TRON Project Leader's Opinion

Ken Sakamura

Interfaculty Initiative in Information Studies, The University of Tokyo

At present, the recession in the U.S. due to the reaction of the IT bubble is enveloping the world. Among U.S. IT-related businesses, there are even firms where losses have added up to more than 1 trillion yen. Stock prices on the NASDAQ stock exchange where emerging emerging enterprises are listed have dropped 60 percent from their 2000 peak, and investments of $2 trillion have been lost.

In the latter half of the 90s, Internet-related venture enterprises grew rapidly, and firms were listed on the stock exchange one after the other, but they collapsed in a short period of time. Then, at the end of last year, large computer makers and large telecommunications makers in the U.S. finally entered into a slump. Because many large firms made large-scale equipment investments and bold corporate buyouts when the economy was healthy, as a result of the worsening of the business climate, business results were directly affected, and firms that are becoming unable to maintain themselves have also become conspicuous.

These kinds of enormous expectations and over-investments are exactly the same as those in reaction of the Japanese land bubble investment.

However, what we should be careful about here is the fact that the IT industry has by no means come to an end due to this. Fifty years ago when it was born, it was understood that the utilization of the computer would give birth to epochal effects. In the past, computer booms have occurred several times. The difference between past booms and this one in the 90s is whether it enveloped ordinary people or not. As we saw in the Internet boom, the reaction (over-expectation) to the mistaken impression that IT will become a money maker, which was overly intense, is connected to today's downturn. However, even while we repeat downturns and upturns, it is without a doubt that over the long term the IT industry will prop up the nation in the manner of the automobile industry.

The U.S. IT downturn immediately reached Japan also, and Japan's electronics and computer industries, which export a lot to the U.S., also began to receive a great blow. One after the other, first class enterprises have fallen into the red or experienced great reductions in profits. For that reason, there are IT firms telling us to abandon manufacturing and change course into service industries, such contracting for system construction.

However, to tell you the firm that has raised its profits the most in this present downturn, it's Toyota of the manufacturing industry. Even though we talk about making things, there are various ways; although IT is going fine, why is IT no good?

The biggest difference between the automobile industry and the IT industry is whether or not there is a black box in the parts they use. For example, when we talk about personal computers, in something in which a Microsoft operating system has been combined with an Intel microprocessor, there is nothing we can do in terms of original devices and cost reduction without knowing the innards. In something in which another company holds the key parts, it is difficult to raise profits further. In fact, even if we look at this this in terms of other things, in regard to the final product, the advance of Taiwan, Korea, and China with mass production and low cost as a weapon is striking, but the technologies that serve as the key are still in good shape. Korea has become number one in the world pulling ahead of Japan in the production of DRAMs and liquid crystals, but that the parts and production equipment are all imported from Japan is something that is seen as a problem in that country.

By the way, in this downturn, the thing for which there are the greatest expectations is probably broadband--the so-called high-speed Internet. However, although it seems like a great business chance at a glance, when we look at it in units of several years, it is being recognized that it won't become much of a business. In the U.S., the three big DSL specialist telecom firms that provide high-speed Internet have all gone bankrupt. Cable television Internet also doesn't produce profits, and there are also large enterprises that are in doubt about their future. We also don't find anything that seems like it will become a business in the contents that we run inside the high-speed Internet. Korean broadband firms, which are said to be more advanced than Japanese, are all suffering losses.

With this in mind, will the Japanese government's strategy that aims at turning Japan into a leading edge IT nation and an economic recovery by laying a high-speed Internet inside Japan go well? Setting up a high-speed Internet is like laying an eight-lane highway throughout Japan; for the people who will use it, it is desirable, but if we carry it out by ignoring profits, a great sum of losses will remain. Thus, although it would be nice if economic activity picked up, there is no guarantee of that.

In comparison to that, what's going well is the cell-phone. Internet connections based on cell-phones, such as i-mode, are used on as many as 42 million platforms, and there is no other country where business has been this successful with mobiles. Fees are by no means cheap and price reductions are desirable, but even at the present rates they are widely utilized.

If we are going to set up an industrial strategy, we shouldn't follow other countries' way of the doing things, rather we need an independent mobile that makes use of Japan's strengths and covers its weaknesses. As long as we don't find that kind of mobile, Japan's surplus will only fall and an economic recovery will probably be very uncertain.

Although Japanese firms are comparatively strong in hardware, they are generally weak in software. At actual sites, there are many places where Japanese have been driven to the wall by combining ready made things whose innards they do not know well. Personnel who have mastered computer science and can develop things independently are extremely few, and there are many cases in which personnel from other fields have been given crash training and made into software staff. Japanese IT firms will not have their feet on the ground without creating a firm foundation in regard to software.

Even in the U.S., there are many instances in which they make do by skillfully combining ready made things, but if they think they want to do it, there is a surplus of personnel who can develop good quality original software.

Developing original software in your own company is difficult, but the open source method in which one makes public the software contents and proceeds in development with third parties has become quite natural.

What is wished for in the Japanese software industry is not making do, but open source development in which the contents are clearly understood by anyone. In bringing the software industry near to the level of the Japanese manufacturing industry, building society's infrastructure by actively utilizing a software platform in which the contents of things like TRON, Linux, or GNU have been openly presented to the public seems a long way off, but, in reality, that's the royal road.

The above opinion piece by TRON Project Leader Ken Sakamura appeared on page 1 of Vol. 71 of TRONWARE. It was translated and loaded onto this page with the permission of Personal Media Corporation.

Copyright © 2001 Personal Media Corporation

Copyright © 2001 Sakamura Laboratory, University Museum, University of Tokyo