Profits of listed companies for Apr-Sep, 2011 vs 2012
(not including Power and Monetary industry)
(Source: Nikkei)
20
2011 2Q
15
2012 2Q
10
5
0
(5)
(10)
Manufacturing
non-manufacturing
Marine Transportation
Land Transportation
Construction
Gas
Retail
Real Estate
Service
Telecom
Trading
Electric Equipment
Steel
Oil
Shipbuilding
Textile
Pulp Paper
Non-ferrous metal
Precision Instrument
Chemical
Food
Machinery
Pharmaceutical
Automobile
(15)
Who is your rival?
~ Interviews with Carrier Tops ~
‘Verizon Communications’
as a cloud servicer
‘Silicon Valley’
as a innovative group of synergy
‘Customers’
as a fast-changing
marketing target
7
Verizon Show at CES 2013
~No Phones There~
Running shoes that
Uploads runners data
without smartphone
Plug-in On Board Diagnosis
(OBD) module that gathers
various car data so that
rental-car company monitors
for efficient maintenance
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
Foot ball helmet that
uploads detailed data
of shock for players
so that a team can
monitors their health
8
NTT DoCoMo keynote at MWC 2013
~ $11B revenue from New Business in 2015~
Mr. Kaoru Kato
(President, 2012- )
9
Why carriers move toward Cloud
1. Network Concept has changed.
Services are provided by Data Centers (not by network nodes)
DC
DC
IAAS
PAAS
DC
SAAS
2. Major OTT players own & operate dedicated DCs and backbone network, that
push telecom carriers down to access conduit and deprive their revenues.
Cache Server
for popular
video contents
ISP
IX
DC
DC
ISP
ISP
Telecom Carrier
Job Scope
IX
Peering with ISPs
DC
Global WAN to
connect own DCs
10
NTT Invests to transform
themselves to a CLOUD Player
‘Driving for Service Creation Group’
 Focuses on Solution Services Creation
 Expands Overseas Business (US$10B revenue by 2012)
 Acquired
Mr. Satoshi Miura
(President, 2007-2012)
‘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. Hiroo Unoura
(President, 2012- )
11
Acquisitions to be a Cloud Player
Ms. Meg Whitman
(President & CEO)
US$2.5Billion by
Century Link (2011)
Mr. Glen F. Post
(CEO)
Mr. Lowell McAdam
(Chairman &CEO)
US$1.4Billion
by Verizon (2011)
US$1.6Billion by HP
(2007)
US$0.445Billion
by Verizon (2007)
US$13.9Billion by HP
(2008)
ICT Value Shifts Rapidly
Search
Information
Easy Access to
Information
Connecting
A with B
Delightful Experience
- Impossible to Possible
- Unaffordable to Affordable
- More Human-front Services
(ICT-innovated analogue services)
Sharing
Information
Mobile BB Internet
with intuitive UI
smartphone
Convenient
Shopping
Utility IT Service
(Public Cloud)
Solution
- Single Answer
( find my best one
from crowdsourcing)
- Intelligent Answer
(avoid known failures)
- High Social Value
Game Changer, Black-box
Behavior / Preference Analysis
& Target Marketing
- Creation of Industry, Market, Social Structure
- Users can be Servicers by sharing their own resources
13
Competition of Customer Experience
~ Retail Market in Japan~
Cost and After-Sale Service Centric
- Networking local SMCs as decentralized warehouse
and sales-support resource
- Strong ASKUL’s B2B (wholesale and logistics)
- Yahoo’s attracting portal and auction
Logistics Centric
- minimum delivery time by its own huge warehouse
- Support purchase decision by personalized line-up
 Pleasure to make
the most economical
shopping
 Pleasure to make the
simplest shopping with the
quickest delivery and longtail line up.
 Face to face interaction with real human clerks
ease and pleases net- phobia customers
Human Service centric value
- Shop clerks’ face to face support service
- Internet order with pick-up / layaway at shop
- outsourcing for home kitchen/fridge & store
- Multi-purpose hybrid terminal
(ATM, Government Service, Entertainment tickets etc)
Active Tenants Centric
- Ultimate support to tenant shops
 Pleasure like mall
window shopping
14
Telecom Operators make Good Profits,
Electronics Makers make Huge Losses
US$ Billion
Profits of listed companies for Apr-Sep, 2011 vs 2012
(not including Power and Monetary industry)
(Source: Nikkei)
20
2011 2Q
15
2012 2Q
10
5
0
(5)
(10)
Manufacturing
non-manufacturing
Marine Transportation
Land Transportation
Construction
Gas
Retail
Real Estate
Service
Telecom
Trading
Electric Equipment
Steel
Oil
Shipbuilding
Textile
Pulp Paper
Non-ferrous metal
Precision Instrument
Chemical
Food
Machinery
Pharmaceutical
Automobile
(15)
Japan Electronics - Financials
FY2011:1us$=80yen
FY2012:1us$=94yen
US$ Billion
US$ Billion
Revenue
2011
2012 (Forecast)
Net Profit / Loss
2011
140
6
120
4
100
2
2012 (Forecast)
0
80
-2
60
-4
40
-6
20
-8
0
-10
All-Rounder
ICT
Consumer
Electronics
All-Rounder
ICT
Consumer
Electronics
16
2012 Financial Fiasco Drives Them to Different Places
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.
Panasonic
2011
2012 Forecast
Net loss
($9,652M)
($9,562M)
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).
Sharp
2011
2012 Forecast
Net loss
($4,700M)
($5,625M)
Mr. Hirai, president of Sony, commits to revive original Sony DNA,
which product stimulates peoples curiosity and move users
emotionally.
Sony
Net loss
Net Profit
2011
($5,708M)
2012 Forecast
$250M
1US$=80yen
17
Tough Paradigms for Vendors
Servers / Storages
Data Centers
 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
 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
Terminals
 Voice I/F on all things
 Terminals For illiteracy
(48% of Indian people )
DC
Network Platforms
IAAS
PAAS
SAAS
DC
Marketing
 Real Value oriented
 Differentiate from competitors
 Statistic Analysis of Point of Use
(Big Data)
 Co-creation with partners
 Generic LSI  Customized LSI

make 10GPS
OpenFlow switch by themselves
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
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
Thank you
नमस्ते
Namaste
Harry Takeichi
takeichi@ciaj.or.jp