About the author
Ken McCarthy of E-Media was, along with Marc Andreessen of Netscape and Maurice Welsh of Pacific Bell, the co-sponsor of the first conference ever held devoted exclusively to the subject of commercial publishing opportunities on the World Wide Web. His book The Internet Business Jissen Manual published by Bunkasha is the first book in the Japanese language written on the subject of using the Internet as a business and marketing tool. E-Media specializes in providing Internet advice and service to publishers and is one of the leading US-based companies producing Japanese language web content and providing Japanese language localization services. Mr. McCarthy graduated from Princeton University with a degree in Anthropology.
It's hard to believe that less than three years ago there was only one Internet access provider in Japan, TWICS. Now there are at least 150 with announcements of new services being made weekly. Many of these new access providers are divisions of some of Japan's largest corporations, and even skeptical observers acknowledge that there are currently at least 1,000,000 Japanese with Internet access.
My talk about Japan and the Internet today has three parts. The first part covers facts. The second covers trends supported by facts. The third part covers my projections about where all this is headed and my recommendations about what American companies should do about it.
Facts: Japan is significantly behind the US, and several other industrialized countries, in Internet development.
Trends: Japan is making a concerted effort to catch up and Internet development there is now taking place at a faster rate than it is anywhere else in the world.
Projections and Recommendations: It is not too early for companies to get involved in the Japanese Internet market now. In fact, waiting will turn out to be a very expensive exercise.
Japan does not have as many PCs per person as the United States
There are PCs in 16.6% of Japanese homes vs. 34% in American homes.
Japan has a smaller percentage of its population on the Internet than the United States
Less than 1% of Japanese have access to the Internet from home or work vs approximately 10% of Americans.
Internet use in Japan is most heavy in academia and corporate engineering and R&D departments
R&D employees 24.4%
College and university students 22.9%
Computer engineers 12.5%
Non-computer engineer 5.3%
Management administration 4.3%
Internet users by age
Under 20 3.0%
PC sales in Japan were up sharply in 1995
The sale of PCs within Japan was up over 70% in 1995. Much of this increase can be attributed to interest in the Internet.
The Japanese online industry is on the verge of providing Internet access to millions of Japanese in the next few months
There are at least two million Japanese online who are not yet on the Internet. They are subscribers to services like NIFTY-Serve (1,300,000 subscribers) , PC-Van (1,100,000) ASAHI-NET (320,000), ASCII-Net, and People. Like CompuServe and America Online, these services did not start out to become Internet service providers, but market demand is forcing them to change from closed, proprietary systems to Internet on ramps.
Japan's industrial leaders have made Internet development (electronic commerce) a major priority
The list of major corporations in Japan that have made formal commitments to multi-million dollar investments in Internet development reads like a Who's Who of Japanese commerce. MITI is involved in high profile projects as is NTT, NHK, and the Postal Ministry and all the leading computer manufacturers including Sony, Fujitsu, and Matsushita. Softbank, the Japanese computer magazine publisher whch recently paid $2.1 billion to buy Ziff-Davis has bought stakes in several US Internet companies including Yahoo, the Internet directory service, and has started an Yahoo Japan service.
Japan shows the greatest growth in interest in business uses of the Internet of any leading industrialized country
Domain names, the basic yardstick used to measure the number of business ventures on the Internet, have risen in Japan from 159,776 last June to 269,327 in January of 1996, an increase of 69%. In contrast, growth in US-registered domain names during the same period was 36%.
The Japanese media and other trend setters have fallen in love with the Internet
There are three television programs and over one dozen magazines that cover Internet topics in Japan. Having a personal Internet address is considered a status symbol in Japan, a very status-conscious country. Tokyo boasts ten Internet cafes. Enthusiasm for the Internet is at an even higher pitch in Japan than it is in the US.
The Internet in Japan is where the US was two years ago
The Internet market in Japan today closely resembles the Internet market in the United States two years ago: rapidly expanding public awareness, adoption by the high tech and academic world, high levels of media attention, rapid growth in the number of access providers and users, and relative shortage of content.
The Internet has the potential to become an important part of Japanese life
The Internet is made to order for Japan. In a country that values education and research it is the ultimate education and research tool. For example, Fujitsu recently ordered a company-wide English test to identify fluent English readers who could be assigned to Internet surfing for strategic research purposes. After school tutoring is a big industry in Japan and one company, Gakken has established a network of 300,000 families which receive daily lessons via fax. Switching such networks to the Internet is an obvious and easy step that will cut cost and improve service.
The Japanese have a keen interest in other parts of the world, as well as a reluctance to spend too much time away from their home country. The Internet is a perfect window on the world to satisfy these mutually exclusive national desires. The Japanese also demonstrate a ready willingness to adopt new technologies, especially if they are seen as prestigious, and an ability, one might even call it a passion,
to come from behind technologically.
There is a shortage of quality content on the Internet in the Japanese language
Contrary to the popular belief among people who do not know Japan, Japanese are not particularly good at reading English, in spite of their efforts to learn the language, and vastly prefer reading in their own language to English.
There are significant rewards to companies that capture mindshare early in the Internet market
In the US, content shortages created tremendous opportunities for early pioneers, the most dramatic example being Yahoo, an Internet directory company which started without capital in a college dorm room in April of 1994 and now, exactly two years later, is (somehow) valued by Wall Street at over $1 billion. There have been many such stories of companies that acted fast to establish a high profile among early adopters and attained spectacular success, albeit on a smaller scale. Smart companies that have reaped the rewards of the Internet boom in the US (Netscape, Yahoo, PSI, Individual, E-Media) are already in Japan with large investments.