A Look at Japan's Consumer Electronics Industry (SNE, HIT, NIPNY, DCM, CSCO, INTC, NVDA, ONT)

by: Steven Towns

Have you ever wondered how big Japan's consumer electronics market is? What are the key areas receiving the most focus and investment going forward? Japan's Ministry of Internal Affairs and Communications (NYSE:MIC) has industry survey results available and the Japan External Trade Organization (JETRO) has elaborated on where future growth lies.

Below are portions of the survey and content published by JETRO on its webpage. One of the main highlights is an emphasis on the convergence of communication and entertainment electronics. While this is already happening the government views this as a major shift in the consumer electronics industry. At the end of the page at the above link, JETRO lists 3 U.S. companies that have achieved success in this area in Japan: On2 Technologies (ticker: ONT), Geo Vector Corp., and NVIDIA Corp (ticker: NVDA).

--> Japan’s Ministry of Internal Affairs and Communications (MIC) surveyed the consumer electronics market for 2004 to have been 2.7 trillion yen and estimated it to grow to 11 trillion yen by 2010, more than four times the value of 2004. When including the cellular telephone market (and including network platforms and appliances), the market size is estimated to be 20 trillion yen.

The MIC defines the consumer electronics market to include the following areas:

* Service content market
      o Content, such as entertainment information on movies, drama, etc.
      o Services, such as distance learning (tele-education), security services, etc.
* Appliance market
      o Digital information consumer electronics, such as TV, washing machine, PC, modems, etc.
      o Network platform market*
* Networks, including ADSL, cable Internet, fiber-optic cables, etc.
      o Platforms, such as ones for billing and authentication

* The MIC includes the network platform market in the consumer electronics industry due to the expected convergence of communication and entertainment electronics.


State of the industry

The Japanese consumer electronics industry anticipates the convergence of communication and entertainment electronics. By networking consumer electronics, companies seek to provide advanced services to help consumers achieve more convenience in their daily activities, particularly in the home market.

Consumer electronics are expected to make their way into home security systems helping to monitor fires or break-ins and report them to nearby fire departments or police stations. Telediagnostic systems are being developed in which a person’s diagnostic information monitored by various devices in the home (e.g. thermometer, scale) is sent to their doctor or healthcare center. Consumers could also control appliances in home from their cell phone or personal digital assistant (PDA). Upon departing the home, a person can turn off all consumer electronics while turning on the security system. On the way home from work, one can start a bath or begin warming up the house.

One control system in development that focuses on entertainment consumer electronics is the E PC, which is a computer that looks like a VCR and sits as a part of entertainment consoles to serve as a control center for stereos, TVs and other equipment. Louis Burns, vice president of the desktop platforms group at Intel, told CNET, “The whole industry is turning about. You will start to see the content industry target the E PC.

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