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1. “Smart ICT” to produce Japan’s vigor and growth — General —(1) ICT and economic growth — A basic framework —a. Factor decomposition from the macroeconomic viewpoint
From the macroeconomic viewpoint, economic growth is decomposed into labor input, capital input and total factor productivity. Labor input represents the quantitative expansion and qualitative improvement of labor. TFP indicates productivity improvements that cannot be explained by labor or capital input growth.
b. ICT as growth engine — ICT-using industries’ growth combined with ICT industry’s growthFirst, ICT has served as a growth engine. In ICT-using
industries or sectors, TFP growth through labor produc-tivity growth induced by information capital investment and through production method improvements has been combined with the integration of various products and services with Big Data and smartphone use to boost value added to products and services. On the other hand, growing demand for ICT services and equipment in the ICT-using sectors has encouraged the ICT indus-try’s technological innovation and development and pro-duced the ICT industry’s growth, leading to a virtuous circle. The entire ICT industry, including the software, services and hardware sectors, has served as a growth engine to drive Japan’s economy.
c. ICT as versatile tool -- Using ICT for solving global social challenges and expanding such solutions globallyAnother role of ICT in economic growth, which has
attracted attention over recent years, is to serve as a ver-satile tool. Social challenges that have become con-straints on growth in Japan are or will become common to other countries. Japan may use ICT-based innovations for solving these challenges and expand the solutions and relevant know-how globally. Such global expansion is expected to come through efforts to use ICT for vari-ous social challenges facing Japan.
(2) Using new ICT trend to drive growth — Smart ICT —Cloud, Big Data, mobile, social and other new ICT
technology and service innovations are producing a new ICT growth base. The new ICT trend is expected to greatly improve growth potential in various areas not only for the ICT industry but also for ICT-using indus-tries or sectors.
As Big Data technologies have been used more wide-ly, for example, systems that had been used mainly for production lines at large companies and sales manage-
ment at large distributors are now available for easy use for street shop management and public areas including education and healthcare.
The use of social media for various analyses has ex-panded from advertisement to a wide variety of other areas. It has been pointed out that as goods have grow-ingly been commoditized, every industry or sector has grown more service-oriented, with how to maximize val-ues for continuous use rather than exchange being im-portant for competition. ICT has traditionally accelerat-ed this trend toward a stage where ICT users are co-creating values.
As for solving social challenges, meanwhile, Big Data and M2M (machine to machine) sensor networks can be used for efficiently controlling various social infrastruc-tures. They can also be expected to contribute to solving resources problems facing Japan. Furthermore, open data may be used for creating various user-friendly pub-lic services at the initiative of the private sector.
In this way, the new ICT trend or “smart ICT” has gone beyond traditional ICT systems used mainly for improving operations and productivity and has the po-tential to produce a new growth engine.
(3) Using smart ICT for accelerating Japan’s vigor and growthHow have Smart ICT components including mobile
(smartphone and M2M), cloud computing, Big Data and social media technologies diffused in Japan? Figures 1-1-1-1 and 1-1-1-2 show the results of an Internet survey on the diffusion of smartphones and social media in Japan, the United States, the United Kingdom, France, South Korea and Singapore. They indicate that Japan has not necessarily achieved the world’s top position in diffusing smartphones or social media.
The survey’s results regarding various Internet ser-vices show that users of e-commerce online purchases of and trade in goods and services in Japan accounted for 78.3% of respondents in the survey. Although the per-centage share is the highest among the six countries, the share for users of electronic central and local gov-ernment services (electronic applications, declarations and reports) in Japan is limited to 16.2%, far lower than in the other countries.
A comparison of cloud network technology use rates among Japanese and U.S. enterprises (in March 2013) shows that the rate in the United States reached 70.6% against 42.4% in Japan (Figure 1-1-1-3). There is a wide
Section 1 New ICT Trend: “Smart ICT” to Produce Japan’s Vigor and Growth
2
Part 1
Chapter 1Utilizing “Smart ICT” Advancement to Create New Values
Figure 1-1-1-1 Smartphone and social media use rates (comparison between 6 countries)
(Source) MIC “Survey Research on New Challenges for Advancement of ICT Infrastructure and Services” (2013)
0 20 40 60 80 100
（％） （％）
0 20 40 60 80 100
USTREAM
YouTube
Google+
88.3
76.8
15.0
42.8
16.0
7.8
4.7
96.2
67.8
2.7
14.5
10.1
3.3
0.60.0
98.6
44.4
7.7
19.3
14.1
10.5
93.8
56.3
8.5
29.4
15.3
18.8
2.9
93.8
47.6
10.6
29.7
16.9
20.8
2.4
97.7
38.2
16.5
12.3
9.8
10.7
0.4
91.1
44.6
28.7
26.7
22.3
74.6
1.4
2.7
2.7
69.2
23.5
38.0
2.4
50.2
49.6
0.9
2.7
9.3
73.7
22.2
17.8
10.8
3.0
40.2
0.6
4.1
15.4
77.1
17.2
31.9
16.9
7.2
45.8
1.1
2.6
13.7
84.7
24.8
33.8
27.4
13.5
52.1
2.9
3.7
8.4
40.4
10.6
33.8
1.7
25.3
54.8
10.2
5.9
24.1
【Internet Use Rates by Terminal (Internet survey)】 【Social Media Use Rates】
Japan U.S. U.K. France South Korea Singapore Japan U.S. U.K. France South Korea Singapore
Personal computers
Smartphones
Mobile phones and PHSsexcluding smartphones
Tablet terminals
TV
Home-use game console
Others
Blog
Other social media
I have never usedsocial media.
Figure 1-1-1-2 Comparison of Internet use rates by usage
(Source) MIC “Survey Research on New Challenges for Advancement of ICT Infrastructure and Services” (2013)
97.0
94.1
75.8
46.8
73.4
16.7
50.1
33.0
89.3
76.4
62.9
40.3
53.2
6.8
37.1
38.8
94.1
94.9
59.3
32.2
47.8
17.2
36.4
18.6
96.9
94.9
69.1
44.7
60.3
13.6
45.4
22.2
96.7
92.4
72.1
50.9
63.4
18.9
45.8
28.9
95.0
84.8
54.2
33.3
63.2
6.1
28.4
16.8
50.2
19.0
62.3
23.3
38.6
27.2
54.5
61.4
0.6
75.0
54.2
80.0
41.4
40.1
42.5
41.5
53.1
0.2
72.9
27.1
30.8
21.8
33.7
45.8
51.7
59.1
1.5
67.8
52.9
67.1
39.7
32.9
27.5
35.7
56.2
1.8
58.2
31.1
63.4
39.8
40.1
35.7
34.4
58.9
1.8
78.3
40.0
52.6
20.8
27.5
18.6
16.2
65.3
0.2
0 20 40 60 80 100 0 20 40 60 80 100
（％） （％）
Email sending and receiving
Browsing homepages (websites)
Browsing SNS, blogs, microblogs(including Twitter)
Writing and updating for SNS, blogs,microblogs (including Twitter)
Browsing video uploading and sharing sites (YouTube, etc.)
Uploading for video uploading andsharing sites (YouTube, etc.)
Using Internet distribution services forradio, TV program and video content
Exchanging and downloadingelectronic files (P2P, FTP, etc.)
Japan U.S. U.K. France South Korea Singapore Japan U.S. U.K. France South Korea Singapore
Purchases of or trade in goods and services(Internet shopping through Amazon and
other services, excluding financial transactions)
Internet auctions
Financial transactions(Net banking, Net trade, etc.)
Purchasing digital content(music, sound, video,game software, etc.)
Acquiring or hearing digital content(free of charge)
Participating in online (Internet) games
e-government and e-local governmentservices (electronics applications,
declarations and reports)
Map information services(including free and paid services,
transfer guides and route search services)
Others
Part 1
3
disparity between Japanese and U.S. enterprises in the use of cloud computing as a key ICT component.
From the viewpoint of taking maximum advantage of the world’s highest-level communications infrastruc-ture, Japan is required to enhance all relevant initiatives to promote the utilization of ICT, particularly the new
trend of Smart ICT, to improve the growth potential for all industries or sectors beyond the border between the ICT industry and ICT-using industries, to use ICT for solving global social problems not limited to those in Ja-pan and to expand these solutions globally (Figure 1-1-1-4).
Figure 1-1-1-3 Cloud network technology use at enterprises (Japan-U.S. comparison)
(Source) MIC “Survey Research on Foreign Policies for Use of Cloud Computing and other ICT Technologies” (2013)
0 20 40 60 80 100（％）
28.0
9.4
2.8
2.0
19.4
9.8
6.4
7.4
1.0
0.8
42.4
70.6 1%
n＝250 n＝250
n＝250 n＝250
1%23%
46%
23%
15%
10%
9% 62%
82%
8%6%
9%
16%
59%12%
4%
3%
3% 1%
3%0%
3%Japan
U.S.
We are using or have used cloud services
We have plans to use cloud services but have yetto decide on a specific timingWe had considered using cloud services but havedecided not to use such services
We have concrete plans to use cloud services andhave decided on a specific timingWe have been considering using cloud servicesbut have no concrete plan to do so.We are not considering using cloud services
n= Japan: 500, U.S.: 500
Japan (small and medium-sized enterprises) Japan (large enterprises)
U.S. (large enterprises)U.S. (small and medium-sized enterprises)
Figure 1-1-1-4 Smart ICT growth model (image)
Growth of ICT-utilizing industries X Growth of ICT industries
Social problems resolution X global expansion
Inducing innovations and enhancinginternational competitiveness
ICT investment expansion and creation ofnew industries
Mobile(smartphones, M2M)
Cloud
Big Data Social media
4K/8Kmultiscreen
Powerful tools
Growth engineRe
aliz
ing
vigo
r and
gro
wth
in Ja
pan
Growth of allindustries or sectors
Realizing a secure, comfortable society
Upgrading Japan’sinternationalposition
Latest ICT trend of Smart ICT
Progress in cooperation between ICT and other industries→ Vaguer borders between industries
Enhancing the demand-driven innovation approach*
* Demand-driven innovation approach: An approach in which developing solutions to global social challenges is designed to result in economic growth and improved international competitiveness.
4
Part 1
2. Utilizing G-spatial information to create new values(1) Presents state of G-spatial informationa. What is G-space?
G-spatial information is equal to geospace (or geospa-tial) information that is defined in the Basic Act on the Advancement of Utilizing Geospatial Information as lo-cation information, or “information indicating a specific location or area in the geospace (including information on the time involving the relevant information)” or infor-mation consisting of location information and “informa-tion related to the location information.”
b. MIC initiativesEach government agency implements various mea-
sures based on the basic plan on the advancement of utilizing geospatial information. The MIC carries out the operation of quasi-zenith satellite time control equip-ment, the diffusion and enlightenment of integrated GIS (geographical information system) technologies and the expansion of statistical GIS systems not only in the ICT field but also in local government and statistical fields.
The MIC has continued to operate time control equip-ment for the first quasi-zenith satellite system, called Michibiki, for which the ministry conducted research and development until FY2011.
As for integrated GIS systems to be developed by local governments, they are required to promote the develop-ment of common use space data including basic geo-graphical information to increase the operational effi-ciency when introducing the GIS systems. The central government is set to provide technical and auxiliary fi-nancial support to them. The statistical GIS system de-veloped by the MIC Statistics Bureau takes advantage of the GIS mechanism to visualize statistical data of various surveys on background maps according to individual us-ers’ needs.
(2) Local governments’ consciousness of G-spatial utilizationIn a questionnaire survey, local governments were
questioned about operational areas where GIS systems are used. The most frequently cited area was taxation. Particularly, more than 50% of respondents said that GIS
systems are incorporated into routine operations. In ad-dition, more than 50% also chose infrastructure manage-ment areas (Figure 1-1-2-1).
Questioned on areas for which local governments hope to expand the utilization of GIS systems, nearly 80% chose the disaster prevention area. Around 50% chose healthcare/nursing care/welfare, tourism, urban infra-structure and crime prevention (Figure 1-1-2-2).
Questioned about the GIS effects that local govern-ments expect, they cited “greater operational efficiency” most frequently. Following this option were “improve-ment of service quality” and “improvement of various plans and decisions” which were chosen by more than 50% (Figure 1-1-2-3). Questioned about challenges for expanding GIS utilization, about 60% of respondents in the survey said “financial conditions are severe.” Other frequently cited challenges were that “systems for cross-sectional utilization or joint utilization with outsiders have yet to be developed,” that “in-house promotion ar-rangements are insufficient” and that “staff members’ skills (for operation, analyses, utilization, etc.), and soft-ware and tools for utilization are insufficient.” They dominantly pointed to a lack of both in-house hardware and software (Figure 1-1-2-4).
(Source) MIC “Survey Research on the Present State of Regional ICT Utilization” (2013)
（n＝895）（％）0 10 20 30 40 50 60 70
68.7
63.0
55.4
53.5
51.0
47.7
17.3
18.4
18.3
24.0
22.6
18.9
18.5
29.6
14.6
8.0
50.4
39.0
32.8
34.6
32.5
18.1
2.7
10.4
Taxation
Roads
City planning
Sewerage
Waterworks
Disaster reduction
Tourism
Others
GIS has been incorporated into daily operations GIS has been used as necessary
Figure 1-1-2-1 GIS utilization areas
(Source) MIC “Survey Research on the Present State of Regional ICT Utilization” (2013)
Figure 1-1-2-2 Areas for which local governments hope to expand GIS utilization
（％）（n＝895）
0 10 20 30 40 50 60 70 80 9078.1
52.652.6
49.748.6
35.634.0
29.428.9
26.818.1
7.72.7
Disaster reduction areaHealthcare, nursing care and welfare area
Tourism areaUrban infrastructure area
Crime prevention areaTransportation area
Education areaVarious information on environment
and energy areasIndustry area
Administrative service areaLocal community area
Employment areaOthers
Part 1
5
(3) Society pursued through utilization of G-space and ICTIn order to solve challenges facing Japan and realize a
desirable society, we should visualize and share a spe-cific future image of a G-spatial society and how to utilize G-space and ICT as the key to the society. In a future G-spatial society, humans, goods and information that have been isolated will be mutually connected through the thorough utilization of G-spatial information and ICT, al-lowing us to visualize and share humans, goods and in-formation that have been invisible and promote co-cre-ation, mutual assistance and coexistence among humans, goods and information. Then, what has so far been impossible or difficult to realize will be realized.
(4) MIC initiative — G-space × ICT promotion councilThe MIC established the G-space × ICT promotion
council in March 2013 to consider how to fuse space in-formation with communications technology to bring about innovations to our lives at a time when ICT is dra-matically changing and evolving in quality and volume.
The council has proposed “construction of a G-spatial open data platform,” “establishment of the world’s most advanced G-spatial disaster management system” and “realization of success models in ‘G-spatial City’ (as tem-porarily named)” to revitalize the economy through cre-ating new industries and services, to build the world’s most advanced disaster management system and to real-ize regional invigoration with advanced and pace-setting approaches.
3. Smart revolution to produce changes in business operations(1) ICT evolution and spreading “kotozukuri”a. Definition of “kotozukuri”
Kotozukuri (creation of events) began to attract atten-tion as a quasi-business approach in the marketing area for the distribution industry. The area has the concept of service-dominant logic (SDL). Unlike the goods-domi-nant logic (GDL) that focuses on values for exchange of
goods, the SDL concept proposes that attention should be paid to values for customers’ use of goods or services when new products are developed. The concept meets the trend where manufacturers have grown more ser-vice-oriented. The phenomenon where manufacturing enterprises produce values from continuous relations with customers through services may represent kotozu-
Figure 1-1-2-3 Expected GIS effects
(Source) MIC “Survey Research on the Present State of Regional ICT Utilization” (2013)
（％）（n＝895）
0 10 20 30 40 50 60 70 80 90
76.2
67.3
62.5
43.4
21.0
10.3
9.4
1.0
Improved operational efficiency (for example, residence maps areroutinely used for business operations to reduce waste)
Qualitative improvement of services (including prompt responses,easier-to-understand explanations and new services)
Improvement of various plans and decisions (including integrated visualization of variousinformation, easier data analyses and easier explanations for decision makers)
Expansion of utilization of information from citizens (for example, dangerouslocations are identified accurately for information to citizens)
Expansion of cooperation with citizens and enterprises (including volunteers’ preparationof hazard maps and private sector health consulting services)
General improvement of overall town or enterprise attractiveness and competitiveness
Regional private business creation and competitiveness enhancement (including improvementof operational efficiency for local enterprises and new businesses using maps)
Others
(Source) MIC “Survey Research on the Present State of Regional ICT Utilization” (2013)
Figure 1-1-2-4 Challenges for expanding GIS utilization
（％）（n＝895）
0 10 20 30 40 50 60 7059.0
47.642.1
39.035.4
33.632.3
31.727.527.4
26.319.7
7.27.07.0
2.21.0
Financial conditions are severeSystems for cross-sectional utilization or joint utilization with outsiders have yet to be developed
In-house promotion arrangements are insufficientStaff members’ skills (for operation, analyses, utilization, etc.), and software and tools for utilization are insufficient.”
Human resource are shortSpecific visions of use are unclear
There is concern about updating dataGIS development is insufficient
Effects and advantages are not clearDevelopment of non-G-space information (including required data and their codes) is insufficientThere is concern about handling of machinery and personal information and securing of accuracy in safety and security areas
Systems are insufficient for cost burdens and costs for beneficiariesThere is concern about understanding within organizations and by citizens
Utilization of private sector organizations and other outside groups is insufficientAppropriate ICT vendors and services are difficult to find.
We are aware of no challengesOthers
6
Part 1
kuri.Even in the manufacturing industry’s monozukuri
(creation of goods), adding values other than those for functions of goods upon their exchange (sale or pur-chase) or creating mechanisms or processes to produce values upon customers’ use of goods, may represent ko-tozukuri.
b. Kotozukuri and ICT(a) Changes in ICT infrastructure
In the 1980s when the focus was shifting from general-purpose computers to personal computers, general-pur-pose computers were still processing mainstay business operations, with technologies used mainly for replacing human labor.
Later, ICT shifted to a client server age. In that age, enterprises generally acquired domains to use email and open homepages. As the Internet diffused as an open network, systems linking enterprises spread to help ex-pand e-commerce not only for sales but also for procure-ment. The objective of the introduction of technologies then was to computerize and network all operations to innovate the entire business process.
A social ICT age started in 2010. The objective of the introduction of technologies in this age may be to com-prehensively support human intelligent operations or cooperation between humans. The key to success for enterprises is whether they can use social media to cre-ate more open places and continuously produce new values together with various stakeholders. In this age, it is important for buyers and sellers, or consumers and enterprises, to sympathize with each other, go in the same direction and co-create new values. The base for such efforts is information and communications infra-structure as an open platform.
c. Directions of future ICT kotozukuriThe past spread of kotozukuri, ICT evolution support-
ing the spread and the recent trends lead us to find two major future directions.
In the first direction, kotozukuri to create mecha-nisms for producing values within and between enter-prises will develop into more open processes where di-verse stakeholders will be involved. In the second direction, values for the use and experiences will be in-creased further.
The kotozukuri mechanism to create social values and the kotozukuri process to produce new values through customers’ use of goods will be integrated to develop a cycle model for various individuals and organi-zations to repeat the creation, exchange and use of val-ues. As indicated by Figure 1-1-3-1, kotozukuri as a value cycle model will be supported by open platforms for co-operation between various people and ICT based on Big Data to be collected and accumulated.
d. MIC initative — Discussions at ITC kotozukuri panel —In March 2013, the MIC launched an ICT kotozukuri
panel under the ICT Growth Strategy Meeting. Under the common recognition that ICT kotozukuri means building new businesses or mechanisms to utilize ICT from the viewpoint of users for creating higher added value, the panel has discussed the direction of promot-ing ICT kotozukuri to build a society where data pro-duces new values for sustainable growth through new innovations in the “social,” “business” and “user” areas.
(2) Business operations changing under new ICT trendsa. O2O trends(a) O2O outline
O2O indicates a series of mechanisms and initiatives where “online” Internet shops and social media cooper-
(Source) MIC “Condition Survey on Kotozukuri Trend and ICT Cooperation” (2013)
Figure 1-1-3-1 Information and communications system supporting the “kotozukuri” cycle model
Sale/exchange
Cooperation with in-houseand inter-enterprise systems
Use/service
Open platforms for variousstakeholders to create valuesthrough social cooperation
Production/creation
Goods
Cycle of values
-Big Data accumulation-Secondary use of accumulated information
（Open data as social capital）
Sale/exchange
POS and sales management systems
Cooperation with in-houseand inter-enterprise systems
Use/service
Open platforms for variousstakeholders to create valuesthrough social cooperation
Production/creation
Goods
Cycle of values
-Big Data accumulation-Secondary use of accumulated information
（Open data as social capital）
ERP and SCM systems
CRM systems, various sensors,
networks
Part 1
7
ate and fuse mutually with purchases by “offline” real shops (Figure 1-1-3-2). In the past, O2O had mainly indi-cated a business approach where enterprises manage real and Internet shops. As real and Internet shops have been gradually fused, the fusion itself has begun to be called O2O.
Meanwhile, O2O frequently indicates an “online to of-fline” approach (for guiding consumers from Internet shops to real shops) including the distribution of cou-pons through smartphones. As Internet and smart-phone diffusion has allowed consumers to easily get connected to the Internet, the “offline to online” ap-proach (for guiding consumers from real shops to Inter-net shops) and the “online to offline” approach have been fused to blur the border between the two sales channels. This is significant.
(b) O2O trends in JapanIn Japan as well, both “online to offline” and “offline to
online” guidance has diffused and is becoming settled.
Domestic goods sales through Internet sites in 2012 totaled about 1.4 trillion yen for Rakuten, about 730 bil-lion yen for Amazon and about 300 billion yen for Yahoo, ranging from hundreds of billions of yen to more than 1 trillion yen per company. Their comparison with real shop sales indicate that Amazon sales have grown to the real shop sales level of electrical appliance shop chain Edion or supermarket chain Daiei. Rakuten sales rose close to real shop sales of Japan’s largest electrical appli-ance shop chain Yamada Denki (Figure 1-1-3-3).
Japan’s “online to offline” services are focusing on coupon issuance through smartphones. Even those that had kept a distance from Internet marketing have start-ed various “online to offline” services.
An analysis of a questionnaire survey of enterprises on “online to offline” services in Japan indicates that O2O services have diffused widely, producing specific effects including improvement of goods and services awareness (Figure 1-1-3-4).
Figure 1-1-3-2 O2O image
Real shopsOffline
O2O Off→On On→Off
Online to Offline On→Off
Offline to Online Off→On
Internet shopsOnline
EC sites, social media (SNS), online coupons,smart applications, etc.
Guiding consumers from Internet shops to real shopsDistributing coupons through smartphones for guidanceUsing shop search applications and SNS to guide consumers to real shops, etc.
Guiding consumers from real shops to Internet shopsUsing smartphone applications or QR codes to guide consumers to EC sitesIntegrating real shop and EC site point systems, etc.
Figure 1-1-3-3 Major retailers’ sales in 2012 in Japan
(Source) MIC “Survey Research on Business Operation Changes Caused by O2O” (2013)
(Note) Data for Amazon is its full-year domestic sales in 2012 at 1USD=94JPY (2012 full-year finaical data), and data for Rakuten and Yahoo are their full-year goods sales in 2012 (2012 full-year finaical data). Yahoo includes Yahoo! Shopping, Yahoo! Ticket, and Yahoo! Travel. The above figure also indicates the 2012 sales of Aeon, Seven & I Holdings, Yamada Denki, and Edion(2012 full-year finaical data), as reference data to be compared with the scale of online sales. Unit: 100 million yen
0 10,000 20,000 30,000 40,000 50,000 60,000
14,465
7,332
3,082
6,851
17,015
49,916
56,853
Inte
rnet
shop
sRe
al sh
ops
Rakuten
Amazon
Yahoo
Edion
Yamada Denki
Seven & iHoldings
Aeon
（％）
（n＝96）
0 10 20 30 40 50 60 70 80
54.2
20.8
28.1
22.9
19.8
11.5
5.2
6.3
22.9
67.7
47.9
47.9
45.8
29.2
24.0
3.1
17.7
Improvement of goodsand services awareness
Increasing visitors tobrick-and-mortar stores
Improvement ofbrand power
Increasing sales at brick-and-mortar stores
Increasing online sales
Acquiring and usingcustomer information
Others
No effect gained
No response
Projected effects Real effects
Figure 1-1-3-4 Guidance from Internet sites to real shops and effects
(Source) MIC “Survey Research on Impacts of ICT Innovation on Japan’s Social and Economic Systems” (2013)
8
Part 1
1. Overview of ICT industry innovation in Japan(1) Mobile terminal market trends
Global smartphone sales in 2012 expanded 1.44-fold from 2011. Among smartphone manufacturers, South Korea’s Samsung and the United States’ Apple account-ed for almost half the global sales. Third and smaller smartphone producers including Japanese firms, Nokia, and RIM reduced their respective market shares (Fig-ure 1-2-1-1).
Japan’s smartphone sales in 2012 increased 1.29-fold from 2011. Among smartphone manufacturers, Apple commanded the largest share of annual sales. In addi-tion, Samsung expanded its share, while Japanese smartphone producers generally narrowed their shares (Figure 1-2-1-2).
Section 2 “Innovation” and Global Expansion of ICT Industries
(Source) Prepared by MIC from Gartner data
Figure 1-2-1-1 Global smartphone market share changes
Others3.3%
● Global smartphone market share changes (2009⇒2011⇒2012)*Sony sales include those of Sony Ericsson.
HHI＝2,374 HHI＝1,294HHI＝1,453
HHI＝2,921 HHI＝3,010
HHI＝4,830
By m
aker
By o
pera
ting
syst
em
Sony0.8%
Motorola1.5%
Panasonic1.9%
NEC2.1%SHARP
2.5%Fujitsu2.8%
Samsung3.4%
Nokia41.1%
RIM19.9%
Apple14.4%
HTC6.3%
Apple18.9%
Samsung18.7%
Nokia17.9%
RIM10.9%
HTC9.1%
Sony4.2%
LG4.0%
Motorola3.7%
ZTE2.2%
Huawei3.3% Others
7.2%
Others16.9%
Samsung30.3%
Apple19.1%
Nokia5.8%
RIM5.0%
HTC4.7%
Huawei4.0%
ZTE3.9%
LG3.8%
Sony3.6%
Motorola2.8%
他10.0%
Android3.9%
Windows8.7%
iOS14.4%
RIM19.9%
Symbian46.9%
Others3.0%
Windows1.9%
RIM10.9%
Symbian18.7%
Android46.7%
iOS18.9%
Others2.7%
Windows2.5%
Symbian4.2%
RIM5.0%
iOS19.1%
Android66.4%
1.44-fold market
expansion
1.44-fold market
expansion
2.74-fold market
expansion
2.74-fold market
expansion
Total smartphone
sales in 2009: 172 million
units
Total smartphone
sales in 2011: 472 million
units
Total smartphone
sales in 2012: 680 million
units
Total smartphone
sales in 2009: 172 million
units
Total smartphone
sales in 2011: 472 million
units
Total smartphone
sales in 2012: 680 million
units
The iOSshare leveled off while the Android share expanded to two-thids
Apple won the largest share from Samsung with others reducing their shares
Source: Gartner (2/13/2013)* HHI(Herfindahl-Hirschman Index): A measure of market concentration. It is calculated by squaring the market share of each firm competing in a market, and then summing the resulting numbers. A higher index indicates higher market concentration. Usually,the index is calculated in terms of sales value shares. Here, however, data constraints forced us to base the calculation on sales volume.
Figure 1-2-1-2 Japanese smartphone market share changes
(Source) Prepared by MIC from Gartner data
● Japanese smartphone market share changes (2009⇒2011⇒2012)*Sony sales include those of Sony Ericsson.
HHI＝2,066 HHI＝1,584 HHI＝1,583
HHI＝4,176 HHI＝2,998 HHI＝3,829
By m
aker
By o
pera
ting
syst
em
1.44-fold market
expansion
1.29-fold market
expansion
1.29-fold market
expansion1.44-fold market
expansion
Others3.2%
Apple7.4%
Fujitsu28.0%
SHARP21.5%NEC
20.7%
Panasonic19.2%
Others3.6%
Fujitsu21.9%
Apple20.7%
SHARP19.0%
Panasonic10.6%
NEC CASIO9.3%
Sony8.5%
Samsung6.3%
Others1.0%
HTC2.0%KYOCERA
2.2%LG
2.4%
Samsung7.7%
NEC CASIO7.7%
Sony8.4%
Panasonic8.9%
SHARP13.2%
Fujitsu18.6%
Apple27.9%
Others0.2%
Symbian9.2%
Linux9.1%
iOS27.9%
Android53.7%
Android44.4%
Others0.6%
Linux15.1%
Symbian19.2%
iOS20.7%
Others1.7%
Android0.7%
iOS7.4%
Linux39.9%
Symbian50.3%
Apple won the largest share and Samsung expanded its share
The Android share expanded to a majority
Total smartphone
sales in 2009: 17.43 million
units
Total smartphone
sales in 2011: 25 million
units
Total smartphone
sales in 2012: 32.18 million
units
Total smartphone
sales in 2012: 32.18 million
units
Total smartphone
sales in 2011: 25 million
units
Total smartphone
sales in 2009: 17.43 million
units
Source: Gartner (2/13/2013)
Part 1
9
(2) Venture and ICT trendsa. Venture startup trends
In Japan’s venture startup trends over recent years, the number of ventures subject to investment by venture capitals and their venture investment value plunged due to the FY2008 Lehman Shock and have continued a re-covery since FY2010. Venture capitals have shifted to earlier-stage investment in more promising ventures (Figure 1-2-1-3).
b. ICT area trends and venture launching environment evolutionICT area developments, including the diffusion of
cloud services and electronic commerce, might have been coupled with basic environment changes such as growth of first-generation ICT and other ventures and activities of large and successful entrepreneurs to con-tribute to the vitalization of venture launching in both ICT and non-ICT industries. The recent rapid diffusion of smartphones and tablet computers and the Big Data technology advancement have encouraged both the ICT industry and ICT-using industries to grow more inter-ested in ICT ventures. The recent ICT area develop-ments and venture launching environment changes are shown in Figure 1-2-1-4.
Figure 1-2-1-3 Number of venture capital investment targets, investment value and investment stages
(Source) Venture Enterprise Center “Annual Report on Venture Businesses”
0
500
1,000
1,500
2,000
2,500
3,000
2,790 1,933 1,366 875 1,132 1,240
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011
2,7742,579
1,294
991 915 1,017
0
20
40
60
80
100
33.1 35.3
34.420.4
28.1
28.6
4.415.7
（％）
Annual investment value (in hundreds of millions of yen)
Number of investmentand lending targets LaterExpansionEarlySeed
FY2010 FY2011
・・・・・・
・・・
Cloud service diffusion(lean, startup)
Cloud funding(lowering fund-raising hurdles)
Sales and procurement through EC sites
3D printers, FabLab(making molds unnecessary, enabling
social engineering)
Vent
ure
ente
rpris
esEx
istin
g (la
rge)
ent
erpr
ises
Internet busi-ness-relatedSmartphone applications
EC
Social games
Technology-related
Data analysis technology
SDN technology
ICT environment evolu-tion has had impacts
on a monozukuri ven-ture launching boom
Electrical appliance ventures
① ICT environ-ment evolution has lowered venture launching hurdles
Toward IPO(initial public offering)
② Growing interest in ICT ventures
Support for ICT ventures and M&A
Smartphone diffusion →intensifying competition between eco-systems
Vitalization of Big Data-related businesses and technologies
Cloud computing progress →virtualization
ICT industry ICT-using industries(manufacturing, distribution and other industries)
Major changing factors under the latest ICT trend
③ Basic venture environment changes
Social media utilization diffusion
Kotozukuri progress(manufacturers growing more service-oriented)
O2O progress(fusion of real and Internet shops)
First-generation entrepreneurs support venture launching
Expansion of exchange opportunities includ-ing venture launching seminars and events
Successful ventures become large enterprises
Figure 1-2-1-4 ICT area developments and venture launching environment evolution
(Source) MIC “Survey Research on ICT Industry’s Global Strategy” (2013)
10
Part 1
2. Global expansion of ICT industries(1) Global market for ICT industry
Commercial characteristics of global players in their respective mainstay sectors indicate that IT service and other upper-layer players have higher growth potential and yieldability. But telecommunications equipment, electronics, electronics-related equipment and other lower-layer players have posted negative profit growth, indicating progress in the commoditization of their prod-ucts. Among them, the communications layer, though continuing steady growth, sees a globally mature mar-ket (Figure 1-2-2-1).
In developed regions other than Japan, services for upper layers are projected to continue growing. Mean-while, the environment in Japan is severe for devices and other lower layers. But lower layers are predicted to achieve high growth in emerging countries (Figure 1-2-2-2).
(2) Global expansion models for ICT industryBased on the abovementioned trends, global expan-
sion models for the ICT industry are illustrated in Fig-ure 1-2-2-3. From the viewpoints of major global expan-sion promoters, customer segments, relations with ICT-using industries and mainstay businesses in ICT in-dustry layers, global expansion models are divided into five categories -- (1) communications services expan-sion, (2) ICT service expansion, (3) infrastructure ex-port expansion, (4) equipment vendor service expan-sion and (5) platform expansion.
(3) Global expansion for communications layerThe global communications market (covering mobile
and fixed communications) is projected to grow 2.1% an-nually through 2017. A steady global shift is expected to mobile data communications services for such terminals as smartphones (Figure 1-2-2-4). Of the global mobile
Figure 1-2-2-1 Analysis of growth potential in global ICT market layers
(Sources) Prepared from MIC “Survey Research on ICT Industry’s Global Strategy” (2013) and OECD (earnings of 250 largest enterprises in ICT industry)
0
2
4
6
8
10
12
14
1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 -15
-10
-5
0
5
10
15
20
25
30
0 10 20 30（％）
（％） （％）Changes in sales and yieldability of ICT industry layers
Bubble sizes indicate sales(in millions of U.S. dollars) in 2011
IT services
Internet
Software
SemiconductorsIT equipment
Telecom
Telecomequipment
Electronics andrelevant equipmentAv
erag
e an
nual
yie
ld g
row
th (f
rom
200
6 to
201
1)
Average annual growth (from 2006 to 2011)
Yield growth > Sales growth(Layers where growth andyieldability are expected)
Yield growth < Sales growth (Layers where commoditization is observed)
Employment size
Bubble sizes indicate sales(in million U.S. dollars) in 2011
IT services
Internet
SoftwareIT equipment
Electronics andrelevant equipment
TelecomSemiconductors
Telecom equipment
Number of employees (2011)
Gro
wth
in th
e nu
mbe
r of e
mpl
oyee
s （fro
m 2
006
to 2
011）
Figure 1-2-2-2 Region-by-region distribution of global ICT market and growth
Source: Prepared by MIC from Gartner data
0 20 40 60 80 100
20.1
16.9
30.3
48.2
50.8
72.4
69.3
62.1
43.0
42.3
7.6
13.8
7.6
8.8
6.9
（％） 0 5-5 10 15
10.2
8.3
6.5
3.5
8.9
5.6
4.8
2.9
0.6
2.0
5.0
1.1
1.2
1.8
（％）
-2.5
Software
Data centers
Telecom
Devices
Software
Data centers
Telecom
Devices
Region-by-region distribution of each layer's market size (2012)
Japan North America / Western Europe Others Japan North America / Western Europe Others
IT services IT services
Each layer's growth potential (from 2012 to 2017)
Part 1
11
communications market, Japan accounted for 7.9% in 2012. North America and the Asia-Pacific region respec-tively accounted for 22-23%, representing the largest markets in the world. Projected mobile communications market growth through 2017 in Japan is limited to 2.0%, against higher growth rates of 5.3% for North America and 6.7% for the Asia-Pacific region.
a. Global expansion models for communications layerFigure 1-2-2-5 shows the growth potential for regional
communications markets in the global market and tele-communications carriers’ global expansion. The figure indicates that these service providers in Europe where communications market growth has been capped are expanding into South America, the Middle East and Af-rica where the communications markets have high growth potential. America Movil in Mexico is expanding into South America and SingTel of Singapore is expand-
ing operations within the Asia-Pacific region.
b. Prospects for telecommunications carriers’ global expansionTelecommunications carriers in Japan and other
countries have created two models for overseas expan-sion. (1) The first model represents global expansion based on historical reasons including colonial age rela-tions between colonial powers and their colonies and the need for international expansion after an early introduc-tion of competition in domestic communications mar-kets. (2) The second model for overseas expansion takes advantage of relations with neighboring countries based on geographical factors including limited national land and market sizes.
North America, South America and the Asia-Pacific region subject to the Trans-Pacific Partnership free trade negotiations represent the world’s three fastest-growing markets. If Japan leads other TPP participants
Figure 1-2-2-3 Global expansion models for ICT industryCategory of expansion models B2C B2B B2C
Non-ICT industriesLifelines
Manufacturers
Applicationservice
Serv
ices
(cus
tom
er c
onta
cts)
Platform
Infrastructure
Terminals
Content
Applications
Systems
Cloud
DC
Access
Telecomequipment
TerminalequipmentG
loba
l
Low
gro
wth
Sales of goods
Applicationproviders
⑤Platform expansion
Facebook GREE DeNA
AmazonGoogleRakuten
Since the ICT business expansion is related to national security, Japan’s relations with foreign countries are important. Historical relations and cultural and language homogeneity are required. (There are foreign investment regulation and approval systems.)
Platformproviders
NHN
Global expansionUpstream expansion
Downstream expansionTerminal makers
Samsung
Apple
Infra
stru
ctur
e ex
ports
and
eco
nom
ic c
oope
ratio
n
③Infrastructure export expansion
Sler
Network serviceproviders
Manufacturing,retail, financial
②Expansion of ICT servicesHitachi
FujitsuNTT DataIBM
NTTGroupKDDIAT&TVerizon
KDDI SoftbankSingTel MTNVodafone Telefonica
①Expansion of telecommunications carriers
Telecommunicationscarriers
Telecommunications Equipment Vendors
CiscoEricsson
④Expansion of ICT equipment vendors
Huawei NEC Fujitsu
Core (IP)
Electricity, waterworks, railways,agriculture, disaster reduction
Regi
onal
Hig
h gr
owth
Stab
ility
HitachiToshiba
Figure 1-2-2-4 Projected global communications market sizes（％）
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
20172016201520142013201220110
20
40
60
80
100
Asia-Pacific and North American mobile communications markets are large and expected to post high expected to post high growth.
（％）
Fixed communica-tions markets post low or negative growth.
（％）
0 5 102.0
5.36.7
3.10.8
3.64.5
18.1 19.1 20.0 21.0 21.8 22.5 23.0
59.7 61.3 62.7 64.2 65.5 66.8 67.9
-5 0 51.0
1.50.5
-1.6-4.1
-2.10.3
Mar
ket s
ize
(in m
illio
ns o
f U.S
. dol
lars
)
Average annual growth (2017/2012) : 2.1%
Mobile (voice communications)Fixed (data communications)
Mobile (data communications)Mobile communications share
Fixed (voice communications)Data communications share
Shar
es fo
r mob
ile a
nd d
ata
com
mun
icat
ions
mar
kets
Mob
ile c
omm
unic
atio
ns m
arke
tFi
xed
com
mun
icat
ions
mar
ket
Region-by-region market breakdown (2012) Average annual growth by region (2017/2012)
Middle East/Africa12.4%
SouthAmerica11.0%
SouthAmerica11.0%
Japan7.9%Japan7.9%
North America22.1%
North America22.1%
Asia-Pacificregion23.7%
Asia-Pacificregion23.7%
Eastern Europe17.2%
Eastern Europe17.2%
WesternEurope
5.7%
WesternEurope
5.7%
JapanNorth America
Asia-Pacific regionWestern EuropeEastern Europe
Middle East/AfricaSouth America
JapanNorth America
Asia-Pacific regionWestern EuropeEastern Europe
Middle East/AfricaSouth America
Japan10.2%Japan10.2%
North America27.0%
North America27.0%
Asia-Pacificregion15.8%
Asia-Pacificregion15.8%
WesternEurope
5.6%
WesternEurope
5.6%
Eastern Europe20.9%
Eastern Europe20.9%
Middle East/Africa7.3%
SouthAmerica13.2%
SouthAmerica13.2%
1,010billion
U.S.dollars
640.4billion
U.S.dollars
(Source) Prepared by MIC from Gartner data
12
Part 1
to repeal or relax regulations on foreign investment and ensure fair access to communications infrastructure, Japanese telecommunications carriers may expand into these regions more easily and offer better service terms and conditions. Japanese telecommunications carriers thus have potential to overcome constraints in the ma-ture domestic market and benefit from the high growth potential of the Pacific Rim region by taking advantage of Japan’s location in the high-growth region and its rela-tions with neighboring countries based on geographical factors for their global expansion according to the above second overseas expansion model.
(4) Global expansion for ICT service layera. ICT service layer market trends
The global ICT market is projected to post an average positive annual growth rate of 5.2% between 2012 and 2017 under the globalization of business operations and the diffusion and expansion of information and commu-nications systems (Figure 1-2-2-6).
Among regions, North America, Japan and the Asia-Pacific region account for more than 60% of IT service, software and data center markets. The markets for the
three service categories are projected to grow 8-11% in the Asia-Pacific region and 4-7% in North America. These regions are predicted to continue high ICT ser-vice industry growth (Figure 1-2-2-7).
b. Prospects for global expansion for ICT service layerMajor Japanese ICT service enterprises have tradi-
tionally expanded into the global market in a manner to follow their Japanese customers expanding into the
Figure 1-2-2-5 Telecommunications carriers’ global expansion and market growth potential
(Source) Prepared by MIC from Gartner data
（％）
5.0
0 20 40 60 80 100
7.0
9.3
12.7
28.9
26.2
22.9
9.9
10.7
17.6
40.4
46.1
39.2
13.8
7.6
7.6
0 2 4 6 8 10 12（％）
1.2
4.1
7.9
0.8
4.2
6.6
10.8
3.7
9.5
1.1
5.9
8.6
3.2
8.0
IT services
Software
Data centers
Market size(2012)
Japan North America Asia -Pacific Western Europe Others
Market growth rates (2012-2017)
Japan
North America
Asia -Pacific
Western Europe
Others
IT services Software Data centers
Figure 1-2-2-7 Region-by-region ICT service market sizes and growth rates (2012-2017)
(Source) Prepared by MIC from Gartner data
Western EuropeAverage annual growth:-1.5%
3,205 2,972
Vodafone Deutsche Telekom
France Télécom Telefonica
Middle East and Africa
Eastern and Central EuropeAverage annual growth:1.2%
914 971
Japan
Average annual growth: 1.8%1,497 1,639
North AmericaAverage annual growth: 2.0%
South America
4,155 4,597
2,076 2,439
Asia-Pacific (excluding Japan)
3,434 4,3391,816 2,016
SingTel
América Móvil
Unit: $100 millionAverage annual growth (projected growth from 2012 to 2017)
Average annual growth: 3.3%
Average annual growth: 2.1% Average annual growth: 4.8%
(Source) Prepared by MIC from Gartner data
Figure 1-2-2-6 ICT service market trends
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
20172016
6.6％
3.5％
6.3％
5.9％2.7％
6.6％
4.0％
2014 2015201320122011
Average annual growth (2012-2017) : 5.2％Average annual growth
(2012-2017)
Mar
ket s
ize
in m
illio
ns o
f U.S
. dol
lars
Consulting Building IT outsourcingBusiness process outsourcing IT product support SoftwareData centers
Part 1
13
United States, and ASEAN and other Asian countries. Following Japanese customers’ global expansion alone may fall short of allowing these enterprises to grow more and more amid competition from European and American forerunners and low-cost local companies.
When anticipating Japanese ICT service enterprises’ global expansion potential, we can conceive two major models — “horizontal global expansion” through M&A deals to increase business sizes and “global expansion based on upstream integration” through the enhance-ment or launching of upper layer services including con-sulting.
In the future, it may be effective for Japanese ICT ser-vice enterprises to take advantage of their strengths in-cluding quality, reliability and security for supporting their Japanese and foreign customers’ global expansion with the abovementioned models in mind.
(5) Global expansion through infrastructure exportsa. Drafting and releasing infrastructure export strategy
Under its growth strategy, Japan must proactively ab-sorb infrastructure development demand mainly in emerging countries and take advantage of the demand for its powerful economic growth. To this end, Japan should take various business approaches including full turnkey contracts covering infrastructure engineering, construction, operation and management as well as proj-ect investment expansion. Infrastructure system ex-ports are expected to produce composite effects includ-ing the development of overseas business bases for Japanese enterprises and the enhancement of their sup-ply chains and to contribute to improving Japan’s inter-national position through its transfer of advanced tech-nologies and know-how.
Given the expectations, the government created the Ministerial Meeting on Strategy relating to Infrastruc-ture Export and Economic Cooperation chaired by the Chief Cabinet Secretary in March 2013 to support Japa-nese enterprises’ overseas infrastructure system devel-opment and their acquisition of interests in overseas en-ergy and mineral resources and to discuss Japan’s key economic cooperation measures for their strategic and efficient implementation. In May 2013, the government
released the Infrastructure Systems Export Strategy.
(6) Global expansion for telecommunications equipment layera. Telecommunications equipment market trends
The telecommunications equipment market is pro-jected to grow at an average annual rate of 4.8% against the backdrop of globally expanding communications de-mand even amid the commoditization of telecommunica-tions equipment. The mobile communications infra-structure portion accounts for nearly 50% of the market and is expected to steadily expand in the future. In the fixed communications infrastructure portion, demand is projected to decline substantially for legacy network equipment while expanding for IP (Internet protocol) network equipment. Particularly, router/switch demand is predicted to continue a high average increase of 8.5% (Figure 1-2-2-8).
Among regions, the Asia-Pacific region accounted for the largest share or $12.9 billion of the mobile communi-cations infrastructure market in 2012. Of the fixed com-munications infrastructure market in the year, North America commanded the largest share or $12.9 billion. Through 2017, Asia-Pacific and other emerging coun-tries are projected to steadily expand demand for fixed communications infrastructure. The Asia-Pacific re-gion’s mobile infrastructure demand is projected to grow to $16.5 billion (Figure 1-2-2-9).
0
20,000
40,000
60,000
80,000
30,000
10,000
50,000
70,000
90,000
100,000
20172016201520142013201220112010
4.3%
Fixed3.8%
8.5%
5.3%3.3%
－21.6%
Switching equipment (legacy)
Voice switching, control andapplication equipment
Broadband access equipment
Service provider routers/switches
Optical transport equipment
Mobile communicationsinfrastructure
4.8%(Average annual growthrate from 2012 to 2017)
(Average annual growthrate from 2012 to 2017)
Mar
ket s
ize
in m
illio
ns o
f U.S
. dol
lars
Mobile
(Source) Prepared by MIC from Gartner data
Figure 1-2-2-8 Telecommunications equipment market trends
Figure 1-2-2-9 Telecommunications equipment market breakdown by region
(Source) Prepared by MIC from Gartner data
JapanJapanOther
regionsOther
regions18.5%
Western Europe
Western Europe16.0%
Asia-PacificAsia-Pacific27.5%
North AmericaNorth
America32.6%
Other regionsOther regions27.0%
Western Europe
Western Europe10.2% Asia-PacificAsia-Pacific
34.3%
North AmericaNorth
America18.9%
JapanJapan9.6%
JapanJapan5.4%
4.4
4.3
4.7
－5 0 5 10
4.4
6.2
6.0
6.5Other regions
Western Europe
Asia -Pacific
North America
Japan
－5 0 5 10
－3.2
5.8
5.0
4.3
4.7Other regions
Western Europe
Asia -Pacific
North America
JapanJapanOther
regionsOther
regions18.5%
Western Europe
Western Europe16.0%
Asia-PacificAsia-Pacific27.5%
North AmericaNorth
America32.6%
Other regionsOther regions27.0%
Western Europe
Western Europe10.2% Asia-PacificAsia-Pacific
34.3%
North AmericaNorth
America18.9%
JapanJapan9.6%
JapanJapan5.4%
Fixed communications infrastructure
（%）
0.0
（%）
$39.5 billion
Mobile communications infrastructure
$37.7 billion
14
Part 1
b. Prospects for global expansion for telecommunications equipment layerTelecommunications equipment vendors’ global ex-
pansion approaches are roughly divided into two models — (1) a “horizontal expansion model” in which vendors focus on equipment or systems representing their tech-nological advantages and (2) a vertical expansion or “managed-service” model where vendors undertake network operation and maintenance as best partners of overseas communications service companies.
In the telecommunications equipment layer where products have growingly commoditized through stan-dardization, however, the horizontal expansion model mainly pursues a greater sales size taking advantage of lower prices and an overwhelmingly broad product line-up through mass production. It may be difficult for Japa-nese vendors to follow this model and successfully de-velop it into a sustainable business model unless they have overwhelming technological advantages and new markets where technological development can be fore-seen.
On the other hand, the managed-service model is a standard business model for the global market. There-fore, Japanese telecommunications equipment vendors must obtain business resources for providing managed services by taking advantage of M&As and strategic alli-ances. In order to differentiate themselves from forerun-ners, they must find solutions as their strengths and de-velop complementary, win-win relations with major communications service companies. In global expan-sion, it is important for them to cooperate with global telecommunications carriers based in Japan and foreign courtiers.
Other conceivable models include (3) “expansion into upper layers” based on Japan’s high technologies and know-how and (4) “infrastructure exports.” In the upper layer market that is also competitive, Japanese vendors may take advantage of their excellent technologies and know-how to increase their overseas presence and ex-pand into foreign markets. In the infrastructure exports market where Japan faces fierce competition from such big countries as the United States and China, Japanese
vendors may fuse their ICT technologies with infrastruc-ture or cooperate with manufacturers free from com-moditization in order to expand into Asia-Pacific and other emerging countries where growth potential is great with demand growing for infrastructure.
(7) Global expansion for upper layersa. Upper layer market trends
The upper layer market has been expanding rapidly amid the global development of wired and wireless broadband environments and free competition between market players. The market, though dominated by U.S. companies, increased its size (sales of major market par-ticipants) even after the Lehman Shock.
Upper layer enterprises, including digital content pro-viders, are capable of driving the entire ICT industry in terms of growth potential and profitability (Figure 1-2-2-10).
b. Prospects for global expansion for upper layersOnly a limited range of enterprises including Google,
Amazon, Apple and Facebook have been successful in platform development. In content and application devel-opment, requirements for local optimization in each country or region may be stronger for upper layers. When expanding into foreign countries, therefore, en-terprises in these layers are expected to growingly local-ize know-how for ecosystems developed in their coun-tries, while promoting M&As and strategic alliances with local rivals to secure local customer bases. Charac-teristically, upper layers can implement global expan-sion more promptly and easily than other layers. Their successful global expansion may produce massive job opportunities.
If the venture support environment is expanded to further develop upper layers, their platform develop-ment is expected to be promoted to further their global expansion.
(8) Estimated effects of ICT industry’s global expansionWe estimated effects of successful global expansion
by major Japanese enterprises in ICT service, communi-
Upper layer services for digital content have great growth potential
Apple, etc.
Google, facebook,Yahoo!, Baidu, Groupon, Zynga, LinkedIn, etc.
Activision Blizzard, Electronic Arts, Konami Corp, etc.
Major enterprises in each category
Microsoft, Oracle, etc.
Amazon,BestBuy eBay, Netflix, etc.
Upper layer services for electronic commerce have lower growth potential due to such costs as investment in distribution
0
5
10
15
20
25
30
35（%）
-10 0 10 20 30 40（%）
Ope
ratin
g pr
ofit m
argi
n (1
Q 2
013)
Market growth (from 1Q 2012 to 1Q 2013)
Internet content service
Software(infrastructure)
Retail (specialized)Computer systems
Telecommunicationsequipment
Pay TV Electrical home appliances
Data storage
Software(applications)
Electronic gamesand multimedia
Informationtechnology service
Semiconductors
Communicationsservices
Bubble sizes represent salessizes (in billions of U.S. dollars,for the latest 12 months)
Figure 1-2-2-10 Assessment of major U.S. publicly traded ICT industry enterprises by category
(Source) MIC “Research Survey on ICT Industry’s Global Strategy” (2013)
Part 1
15
cations service, telecommunications equipment and up-per layers building on models of foreign forerunners. As a result, we found that major Japanese enterprises in these layers have the potential to achieve 17.5 trillion yen in overseas sales, equivalent to three-quarters of their present domestic sales (in 2012), if they implement
full-fledged global expansion (Figure 1-2-2-11).This estimate, though excluding effects of the above-
mentioned infrastructure exports in (5), indicates a great potential market resulting from these major Japa-nese enterprises’ global expansion.
3. Broadcasting industry’s global expansion and next-generation broad-casting initiative
(1) Broadcasting industry’s global expansionJapanese broadcasters are exploring various overseas
expansion approaches in a bid to shift away from their heavy dependence on the domestic market.
Models for their overseas expansion are divided into two groups for an analysis, based on specific cases (Fig-ure 1-2-3-1). One group represents a horizontal expan-sion through content-based multimedia development and alliances with other categories of enterprises to take advantage of broadcast content’s influences for expand-ing business bases and value chains. The other repre-sents enhancing involvement in broadcasting services in foreign countries through measures ranging from outright program sales to cooperation in producing pro-grams, involvement in programming rights through se-curing programs and channels, and business alliances for participation in corporate management.
(2) MIC initiatives for overseas expansion of broadcast content sales
a. Discussions at panel on how to promote broadcast content salesIn November 2012, the MIC created a panel on how to
promote broadcast content sales to consider challenges for (1) enhancing rights handling, (2) securing overseas opportunities for providing content, and (3) promoting the exploration of overseas and other new markets. A factor behind the slow overseas expansion of broadcast content is that the handling of rights fails to make prog-ress in overseas markets that are smaller than the do-mestic market. Therefore, Japan should promote both “enhancing the efficiency and speed of the handling of
rights” and “expanding overseas markets.”
b. Economic spillover effects of global expansion of broadcast content salesIn his (second) speech on Japan’s growth strategy in
May 2013, Prime Minister Shinzo Abe came up with a policy of building on the Cool Japan initiative to promote “all Japan” efforts for manufacturing and services indus-tries’ overseas expansion. In this respect, the prime min-ister cited a goal of tripling broadcast content-related overseas sales in five years (by 2018) and indicated that the expansion’s economic effects including those for pe-ripheral industries would total 400 billion yen.
(3) Initiatives for diffusing next-generation broadcasting services (including 4K/8K initiatives)
a. 4K/8K (super hi-vision) initiatives and their significanceAs the digitalization of broadcasting has been com-
pleted with advanced infrastructure developed for high-definition broadcasting and interactive services, the time has come to utilize the infrastructure for diffusing new digital broadcasting services. Meanwhile, Japan’s public and private sectors have launched initiatives to realize next-generation broadcasting using 4K and 8K ultrahigh-definition technology to enhance the competi-tiveness of Japan’s broadcasting industry. The definition of 4K means there are four times as many pixels than the present hi-vision (2K) level (about 2 million pixels). 8K indicates 16 times as many pixels.
The 4K/8K ultrahigh-definition technology can be ex-pected to be used not only for televisions and broadcast-
0 10 20 30 40 50
Upper layer ICT services Communications Telecom equipment Upper layer ICT services Communications Telecom equipment
Domestic sales Overseas sales
Sales (in trillions of yen)
Present
Global expansion
3.2 trillion yen
Overseas sales at 17.5 trillion yenDomestic sales at 22.9 trillion yen
1.36.58.51.21.310.010.11.5
Figure 1-2-2-11 Estimated effects of ICT industry’s global expansion
(Source) MIC “Research Survey on ICT Industry’s Global Strategy” (2013)
16
Part 1
ing but also for digital cinemas and digital signage and lead to exports of relevant equipment and content pro-duction know-how.
Japan, with its expertise in ultrahigh-definition tech-nology, is expected to promptly commercialize and dif-fuse specific services to secure the broadcasting indus-try’s technological capabilities and international competitiveness and to export relevant technologies, products and Japanese culture.
A report by the ICT Growth Strategy Meeting’s panel on the advancement of broadcasting services at the MIC has indicated a roadmap where Japan will launch test 4K broadcasting in 2014 (when Brazil will hold the World Cup soccer tournament) and test 8K broadcasting in 2016 (when Brazil will hold the Rio de Janeiro Olym-pics).
b. Next-generation broadcasting expansionThe ultrahigh-definition technology may find applica-
tion in a wide range of industrial purposes in addition to the abovementioned consumer goods and services. For example, 4K/8K ultrahigh-definition display and camera technologies may be used not only for broadcasting equipment but also for X-ray, mammography and other diagnostic images, tablet terminals for displaying elec-tronic health records, ultrahigh-definition endoscopes for surgical operations and other medical purposes. They may also be available for ultrahigh-definition dis-plays for computer-assisted design operations, ultra-high-definition surveillance cameras for disaster preven-tion and social infrastructure maintenance, and digital signage systems (Figure 1-2-3-2).
Program sales
International jointproduction
Investment, alliances, jointventures
Securing programs
Format sales
Selling remake rights
Complete package sales
Contracted consulting onproduction
Securing channels
Appr
oach
es fo
r exp
andi
ng e
xits
and
con
tent
Internet delivery
Business alliance expansion
Pay-TV broadcasting
Launching program sales
Securing overseas broadcast timeframes and channels
Sponsored programs
Launching peripheral business operations
Launching pay-TVbroadcasting
Internet delivery-EC cooperation
Character business
Package sales
Launching mail-order sales
Mail-order sales channels
Securing mail-order program hours
Entrance/revenue channels
Participation incorporate management
(management rights)
Cooperating insecuring broadcast
platforms(programming rights)
Cooperating inproducing programs
Providing content Commerce partnership, etc.
Figure 1-2-3-1 Major approaches for overseas expansion of broadcast content sales
(Source) MIC “Research Survey on ICT Industry’s Global Strategy” (2013)
Figure 1-2-3-2 Image of 4K/8K technology expansion
Source: MIC “Survey Research on Higher Resolution and Advancement of Pay Broadcasting” (2013)
4K/8Kultrahigh-definition
technologies
Films
- Broadcasting equipment(cameras, editors, encoders, etc.)
- Digital cinema (projectors, screens)
- Art and other museums
- Security cameras- Industrial area camera sensors
- Medical monitors- Endoscope systems
- Digital signage- Stadium
CAD, CAM, CG (mechanical design, vehicles,
industrial design, etc.)
Education/academia
Engineering/designing
Crimeprevention
/surveillance
Healthcare
Advertisements, et c.
Broadcasting
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1. Big Data bringing about new growth(1) Concept of Big Data
Big Data features massiveness, diversity and real-time availability. The significance of Big Data utilization is that ICT development has allowed massive, diverse data to be created, collected and accumulated on a real-time basis for analyses to detect abnormal changes, forecast future developments, provide services meeting users’ needs, improve business operation efficiency and create new industries.
Big Data components are from various sources and diverse. The recent attention-attracting fact is that mas-sive, diverse unstructured data have rapidly increased and become available for analyses in line with ICT devel-opment.
(2) Effects of Big Data utilization on economic growtha. Growth accounting equation approach (macro viewpoint)
First, an increase in data analysis and other Big Data-related investment can be created as an economic effect since data analyses meeting data characteristics are re-quired for the effective utilization of Big Data for market-ing and other operations.
Generally, investment as a demand component can drive present economic growth, and investment accu-mulation leads to capital stock to prevent a decline in capital productivity and contribute to productivity on the supply side. Given the duality of investment, Big Data-related investment can be expected to generate a pro-ductivity improvement effect. Other expected effects in-clude cost cuts, operational efficiency improvements, and productivity improvements through new product development and new information creation and utiliza-tion.
Big Data utilization can thus be expected to drive eco-nomic growth through the quantitative improvement ef-
fect of an increase in data-related investment and invest-ment stock and the qualitative improvement or direct effect of a relevant rise in productivity. New businesses and jobs can also be created to achieve the redistribu-tion of labor resources, further improving overall eco-nomic efficiency.
Furthermore, the creation of a virtuous circle of ICT investment and productivity improvement may lead to additional ICT investment. A positive linkage effect of investment and productivity can be expected to create an indirect path to economic growth (Figure 1-3-1-1).
b. Approach based on actual utilization at enterprises and other organizations (micro viewpoint)Human and social behaviors are apparently divided
into three steps — perception, decision and implementa-tion, which rotate in a cycle. ICT and Big Data utilization can be expected to improve the accuracy and speed of these steps. How the introduction of computers, their networking and the utilization of Big Data have impact-ed or will impact humans and society is explained below.
First, stand-alone computers were designed to im-prove the accuracy of decisions upon their introduction at enterprises and other organizations, contributing to reducing waste in the implementation of these deci-sions.
In a later stage where computers were networked through the Internet to promote linkage between data, perception grew more rapid and accurate. Cloud com-puting has diffused to enable distributed processing, substantially improving data-processing capacity in the decision-making stage. In the implementation stage, net-working allowed decisions to be conveyed more widely, quickly and accurately.
How has ICT advancement including Big Data utiliza-
Section 3 Growth Potential Coming from Big Data Utilization
Figure 1-3-1-1 Economic growth path contributed by Big Data distribution, accumulation and utilization (macro viewpoint)
(Source) MIC “Survey Research on Consideration of Approach for Measuring Information Distribution/Accumulation Volumes” (2013)
Input side Output side
Creating new businessesand jobs
Sensors
Multiple persons, equipment and information are linked together to create synergy effects at input and output levels.
Audio dataBig Data
-Creating new businesses including data analysis
-Improving information distribution and decision- making accuracy-Diverse data are linked together or cooperate to create innovations
-Increases in Big Data-related investment for data analyses (software investment, service investment, etc.)
Positive feedback of investment and productivity improvement(Further investment rise→Productivity improvement→Investment return
rise→Further investment→・・・)
Direct effect
Direct effectCapital accumulation
and investment expansion
Total factor productivity improvement
Indirect effect
Redistribution of resources from non-production sectors to production sectors
Economic growth and value-added
improvement
GPS
CGCPOS
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tion impacted the perception, decision and implementa-tion? The development of M2M (machine to machine) communications for automatic recognition and control has allowed data acquisition and implementation to be optimized without human labor. In addition, the diffu-sion of massive data analysis tools has enabled more ac-curate massive data to be analyzed.
Furthermore, the qualitative improvement and low-ered prices of computers, software, storage and net-works have allowed more massive data to be created, distributed, accumulated, analyzed and utilized more quickly. The diffusion and lowered prices of broadband networks have enabled users to use faster broadband networks at lower prices.
Although operational decisions had traditionally depend-ed on skilled persons’ implicit knowledge, Big Data utiliza-tion has also allowed operational decisions to be reflected in operational systems for the explication of knowledge.
(3) Figuring out Big Data realities in Japana. Life cycle of Big Data
Big Data is created, distributed, accumulated and
made available for analyses before being analyzed and utilized. In this process, massive data may disappear or remain in dead storage. Big Data that is actually ana-lyzed and utilized may be limited to only a small portion of the created data. Some of accumulated data may be redistributed and accumulated for different purposes before being analyzed and utilized.
b. Big Data analysis schemeWe considered two methods for measuring Big Data
and actually estimated the data volume and potential ef-fects of Big Data utilization.
(a) In estimating Big Data distribution and accumula-tion volumes, we calculated data volumes from the cre-ation of original data to the distribution/accumulation stage at macro and industrial levels. (b) In measuring potential effects of Big Data utilization, we analyzed what effects Big Data available for analyses produce on the actual preparation of business strategies and in-house decisions at the corporate level (Figure 1-3-1-2).
2. Measuring Big Data information distribution and accumulation (macro survey)
(1) Frameworka. Measurement targets
Given that the corporate sector is a major economic agent that utilizes Big Data for creating social and eco-nomic values, we limited measurement targets to enter-prises and data that enterprises receive electronically, before considering a framework and trying the mea-surement.
b. Compiling data creation/distribution/accumulation process conceptIn the process of data creation, distribution or accu-
mulation, digital data created at some point may be dis-tributed to individual economic agents through commu-nications networks and accumulated. The first cycle of data creation, distribution and accumulation may be
completed here. In this process, all or some of the cre-ated data may be distributed and accumulated depend-ing on the characteristics (the first data distribution pro-cess).
Digital data’s major feature is that accumulated data are recreated through copying, processing and aggrega-tion into new data that may be distributed and accumu-lated. Digital data may thus be recreated, redistributed and reaccumulated (the second data distribution pro-cess).
c. Data distribution/accumulation volume estimation scope and estimation target dataGiven the accelerated data volume expansion of digi-
tal data through a multi-stage repeat of the data cre-
Figure 1-3-1-2 Big Data analysis scheme (macro and micro surveys)
(Source) MIC “Survey Research on Impacts of ICT Innovations on Japan’s Socioeconomic System” (2013)
Micro survey scope
Dist
ribut
ion
Crea
tion
Accu
mul
atio
n
Anal
ysis
and
utili
zatio
n
Disappearance Disappearance Dead storage Unutilized
Multi-stage distribution/redistributionMacro survey
scope
Prep
arat
ion
for
anal
ysis
Potentialeffects
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19
ation/distribution/accumulation process, it is very diffi-cult to estimate data volumes after the first data distribution process while taking all data distribution cycles into account. In estimating the data distribution volume, therefore, we limited estimation targets to data volumes in the first data distribution process (Figure 1-3-2-1).
d. Big Data distribution/accumulation volume estimation approach(a) Big Data distribution volume estimation approach
In estimating data distribution volumes, we selected nine industries (services, information and communica-tions, transportation, real estate, finance and insurance, commerce, electricity/gas/water, construction and manufacturing) and 17 categories of data as estimation targets. We used the following model to estimate a data distribution volume for each industry and aggregate in-dustry-wise volumes into a macro data distribution vol-ume. In the distribution volume estimation, we retroac-tively estimated past distribution volumes as far as possible, building time-series data distribution volume data (for 2005, 2008, 2011 and 2012).
(b) Big Data accumulation volume estimation approachIn estimating data accumulation volumes, we focused
on data stored on servers installed inside or outside en-terprises. Therefore, data for the estimation were not limited, while targets for the data distribution volume estimation were limited. All data stored on servers were subjected to the estimation. Attention should be paid to the difference in estimation scopes.
(2) Big Data distribution and accumulation volume estimatesAs a result of the Big Data distribution volume estima-
tion, we estimated the total Big Data distribution volume for the nine industries in 2012 at about 2.2 exabytes. The time-series data indicate that the Big Data distribution volume increased about 5.2-fold in seven years from about 0.4 exabytes in 2005 to about 2.2 exabytes in 2012 (Figure 1-3-2-2).
The Big Data accumulation volume (for the nine in-dustries) in 2012 was estimated at about 9.7 exabytes for 2012. Among the industries, the commerce and services industries posted greater data accumulation volumes than the others. The finance/insurance and services in-dustries logged higher outside server accumulation shares than the others (Figure 1-3-2-3).
(3) Analyzing relations between data distribution volumes and macroeconomic indicatorsIn order to assess impacts of an increase in data that
enterprises receive electronically on economic perfor-mances, we analyzed relations between growth rates for the data distribution volume per employee and for labor productivity (real gross domestic product per employ-ee) between 2005 and 2011.
Figure 1-3-2-4 shows average annual growth rates (from 2005 to 2011) for the data distribution volume per employee on the horizontal axis and average annual growth rates (from 2005 to 2011) for labor productivity on the vertical axis, indicating their correlations. As far as other factors influencing the correlations are deemed constant, the data distribution volume and labor produc-tivity have positive correlations.
1st process
Sensor data
Newspapers/magazines
Books
Postcards/envelopes
Radios/TVs
Telephones
Customer information
GPS
All data/information
Computerization coefficient
Information generation/creation
Analogdata
Digital data/information
Un-structure data
Structure data
2nd process
Distributioncoefficient
Information distribution/conveyance
Distributed data/
information
Nondistributed
Accumulation coefficient
Data for intra-organization distribution
Data for inter-organization distribution
Processing/aggregating, new information creation
Nonaccumulated(abandoned, etc.)
Information accumulation/storage
1st process
Redistribution coefficient
Accumulated data/information
Scope for data creation/distribution volume estimation
Utilization and value production at business planning, decision-making and other fronts
Explanatory note
Utilization and value production at business planning, decision-
making and other fronts
Figure 1-3-2-1 Data distribution volume estimation scope
(Source) MIC “Survey Research on Consideration of Data Distribution/Accumulation Volume Measurement Approaches” (2013)
Figure 1-3-2-2 Trend of Big Data distribution volume (total for 9 industries)
(Source) MIC “Survey Research on Consideration of Approach for Measuring Information Distribution/Accumulation Volumes” (2013)
（TB）
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
424,306
1,033,904
1,536,450
2,217,195
2012201120082005
A 5.2-fold increasein seven years
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Next, we built industry-by-industry panel data for 2005, 2008 and 2011, for which data distribution volume and labor productivity data are commonly available, and conducted a panel data analysis on the impact of data distribution volume growth on labor productivity im-
provement to statistically verify the impact. As a result, we found that data distribution volume growth and labor productivity improvement have a significantly positive relationship.
3. Big Data utilization cases and potential effects (micro survey)(1) Frameworka. Survey scope
We collected information including Big Data utiliza-tion cases introduced in various literature since 2011. Therefore, we imposed no limits on information for the collection in regard to industrial categories or areas, en-terprise sizes, data usages or categories of utilized data.
Subject to the information collection were cases for the utilization of massiveness, diversity or real-time availability representing the characteristics of Big Data.
b. Analysis approach for this surveyIn this analysis, we paid attention to industrial, busi-
ness method and operational categories of specific cases for information collection. We thus analyzed cases after specifying industrial, business method and operational categories in which Big Data were utilized.
Based on collected information, we first specified mechanisms for Big Data utilization to produce effects for specific operational categories (effect-producing mechanisms).
Next, we estimated potential economic effects of Big
Figure 1-3-2-3 Big Data accumulation volume (by industry, in 2012)
(Source) MIC “Survey Research on Consideration of Approach for Measuring Information Distribution/Accumulation Volumes” (2013)
（TB）
543,156 1,194,956 3,722 2,468,219 334,843 270,270 76,887 350,485 1,455,067
203,562 90,900 1,376 678,545 412,397 63,237 30,258 167,949 990,394
79,350 4,860 515 64,598 76,594 348 8,199 64,911 72,472
826,069 1,290,716 5,613 3,211,362 823,833 333,855 115,344 583,345 2,517,932
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
826,069
1,290,716
5,613
3,211,362
823,833
333,855115,344
583,345
2,517,932
9,708,068TB = 9.7exabytes
Accumulation outside enterprises, outside Japan
Manufacturing ConstructionElectricity, gas
and water supply Commerce Finance and
insurance Real estate Transportation Information and communications Services
Accumulation outside enterprises, inside Japan
Accumulation inside enterprises
Total
Figure 1-3-2-4 Relations between growth rates for data distribution per employee and labor productivity
(Source) MIC “Survey Research on Consideration of Approach for Measuring Information Distribution/Accumulation Volumes” (2013)
0 5 10 15 20 25 30 35 40
-5
-4
-3
-2
-1
0
1
2
3
4
Manufacturing
Information and communications Construction
ServicesTransportation
Real estate
Finance and insurance
Electronic, gas and water supply
Aver
age
annu
al la
bor p
rodu
ctiv
ity g
row
th (2
005-
2011
)
Average annual growth rate of Big Data distribution per employee (2005-2011)
Commerce
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21
Data utilization in specific industrial categories, based on quantitative and qualitative effects found in specific cases. Using quantitative effects found in specific cases as estimation parameters, we conducted the extrapola-tion for operational and business method categories where Big Data may be utilized in similar ways.
(2) Big Data used for various social areasa. Expanding horizons for Big Data utilization
Big Data has begun to attract public attention only re-cently. Even since earlier days, however, various data have been created, distributed, accumulated and utilized as far as possible.
In the distribution industry, point-of-sale systems for cash registers diffused in the1980s, allowing retailers to growingly use sales or POS data for making decisions on product purchases. When enterprise-by-enterprise point cards were introduced around 2000, point card numbers were linked to POS data (to produce ID-POS data), en-abling retailers to figure out customer-by-customer pur-chasing behaviors. These cards developed into common point cards or electronic money cards around 2010, prompting retailers to base their sales promotion on cus-tomers’ purchase records covering multiple enterprises. Over the past several years, information handled by the distribution industry has substantially increased in vari-ety and volume.
Next, the manufacturing industry began to share sales data with distributors in the latter half of the 1990s for the so-called supply chain management to avoid in-ventory surpluses or shortages. In the 1990s, machine builders began to mount sensors on their machinery products to figure out operation conditions for rational-izing maintenance operations. Since around 2000, re-mote surveillance data have been used for new services.
In the early 2000s, the utilization of data spread to cover transportation, infrastructure, agriculture and other various areas.
b. Expanding ranges of industrial and operational categories utilizing Big DataWhile a growing number of cases for the utilization of
structured data emerged in the distribution and finan-cial industries, the range of industrial categories or ar-eas using Big Data has expanded, including the infra-structure area using data from sensors, as well as agricultural and medical areas where ICT utilization had failed to make progress. The range of operational cate-gories using Big Data has also expanded, covering from product development, production and other earnings-oriented operations to business planning, as well as ad-ministrative operations and infrastructure maintenance beyond corporate business operations.
c. Expanding range of sizes of enterprises using Big DataA survey of enterprises on whether they are interest-
ed in Big Data utilization indicated that shares for enter-prises considering utilizing Big Data are higher among enterprises with greater sales sizes. But those consider-ing Big Data utilization accounted for a half of even
smaller enterprises.
d. Expanding range of Big Data utilization purposesA survey of enterprises on operational categories
where Big Data utilization was considered or imple-mented found that market and business planning were frequently cited and that they were considering or im-plementing Big Data utilization for various operational categories. Questioned about operational categories where future Big Data utilization is promising, enter-prises cited various categories, indicating that they are considering utilizing Big Data for a wide range of opera-tions.
(3) Big Data utilization and its effects in major industrial catego-ries
a. Specifying Big Data utilization patterns and effect-producing mechanisms in specific categories
(a) Distribution industryIn the distribution industry, data originate mainly
from sales and include sales records. The industry has long utilized POS data to optimize product purchases.
The recent utilization of Big Data has apparently pro-duced the following five new effects:
First, retailers may add geographical and time data to sales data in order to figure out details of consumer needs and develop new products meeting consumption scenes.
Second, retailers have long depended on sales data for developing and procuring products. In order to reduce sales opportunity losses or dead stock to maximize prof-it, however, they have recently launched efforts to col-lect more demand data on a real-time basis for figuring out and forecasting demand.
Big data utilization has produced effects in sales plan-ning and promotion operations as well. Retailers analyze customer-by-customer data (ID-POS data) on point cards and comments on SNS and other websites to im-prove the accuracy of their sales promotion. Mail-order retailers have attempted to improve catalogue produc-tion and distribution efficiency by producing and distrib-uting catalogues meeting consumer needs. Utilizing common point cards that have emerged recently, retail-ers have launched cooperation with other industries to attract customers that they had failed to attract in the past.
(b) Manufacturing industryBig Data utilized frequently in the manufacturing in-
dustry represents operation conditions for products manufacturers have delivered. In many cases, they col-lect information from sensors mounted on products they delivered and manage and analyze operation data as Big Data to create new values.
In many cases, manufactures analyze machine opera-tion data for improving the efficiency of their after-sale services. Through their Big Data analysis, they conduct preventive maintenance operations without any specific troubles in a systematic manner to improve their busi-ness efficiency. They can also improve customer satis-
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faction by preventing the nonplanned suspension of ma-chines that could bring about losses to customers. Even if troubles occur, they can now promptly identify the causes of troubles and take countermeasures to mini-mize customers’ losses. Furthermore, they build on op-eration and trouble data to find components vulnerable to troubles and revise product designs and production control to reduce maintenance burdens.
Manufacturers also provide services to help custom-ers save electricity and prolong the service lives of ma-chinery products by analyzing their operation data for proposing optimum operation measures to minimize load. These services represent their new value-added services.
(c) AgricultureIn some cases, distribution and sales data are used for
agricultural production. Big Data has just begun to be utilized for research on breeding and production of seedlings. But the entire agricultural sector has failed to make progress in ICT utilization or introduce Big Data on a large scale.
At present, data are used for production relatively fre-quently. Environmental, plant growth and soil compo-nent data are collected and analyzed to compute appro-priate work, fertilizer and chemical volumes. These data are used for controlling vegetable factories and optimiz-ing instructions to workers to increase yields, improve and stabilize product quality and optimize costs.
(d) Infrastructure (road traffic)As for infrastructure, we take up road traffic particu-
larly. Statistical surveys had traditionally been used for figuring out traffic demand and preparing road develop-ment plans. Recently, however, mobile terminals and geographical information systems have been made avail-
able for figuring out dynamic demand and preparing more accurate road development plans. Car navigation data can be used for finding locations for improvements. Dynamic data are utilized for real-time traffic informa-tion services to help avoid traffic congestion.
Sensors are installed on roads to measure load on in-frastructure and relevant changes and reduce road maintenance costs over a medium to long term.
b. Estimating potential economic effects based on specific cases (Figure 1-3-3-1)
(a) Distribution industryIn the distribution industry, an analysis of specific
cases has made the improved efficiency of sales promo-tion and the optimization of orders as effects available for estimation. The former effect is estimated at about 989.4 billion yen and the latter at about 163.5 billion yen.
(b) Manufacturing industryThe effect of maintenance personnel cost cuts (worth
4,738 billion yen) through remote surveillance on ma-chines amounts to 15.5% of shipments (2010) from man-ufacturers of general-purpose, production and business oriented machineries. Electricity savings (worth 51.97 billion yen) through remote surveillance on industrial air-conditioners amount to electricity charges for 65,000 commercial air-conditioners.
(c) AgricultureAs for agriculture, we estimated potential effects
based on a case where the rice price rose by 29,000 yen per 60 kilograms due to synergy effects of quality con-trol improvement through remote sensing and a brand-oriented marketing strategy. At vegetable factories, pro-duction costs are estimated to decline 12.5% to narrow the cost gap with outdoor cultivation.
Figure 1-3-3-1 Estimated potential economic effects based on specific cases
(Source) MIC “Survey Research on Impacts of ICT Innovations on Japan’s Socioeconomic System” (2013)
（in billion yen）
Increasing effectivenessof sales promotion
•Recommendationof vending machine 101.4
•Discount coupon in GMS 33.8•Discount couponin supermarket 854.2
Retail industry
Optimizing order
•Apparel SPA 30.2•100 yen shop 62.8•Food manufacture-selling 70.5
In total, 1.15Bil.JPY, 2% of annual sales of target industry*.
Reducing repair time(in target industry*)
•Increasing effectiveness oflabor force 4,738
Manufacturing industry
Power saving by operation optimization(Commercial air conditioner)
•Saving electricity cost 51.97(Equivalent to power consumption of 65,000 units)
Agriculture
Reduce production cost in vegetable factory (Lettuce)
•Cost reduction 0.4(Reduction rate is 12.5%. Same cost as outdoor cultivation. It contributes 7.5% increase to profit.)
Infrastructure (Road transportation)
＊Various product retail trades, Textile, clothes, appearance retail tradeand Eating and drinking product retail trade
Extension of life by maintenance optimization
•Reduce new construction cost 270(About 48% of new construction budget in FY 2009)
Traffic jam reduction
•Reduce fuel consumption 1,160(Equivalent to fuel consumption of 10.6Mil. Vehicles)
＊Manufacture of general-purpose machinery, Manufacture of production machinery, Manufacture of business oriented machinery
Increase quality and price (rice cultivation)
•Increase price 396.82
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(d) Infrastructure (road traffic)Preventive bridge maintenance to prolong service
lives can reduce annual costs by about 270 billion yen, equivalent to 48% of bridge development costs (570 bil-lion yen in 2009). The effect of annual fuel savings through the Probe traffic information service to reduce traffic congestion is estimated at 1.16 trillion yen, equiv-alent to fuel consumption by about 10.6 million vehicles in Japan.
(4) Big Data utilization to create new valuesBig Data reportedly features “almost comprehensive
massiveness,” “inclusion of unstructured data” and “in-clusion of real-time data.” Advanced computer networks including distributed cloud computing systems for high-speed processing of massive, diverse data have been developed to analyze Big Data.
As a result, enterprises can now figure out customer tendencies and trends that they had failed to fully under-stand. They can also obtain analysis results faster due to the reduction of analysis time consumption. Nearly com-prehensively, massive data can be analyzed along with qualitative information to improve the accuracy of math-ematical models indicating real phenomena. This has made it easier to find abnormal readings and improved the accuracy of future projections. In another major achievement, the real-time data acquisition and high-speed data processing have allowed us to figure out con-ditions on a real-time basis.
Big Data analyses can be used to improve the quality and speed of decision-making and daily business deci-sions at enterprises. Big Data has visualized invisible tendencies and trends, allowing enterprises to bring bur-ied needs to the surface for developing and launching new products and services. In this way, Big Data has produced various positive effects allowing enterprises and society to improve efficiency and explore new mar-kets.
Given the above, Big Data utilization is expected to exert various positive impacts on business operations and the society and economy, contributing to the revital-ization of the Japanese economy.
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