| BUSINESSWEEK ONLINE : MAY 3, 1999 ISSUE | ||||||||
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| SPECIAL REPORT
Can Japan Get Back in the Wireless Game? A new standard could give it a global edge These are heady times in the corporate labs lining Yokosuka Research Park, Japan's Telecom Hill, located 30 miles southwest of Tokyo. With less than two years to go before Japan introduces the world's first Third Generation, or 3G, cellular services, hundreds of engineers are racing to develop wireless phones and equipment that promise a sea change in mobile communications. A glimpse of the future is already on display at the laboratories of NTT DoCoMo (NTT), Japan's largest mobile-services provider: lightweight handsets capable of videoconferencing, easy Web cruising, and lightning-speed data transmission. ''We are ready to create a new world,'' says Kota Kinoshita, senior vice-president of DoCoMo. In this new world, Japanese makers of wireless phones and network equipment could reverse the missteps of the past and become key players in the global marketplace. Why? The standard that DoCoMo and other Japanese players are developing--something called wideband code division multiple access (W-CDMA)--will be used in Europe, Australia, and other key regions of the world. DoCoMo plans to initiate W-CDMA services in Japan by March, 2001, and operators in Europe are expected to follow suit later that same year and in 2002. ''Since Japan will be the first to adopt 3G, its companies should have the first-to-market advantage internationally,'' says analyst Andrew Haskins of HSBC Securities in Tokyo. Japan's leading wireless companies have high hopes for expansion abroad. Consider Matsushita Communication Industrial (MCI), Japan's largest handset maker, with 35% of the domestic market. MCI is planning to boost its share of worldwide wireless phones to 15% in 2000, up from 9% today. To do that, it's increasing production of handsets in the current European digital standard, Global System for Mobile Communications (GSM), from 5 million in 1998 to 9 million this year. That will help establish the company's brand name for even greater expansion with 3G. ''This way, we'll be positioned to move in Europe,'' says Ryuji Hori, head of research and development at MCI. NEC Corp. (NIPNY), a leading computer and communications maker in Japan, also has global ambitions. It, too, plans to establish a foothold in the GSM market before marketing 3G products. In March, it formed an alliance with Germany's Siemens (SMAWY) to develop and market wireless equipment in Europe and other regions. Under the pact, Siemens gets access to NEC's 3G technology in exchange for providing it with GSM knowhow. Japan, with its 47 million cellular subscribers, is hardly a wireless outback. The country boasts the world's smallest and lightest phones at less than 3 ounces. Yet Japanese companies have failed to translate their technological prowess into global market share because Japan's government regulators, determined to protect the domestic market from foreign players, approved homegrown standards. ''It isolated us from the global market,'' says Akio Moridera, a senior vice-president in charge of mobile communications at Fujitsu Ltd. Today, Japanese companies account for less than 20% of the world's cellular-phone business. That could change with 3G. In coming weeks, eight companies will be chosen as equipment suppliers to DoCoMo, including MCI, NEC, and Fujitsu. Maybe the third time will be the charm for Japanese makers of communications gear. By Irene M. Kunii in Tokyo, with Stephen Baker in Hanover, Germany To read a correction/clarification about this story, click here. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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