Regarding Japan's "Kamikaze election"

Regarding Japan's "Kamikaze election" Japan's prime minister Noda declared to dissolve the parliament.  It is almost certain that his DPJ will lose, Japanese media say, but he handed the decision to the opposition party LDP leader Abe in exchange to agree with Noda's main agenda:  to reduce the number of parliament seats.  This means a higher chance of losing his/her job for existing representatives, so nobody has done it before, but he is doing it because he asked Japanese people to endure the consumption tax hike, and that the politicians also should bite the bullet.

Politics in Japan:  The Kamikaze Election (Economist)

Normally, Japanese press don't praise any politicians, and individual Japanese citizens usually would prefer to criticize, not to declare support for, a particular politician in public.  But I am pleasantly surprised that many Japanese people on my Twitter timeline are actually saying something about it, many of which actually support Noda or his decision.

I, for one, feel that I want to support his action.  In the Japanese context, it is the only way to make something NEW happen, which shakes the status quo.  Japan has been TOO successful in the past 50 years and people do not want to move on from that old regime, even though it does not fit in the changing environment.

There are many stories in "samurai" era, that a royal staff commit "seppuku (hara-kiri)" to convince his boss to stop his wrong doing.  In this case, the boss is Japanese people in general, and Noda is using this final weapon.

The election will be held on December 16.  Luckily, by now, I can at least vote from overseas.  I gotta go vote for this one.

Panasonic to ALMOST get out from mobile handset business

Panasonic to ALMOST get out from mobile handset business.

So the Japanese press reports today.  Wait.. were they still making one, anyways?

In Japanese domestic market, Panasonic kept No. 2 (after Sharp) till 2009, but as the market shifts to smartphone, now it is ranked 4th, after Fujitsu, Apple and Sharp.  They just announced that they will shrink their mobile handset business drastically, discontinue Eluga product line they just introduced in Europe, already slashed several hundred headcounts in the domestic product facility.  But "shrinking" even further from the current small operation equals death, practically speaking.

In a separate report, as all the carriers shift their line up to smartphone in the past few years, Japanese vendors finally turned their heavy body around and designed "state-of-the-art" smartphone, with their sophisticated technology and design ability, but it turns out that Qualcomm could not supply enough number of Snapdragon chips due to the global shortage (=dramatic sales increase).  Because Japanese market and vendors are so small that they get a low priority in rationing.

And at this moment, there is really no way out of this mess.  No international vendors want to buy into any of these smaller players, and merging with other weak domestic player will not help in global market at all.  Sharp is on the verge of bankruptcy due to their liquid crystal problem, and Fujitsu handsets have all kinds of problems.

Even the Mighty Nokia is slipping down.  Too bad, Japanese once-glorious mobile vendors are all going down together.  I believe they should have consolidated themselves in early 2000's, when they still had some life left.  But it is WAY too late.

Sigh...

No.2 carrier KDDI is increasing grip on cableTV, and it makes a whole lot more sense

No.2 carrier KDDI is increasing grip on cableTV, and it makes a whole lot more sense While No. 3 Softbank is buying up SprintNextel in the U.S., KDDI is increasing its control on Japanese domestic cableTV industry.

Currently, KDDI has 30.7% of No. 1 JCOM (with 39% market share) and 95.6% of No. 2 JCN (11% share).  JCOM's lead investor is Sumitomo Corp., who fought with K when K tried to buy control of JCOM in 2010, ending up buying more shares than K and currently holds 40%.

Nikkei reports that this time KDDI and Sumitomo will jointly buy up 30% of JCOM shares in the open market, making it privately held with 50-50 joint venture, and then will acquire JCN to make it a subsidiary.

News reports that the new company holds 50% share of Japanese cable TV industry, although much smaller size compared to the US, and plan to become an effective competitor in fixed broadband against dominant NTT group.  NTT is also entering into video distribution through Hikari TV, competing against cable TV companies.

Sumitomo Corp entanglement aside, this deal makes way more sense to me compared to Softbank-Sprint deal, looking from Japanese consumers point of view.  The market has been horribly fragmented and did not have enough clout in the fight against media giants, to move video contents onto broadband.  I hope it will shake the Japanese media's iron grip and finally bring it to 21st century.

Why Softbank is buying Sprint NOW

Why Softbank is buying Sprint NOW

Japan's Softbank is buying 70% of SprintNextel.   "Why" from Sprint side is pretty obvious - they need money.  A lot of it, for LTE deployment, and to kill 4th and under competitors.

But from Softbank side, the gain is not very clear.  Today's Softbank press release talks about their synergy in building "next generation mobile internet company" and they can provide know-how of turn around.  You, as an industry person, know these are just the templates.  It really does not have any meat.  Well, at least Yen exchange rate helps, but really, why?

Some say it is just Mr. Son's ego.  He is eager to expand his business internationally, and he just could not resist the temptation of this opportunity.  Others say he can gain a lot of political clout against Japanese regulatory body - utilizing US pressure, often referred as "gaiatsu" (outside pressure) in Japanese.  Some Japanese analyst complain that Son should invest that money into his own network to improve its notoriously poor connection.  Yes, that is true, there will be no direct benefit to Japanese subscribers.

But after all, does it worth 20 billion dollars, right after Softbank finally shrunk its HUGE debt for Vodafone Japan acquisition to a manageable size?

Well, I am guessing that Masayoshi Son is betting on Dan Hesse.  Sprint has already made a lot of improvement since he took helm.  They cleaned up the customer service mess, cut cost and obtained iPhone in their line up.  They have done a good job in things that does not require a large sum of investment.  But now they have to get onto the real network mess clean up.  And also, Hesse practically throw T-mobile into a tank when he successfully blocked its merger with AT&T, and he still is trying to kick them off into a cliff, taking everyone who is climbing up under him.

If, at this moment, he gets enough money NOW and become successful?  Sprint share price will shoot up.  Son can pocket a huge capital gain.  He can use the money for anything then, be it Japanese network improvement or his new pet project, solar power generation.

In my "telecom economy 10 year cycle" theory, now is the "down" time for both fixed and mobile network.  If my theory is correct, fixed network will turn around in 2015, and mobile in 2018.  Sprint is planning to finish its network transition in 2017.  So it is actually a pretty good timing.

I have been involved and observed the "telecom industry globalization" and leaned that international investment into "local" portion (including mobile) of the network is VERY hard to succeed in long term, except for within Europe (their "country" is about the size of "state" in the US) and for the cases of former colonies (such as former British Empire and Spain-LatAm).  But if you look at it as "5 year" turn around investment between 2012 and 2017, it looks reasonable.

As long as you believe Dan Hesse can do it as he promised.  And I guess Son believes he can, and Son is betting hugely, as his once-in-a-lifetime opportunity.  He is a crazy guy who bet on some smaller but similar opportunity and has been successful.

So let's see if his horse will win or lose.

From box to cloud – Random thoughts at Hosting and Cloud Conference

“Big Data and Cloud Storage” Vol. 2:   Event and Company #2

From box to cloud – Random thoughts at Hosting and Cloud Conference

◆ Die-hard Local Businesses as “Cloud” infrastructure

It was my first time to attend “Hosting and Cloud Transformation Summit2012” held in Las Vegas on September 19th and 20th.

I enjoy feeling various beat of each industry when I attend conferences. This time, the impression of this conference was quite different from equivalent Silicon Valley ones.

I am accustomed to see Asians, Europeans, men and women all mix together, in jeans-based business casual, while the exhibit booths push fashionable and cutting-edge image, in SV. But here at HCTS, most attendees are white male in suit, and the booths are more practical and industrial. I often encounter such atmosphere at traditional telecom segments, which is supported by many local-oriented small to medium service providers.

In the 1990’s, thousands of discount long distance telephone carriers and CLECs flourished across the US. WorldCom was the most famous one, but most of them were not “money game” type people at all. They continued on as honest local businesses, have changed the line of business into another form as the industry changes, and one of their evolved form is the hosting business.

Such not-so-flashy but vast and steady infrastructure business is the building block of the cutting edge cloud services such as social media and online games.

◆　Hosting business is doing well

But their profitability is quite flashy indeed, said DH Capital, investment bank specialized in this area. They claim that after the over-supply period of the bubble, demand increased accordingly and now the market is at just a good balance. EBITDA multiple of publicly traded hosting companies are at 15-20x, nice level as a steady industry.

Traditional hosting as a “box” business can earn a steady income when the box is full. But many predict a huge demand increase in the near future, and the threat of overflow. Conference organizer The 451 Group pointed out in the keynotes the cause of such demand change is caused by “Internet of Things (IoT)” and “Big Data.”

The audience reaction felt a bit slow to these issues, another difference from Silicon Valley where people are actually feeling the pinch of data overflow. I guess it is because the data overflow situation has not spread into many other places.

◆　From Box to Cloud

But such data wave is spreading for sure.

According to The 451 Group, Internet infrastructure market is estimated to grow from $39 billion in 2010 to $68 billion in 2013, at 20% CAGR. Among its sub-sectors, the largest are traditional managed hosting and multi-tenant datacenter, but the fastest-growing is cloud computing with 62% annual growth. “Cloud” is more flexible and scalable form of service compared to “box” type traditional hosting.

Big data characteristic is often express as “3V”, or “Volume, Velocity and Variability.” The 451 Group argues that datacenter has to be elastic as well to handle such type of data communication.

Datacenter management has to adjust as well. In the conference, for example, Schneider Electronic explained that the electricity management has to be upper-layer conscious, because if the power of a part of virtual machine goes down, the management system has to know where to back up.

◆　Amazon Dominance

Looking from a different point of view, cloud service can be divided into three layers, “SaaS (Software as a Service)”, “PaaS (Platform as a Service)” and “IaaS (Infrastructure as a Service).” Hosting service providers are in IaaS area.

The 451 Group showed that approximately half of IaaS market is taken by Amazon, followed by Rackspace and Verizon Business with a wide margin. It is safe to say that Amazon S3 (Simple Storage Service) has become the de facto standard in cloud storage.

Although Amazon was not present in the conference, many speakers mentioned it in a context that managed hosting players are feeling threat from Amazon S3. The 451 Group, however, claimed that both have different roles and will co-exist even in the future.

◆　Cloudian Community Edition

In the conference, this column’s sponsor Cloudian announced free “Cloudian Community Edition”.

Cloudian software enables hosting providers and enterprise users build “Amazon Style” cloud storage system, compatible with S3.

Community Edition includes the same functionality as the standard edition and is free up to 100 Terabyte.

Please refer to Cloudian website for more details.

Shouldn't Apple forget about map and TV and worry about music?

Shouldn't Apple forget about map and TV and worry about music? I just wrote a Japanese column on Nikkei Business Online about Apple's map app problem.  In a nutshell, I wrote that the trouble was caused by their lack of expertise in "cloud" and "big data".  It is not due to the absence of Steve Jobs - they already have a bad track record with MobileMe and Ping - the latter being shut down yesterday.

There has been a lot of rumor about Apple's entry into TV, and I would imagine they have a capability to produce a beautiful piece of TV set - or rather, in my world, iPad is already one.  But if they try to eliminate Netflix from the equation and do it on their own, I guess the same "map" type problem would happen in streaming service.  They pioneered video distribution service on iTunes Store, but after that breakthrough, their iTunes service has not been improved so much.  Netflix, on the other hand, is working SO HARD behind the scenes to brush up their big-data-based recommendation skills, and I believe that is the heart of their success.

Apple is working very had to catch up, aggressively hiring cloud/big-data engineers.  But it will take years to accumulate data and the expertise to turn it into a viable products.

So if they have to work so hard on this area, I wonder why not start from their roots and strength, which is music service.  They already have so much data in music purchases of their huge number of registered users.  The report says that they are delaying "Pandora" type streaming music service due to the right negotiation problem with Sony, but even if that does not exist, I wonder if they can provide good enough interface, given they are still on the learning curve in cloud and big data.

Era of Data Explosion and Big Data

Big Data and Cloud Storage Vol. 1:  Trend #1

I am starting to write a series of "Big Data and Cloud Storage" on this blog, sponsored by Cloudian, who provides the cloud storage software.  The first of the series is the historical trend of data explosion and the need for cloud storage.

Era of Data Explosion and Big Data

• Analog Data and Digital Data

Humankind has accumulated a dazzling pile of analog data in its history over thousands of years. From Buddhist scriptures and printed Gutenberg bibles to enormous amount of modern-day books, photos, music and videos, it still continues to get accumulated day by day.

Digital data is not far behind. Now that major media and personal communications all turned into digital format, digital data is imploding at seams.

So here is a question. Which do you think is the bigger data, analog or digital?

The answer depends on “when”. Consulting firm McKinsey published a report on “big data” in May 2011, and in it, they show an estimate of the share of digital among all the accumulated data. In 2000, thousands-of-year-old analog scores 75% of total. In 2007, however, digital overwhelms analog by 94% share, surpassing analog in mere 7 years.

Digital technology started off in the 80’s with personal computer invention, and by the time of Net Bubble in the 90’s, most of media, such as mail, photo, music and video were in digital format. Yet, in the 2000, we had way more analog, but in 10 years after that, digital exploded as such. How, then, did it happen?

• Bubble Burst and User Generated Contents

In the 1990’s, e-mail emerged as an alternative of snail mails. Then came e-commerce as a catalog alternative, and news portal as a newspaper/magazine alternative. Back then, transmission speed and technology was still limited, so a relatively small number of providers were producing catalog and articles, and delivering these contents to users through Net in an unilateral manner.

Throughout the bubble period, huge scale of Internet infrastructure was built, but after the bubble burst in 2000, demand suddenly shrunk and price of over-supplied fiber optics and datacenter plummeted.

Sometime later, a new type of Internet companies rose from the ashes of bubble, such as Google and Facebook. These new species of Web industry was later named “Web2.0”. They provide “interactive” flow of information on the Net, created platforms for “user generated contents” and revolutionalized the net business. They are not the alternatives of something, but are totally unique to the Web technology and had totally different cost structure. People started to share their thoughts and photos on blogs, and videos on YouTube. And all these user generated contents have been published and accumulated on the Internet.

• Data gathers on “cloud” and becomes “brain”

Google’s then-chairman Eric Schmidt uttered the word “cloud computing” in 2006 in a speech, popularizing the term “cloud”. Cloud computing means the system to keep data and application in Internet, rather than on desktop computer. The term “cloud” came from the “cloud” figure on the network chart to express Internet. Such idea has already been advocated in the past, but around this time, finally came true, as the network environment caught up with broadband penetration.

As data transformed from analog to digital, and gets published on the cloud, now we can easily gather many different kinds of data in the cloud, sort it and extract meaning from it. Starting off as a monad of individual computers in the 80’s, they get connected with nerves of Internet in the 90’s to form a earthworm, and in the 2000’s evolved into human brain.

And this highly intelligent brain activity on the Internet is called “big data”. The more information is stored, the better the brain works, and as the brain works well, it gets more and more interesting to learn the new things, so the brain autonomously and increasingly sucks in the new data.

In summary, digital data explosion and the subsequent trend towards big data was triggered by Web industry’s movement into “cloud”.

"Big Data" series started for Cloudian

I have started to write "Big Data and Cloud Storage" series for Cloudian on ZDNet Japan and Cloudian website in Japanese. English version is coming up soon. 「ビッグデータとクラウド・ストレージ」に関するよもやま話新シリーズを開始いたしました。ZDNetと、クラウディアン社サイトの両方で読めます。

「ビッグデータとクラウド・ストレージ」　連載 第一回 - トピックス - ZDNet Japan What is BIGDATA?: ネットにおける脳の高度な知的活動が「ビッグデータ」

今回のシリーズは、一般的な記事ではなく、クラウディアン社から依頼を受けて、同社の広報の一環として執筆する、いわば「ホワイトペーパー」のようなものです。クラウディアン社は、クラウドストレージ向けソフトウェアを提供する企業です。詳しくは下記をご参照ください。

クラウディアン

直接の製品宣伝ではなく、「企業によるビッグデータの活用、そのためのクラウドストレージ」という動向について、より多くの方に興味を持っていただき、同社製品のターゲットとする市場を広げようというのが目的ですので、できるだけ読んで楽しいものにしたいと考えています。 連載といっても、半年ほどの「短期シリーズ」になる予定です。2週間に一度の頻度で更新です。どうぞ宜しくお願いいたします。

お詫び Apologies

サイト経由でメール問い合わせをいただいた皆様へのお詫び 弊社ENOTECHの一般問い合わせメールアドレス（info@）にいただいたメールにつき、問い合わせがあり調べたところ、だいぶ以前から、私の手元に届かない状態となっていたことが判明いたしました。問い合わせをいただいたにもかかわらず、私からの返信が行っていないという皆様、本当に申し訳ありませんでした。もう遅い件も多いですが、できるかぎり遡って、個別にお詫びを申し上げる予定です。

Apologies to everyone who sent inquiries to us through this site

I have received an inquiry about our general mail address (info@) and found out that there has been an error and I have not received those emails for quite some time. If you have sent an email to info@ and have not received my reply, I would like to apologize for the error. Many things are already outdated, but I will try to go back as much as possible to respond you with a sincere apologies.

Michi Kaifu / CEO ENOTECH Consulting

日経ビジネスオンライン記事

今月のコラムが掲載されました。「発達・学習障害もここでは立派なビジネス」　http://business.nikkeibp.co.jp/article/world/20120904/236373/