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No. 363, December 1999

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Japanese Companies in the US


SOFTWARE AND INFORMATION SERVICES

Within weeks of opening its doors, the Internet Incubator at PANASONIC TECHNOLOGIES, INC.'s Panasonic Digital Concepts Center in Cupertino, California was home to five early-stage, rapidly growing Internet and electronic commerce start-ups (see Japan-U.S. Business Report No. 359, August 1999, p. 9). The companies that passed the PDCC test are: 2ROAM, INC., which provides translation solutions to deliver Web- based content, commerce and services to handheld wireless devices; DYNAPTICS CORP., a developer of on-line impulse buying software; EMENTORING. COM, INC., an on-line learning source for global business skills; FORT NOCS, INC., an Internet applications development and hosting company; and MAGIC-BEANSTALK.COM, INC., which is a meeting place for participants in the dot-com revolution. At this stage, PDCC's Internet Incubator has room for 10 more entrepreneurial ventures.

American Internet start-ups that need money to get off the ground or to expand continue to find willing investors among the handful of Japanese companies that have tied their future to this medium. For example, year-old PRESENTER.COM, INC., which describes itself as the Web's first on-line exchange and forum for presenters and consumers of expert- knowledge content, raised $6.5 million in initial venture-capital funding from SOFTBANK CORP., TRANS COSMOS INC. and a former chief executive of APPLE COMPUTER, INC. The San Jose, California company will use the money to expand operations and staffing, implement an international marketing campaign and develop additional applications for its expert-based information exchange system. Presenter.com, which plans an initial public offering in 2001, uses proprietary encoding technology to transform videotaped events into iPresentations — a new media form that combines streaming audio synchronized with transitional video or still slides and fully indexed presentations of experts from around the world discussing a variety of business-relevant subjects.

SOFTBANK CORP.'s Mountain View, California-based SOFTBANK VENTURE CAPITAL unit, which manages venture-capital funds focused mainly on early-stage Internet companies, hopes to bolster its reputation as the driving force behind some of the most successful Internet start-ups in the United States by leading a $7.5 million round of follow- up financing for DR- DREW.COM, INC. This Pasadena, California company just launched a health and life-style Web site and community aimed at young adults. It takes its name from Dr. Drew Pinsky, who is called the favorite television and radio doctor of the Internet generation. The site is designed to give hard-to-reach 14-to-34-year-olds a forum for exploring a wide range of physical, mental and emotional health topics.

In another test of its ability to pick winners, SOFTBANK VENTURE CAPITAL joined two other American venture-capital funds in putting up money for SPIN MEDIA NETWORK, INC. Established in 1998, the Palo Alto, California company runs Spinway.com, which offers businesses free cobranded or private-label dial-up Internet access to drive traffic and broaden their brand identity. It does this by allowing companies to offer personalized content, rewards programs, instant messaging, full-featured electronic mail and parental- control software. Spinway.com also is said to be the only site that features full-motion video at dial-up.

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Softbank Group companies have been the leading source of funding for American Internet start-ups, but HIKARI TSUSHIN, INC., Japan's biggest distributor of cellular telephones, also is making a name for itself. Among other recent initiatives, the company spearheaded a round of venture-capital financing that raised $20 million for INTRANETS.COM, INC. The Woburn, Massachusetts business, which launched its Web site less than three months ago, provides free intranet portals for small and midsize businesses and organizations, including Web hosting and custom URLs. More than 55,000 entities already have registered for the services. Intranets.com, a product of the idealab! Internet incubator, will use the new funding mainly to finance a major marketing campaign.

Another Internet venture that has caught HIKARI TSUSHIN, INC.'s eye is MEDSITE.COM, INC. The four-year-old, Manhattan-based business, which calls itself the physician's home on the Internet, generated $36 million in follow-on financing through the sale of preferred stock to a number of venture-capital funds or firms as well as to the Japanese company and a big U.S. health-care operation. Medsite.com offers a broad selection of medical books, software, journals and supplies, plus such services as medical news, electronic physician credentialing and continuing education.

XSIDES CORP. (formerly The Pixel Co.) also received a vote of confidence from HIKARI TSUSHIN, INC. The Japanese business joined other investors in providing $15 million in second-round financing for the Seattle operation, which is developing technology that brings Internet applications and services to PCs independent of and outside the machine's operating system. Through partnerships with other companies, xSides delivers such content as customized e-mail, news and weather via a permanent miniature portal window on the desktop.

In an investment right down its alley, HIKARI TSUSHIN, INC. joined four other companies, including 3COM CORP., to provide $14 million in second-round financing for PARAGON SOFTWARE INC. The Santa Clara, California firm's FoneSync software technology is the de facto platform for synchronizing personal information between the desktop and the Internet and mobile phones. Some of Japan's biggest manufacturers of cellular phone handsets have worked with Paragon to develop its software.

TRANS COSMOS INC. and its Bellevue, Washington subsidiary also have built up an enviable portfolio of dot-com investments. One of the latest additions is TRANZ-SEND BROADCASTING NETWORK, INC., into which the American affiliate put more than $3 million. Some of this money will be used to launch the San Francisco firm's ClickMovie.com site, which electronically delivers movies to TV sets using a PC as the set-top box. Tranz- Send's ultimate goal, though, is to use the Internet to make all types of high-quality video available on demand. .....TRANS COSMOS INC.'s U.S. unit also participated in raising $2 million in seed funding for BRAND3 INC. Founded last spring, the Los Angeles developer of Internet-based relationship-building programs for branded organizations will use the money to launch its first offerings in early 2000. Its mission is to enable merchants to extend their brand and marketing message beyond banner ads and limited portal plays. The means is Brand3's GluOn software. It allows an organization to permanently put its logo on the desktops of customers who have signed on or who have requested the free Internet access, e-mail or chat services that participating retailers can provide thanks to their tie-ups with Brand3.

Japan's trading companies also have emerged as a source of funding for Internet and information technology ventures. For instance, ITOCHU CORP. led a group of venture- capital funds and private investors that put up $2.4 million in first-round financing for ZIPLIP. COM, INC. The Mountain View, California business, which launched its Web site in July, specializes in secure messaging and collaborative services. ZipLip was the first company to offer free, totally private e-mail and file transfer over the Web. Its fee-based services include secure document delivery, file-sharing, storage, bulletin board and other collaboration tools. With more money in hand, ZipLip will scale up operations, broaden its product lines and expand marketing.

For their part, MITSUBISHI CORP. and it primary U.S. subsidiary acquired a reported 25 percent in ERGONOMIC TECHNOLOGIES CORP. for an undisclosed amount. The six- year-old Oyster Bay, New York ergonomic consulting technology company will use the investment in part to complete the development of its ergonomic enterprise work-force planning software for Fortune 500 businesses. ETC also will earmark some of the money to begin an Internet-based workplace risk assessment service. .....At the same time, MC CAPITAL INC., the New York City venture-capital arm of MI-TSUBISHI CORP., joined SOFTBANK TECHNOLOGY VENTURES L.P. and a long list of other investors, including many big names, in providing $35 million in mezzanine financing for RECIPROCAL, INC. The Buffalo, New York-headquartered company is in the digital rights management business, enabling content owners to secure their material for distribution and sale over the Internet. Its highly scalable Digital Clearing Service, which just started, is compatible with a variety of platforms, vendors and content types and can handle millions of transactions a day.

Forthcoming SONY CORP. audio products featuring the consumer electronics innovator's OpenMG and MagicGate copyright management technologies will be able to play music content protected by INTERNATIONAL BUSINESS MACHINES CORP.'s Electronic Music Management System — a comprehensive electronic-business solution for the sale and secure downloading of music. This interoperability is the result of an agreement the two reached last spring (see Japan-U.S. Business Report No. 356, May 1999, pp. 9-10). Sony's Memory Stick Walkman and VAIO Music Clip personal audio players, which will be packaged with OpenMG software, will be the first products to feature IBM's EMMS solution. The next step in the collaboration is a wireless music distribution field trial in Japan with NTT MOBILE COMMUNICATIONS NETWORK, INC. This test, expected to start in the first half of 2000, will enable consumers to receive and play EMMS-secured music content over NTT DoCoMo's personal handyphone system data-communications network using Sony's Memory Stick as the recording media in portable devices.

In an arrangement also designed to promote digital music downloads to personal audio players and PCs while protecting the intellectual property of artists, music labels and other rights holders, SONY CORP. agreed to make OpenMG interoperable with MICROSOFT CORP.'s Windows Media digital rights management format. As with the IBM collaboration, the end result here will be that content protected by Microsoft's DRM system can be securely supported on the Memory Stick Walkman, the VAIO Music Clip and other OpenMG-compliant devices. In conjunction with this announcement, Sony said that it would support the Windows Media Audio audio-compression technology on the VAIO Music Clip in addition to its proprietary ATRAC3 technology. In a trade-off of sorts, INTERNATIONAL BUSINESS MACHINES CORP. agreed as part of its expanding electronic-music alliance with Sony to back the ATRAC3 sound-compression know-how.

Last January's agreement between SONY CORP. and SUN MICROSYSTEMS, INC. to bridge the Sony-backed HAVi (home audio-visual interoperability) standard for AV equipment and Sun's Jini (Java infrastructure initiative) platform, which is aimed at information appliances (see Japan-U.S. Business Report No. 354, March 1999, pp. 24-25), has evolved. The pair now plan to work on technologies to directly link digital consumer devices and Internet-based content and services. Their initial focus is the development of home- gateway software that will run on such appliances as set-top boxes and digital TV sets and bring the Internet to consumers without using PCs. Network server technologies are the other thrust of the expanded tie-up.

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FUJITSU, LTD. and TIVOLI SYSTEMS INC. have signed a wide-ranging cooperation agreement designed to help their mutual customers worldwide more efficiently leverage their IT resources. For starters, the diversified electronics company will bundle Tivoli Management Agent with storage systems currently under development. This pairing, the new partners said, will help Fujitsu customers reduce the complexity of implementing Tivoli Enterprise technology management software. Second, Fujitsu will offer Tivoli Storage Manager 3.7 as part of its SystemWalker suite of network management products for enterprise customers. It also will integrate several other main SystemWalker components with Tivoli Enterprise. Finally, Fujitsu will join the Austin, Texas company's Team Tivoli partner program. In conjunction with this worldwide arrangement, Tivoli's Japanese subsidiary will offer its customers several SystemWalker management products and Tivoli Ready SystemWalker applications.

Hoping to win more business from big financial services providers and communications companies in need of mission-critical integration solutions, the Waltham, Massachusetts- based Software Solutions Division of HITACHI COMPUTER PRODUCTS (AMERICA), INC. joined forces with TOTAL TRANSACTION MANAGEMENT. The alliance will draw on the HITACHI, LTD. organization's expertise in large-scale infrastructure software and San Diego, California-headquar-tered TTM's experience in the integration of Web-based and legacy systems with scalable and robust middleware systems. Hitachi's infrastructure software includes the Hitachi Enterprise Application Manager distributed application middleware, which allows direct measurement and management of large distributed applications. Another product is Hitachi TPBroker for Java and C++. This custom application development platform provides the infrastructure for communications and CORBA (common object request broker architecture)-based transactions. TPBroker also has several add-ons.

A wider range of scientific and technical applications soon will be available for COMPAQ COMPUTER CORP.'s powerful 64-bit Unix AlphaServers, thanks to an agreement that the big computer supplier signed with FUJITSU, LTD. Under it, the two initially will port the Japanese company's MOPAC 2000 calculation system, which is used to obtain molecular orbitals from macromolecular structures, to the Compaq high-per- formance computing platform. Later, they plan to optimize Fujitsu's molecular dynamics software, MASPHYS, its VisLink network visualization tool and other science and technology applications to run on the Compaq system. These products will be jointly marketed in the United States, Europe and Japan.

Attempting to ride the constantly building Linux wave in the United States, FUJITSU SOFTWARE CORP. will release in the first quarter of 2000 a version of TeamWARE Office 5.3 that supports the open-source operating system. This suite of groupware applications includes e-mail, time and resource scheduling, discussion forums, and document management and retrieval functions. The forthcoming package will work with Caldera Open Linux, Red Hat Linux and Turbo Linux. In the future, San Jose, California- based Fujitsu Software plans to offer other TeamWARE products that support the Linux platform.

To ensure the continued penetration of the IMAGER line of digital document systems into corporate offices, the Sharp Document & Network Systems of America Division of SHARP CORP.'s main U.S. subsidiary soon will release a pair of document management applications. Both were developed by SHARP LABORATORIES OF AMERICA, INC. in Camas, Washington. One of the products is SharpDesk, which links hard copy and digital images to application software. That integration gives users the ability to manage and merge documents from various sources, edit and manipulate them, and then produce finished documents locally or send them electronically anywhere in the world. The other SLA-developed product is the Sharp Printer Administration Utility. It allows remote configuration and monitoring of Sharp and other companies' printers.

CASIO SOFT, INC., the San Jose, California mobile productivity software development subsidiary of CASIO COMPUTER CO., LTD., announced Casio Soft Project 2.0. This program lets users import and export Microsoft Project-compatible project schedules directly from and to handheld or palm-size PCs, including Casio's line of Windows CE- operating Cassiopeia products.

In a deal valued at $16 million, NAMCO LTD., one of Japan's three largest makers of arcade-type video game equipment, has agreed to buy VIRTUAL MUSIC ENTERTAINMENT INC. The Andover, Massachusetts company specializes in music- based video games. It has developed games for the Sony PlayStation and other platforms. VME also codeveloped a karaoke sing-along game with PIONEER CORP.

In a coup for home video game content developer KONAMI CO., LTD., the company is teaming with the Disney Interactive unit of WALT DISNEY CO.'s Disney Consumer Products Division and ESPN, INC. of Bristol, Connecticut to produce a full line of ESPN sports titles for video game consoles and PCs. Approximately 10 titles are planned for launch in 2000 for such interactive game platforms as the Sega Dreamcast and the Sony PlayStation. The initial titles will be based on officially licensed league sports, but later ones will draw on exclusive ESPN programming.

An exchange rate of ¥105=$1.00 was used in this report.aaaaa

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