(Nikkei BP Group)
(No.1 High-Tech News Site in Japanese)
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| [Industry Forecast '99] NEC Seeks to Boost Sales by 8 Pct. in 1999: Exec. Vice Pres.
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January 8, 1999 (TOKYO) -- NEC Corp.'s consolidated sales for the six months
ended September 1998 declined 11 percent year on year to 2.113 trillion yen
(US$18.85 billion), and it posted a consolidated net loss for the same term
totaling 19.7 billion yen (US$175.78 billion), yet the electronics company
now seeks to boost its sales.
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BizTech interviewed Koji Nishigaki, an NEC executive vice president who
manages its information system business, on the corporate outlook for 1999.
Nishigaki predicts that the government's implementation of tax
cuts on investment in information systems and the corporate demand for sales
force automation (SFA) will help boost the information industry. He said that
the industry is expected to grow 7 percent-8 percent annually from a year
earlier, and his company's sales also will grow at a similar pace.
BizTech: What will 1999 be like for the entire information industry?
Nishigaki: Prospects are better than in 1998.
BizTech: What makes you say that?
Nishigaki: There are at least three reasons. First, businesses related
to the Year 2000 compliance will thrive. Second, the government will cut
taxes for companies that purchase personal computers. And lastly, we can
expect larger demand for SFA from corporate users.
BizTech: Are Japanese companies making good progress in addressing the
Y2K compliance issue?
Nishigaki: Most corporate users of mainframe systems have adopted some
measures to comply. Mainframe computer systems, however, are closed systems.
As for external systems, companies are still at the stage of verifying how
their systems will operate when 2000 arrives.
Corporate customers using small business computers (or office computers) are
not fully addressing the issue yet. Our main products -- hardware, operating
systems and package software -- have all completed the year 2000 compliance.
However, we assume that most of our third-party products used by smaller
companies and proprietary applications of our users are not yet Y2K-compliant.
We will likely have a sudden surge in demand for compliance involving such
products in the coming year.
BizTech: Will the economic stimulus measures introduced by the
government be effective?
Nishigaki: Yes, I think they will be effective. If companies are
allowed, upon the introduction of the tax cuts, to write off at one time all
investments in information systems priced at 1 million yen or less purchased
in the same fiscal year, corporate users, which are hoping to replace their
old information-related equipment, will go ahead with purchases.
If the tax cuts are implemented in April, however, we are likely to see only
minimum orders for replacement PCs in February and March, shortly before the
implementation.
Although it is often said that every employee should have their own PC, in
reality, we have not yet reached that level in Japan. Even at large
corporations, such as Toyota Motor Corp. and Nippon Steel Corp., not every
staff member has their own PC.
However, the trend is that companies are expanding their use of information
systems. When the tax cuts are implemented, corporate investment in
information systems will surely grow.
An increase in investment in network infrastructures by educational
institutions will also promote the information industry. Investment in
infrastructures will stimulate the market, and will expand the range of end
users.
If children can use a PC and the Internet at school, they are likely to
utilize a PC at home, which already is the case in the United States. In the
United States, kids even do their homework with help of a PC and the Internet.
In Japan, too, the user range will gradually expand.
BizTech: The concept of SFA has been proposed for some ten years. Why
does the industry suddenly expect demand to rise for such systems?
Nishigaki: Yes, the concept itself has been around for some time.
However, it is only recently that the industry has realized construction of
practical systems. Also, SFA is becoming indispensable for companies seeking
to enhance their customer satisfaction and develop strategic businesses.
These are strong needs among corporate customers.
We now have the essential technologies needed to construct SFA systems, such
as a data warehouse and a data mart linked with a mission-critical system,
wireless and other network infrastructures, and high-performance mobile
information terminals.
Just a few years ago, a company needed to invest in excess of hundreds of
millions of yen to construct a data warehouse. Now, we can construct a fairly
large system at a price of around 10 million yen.
BizTech: Considering all these growth factors, how much do you think
the information industry will grow this year?
Nishigaki: I predict that the whole industry, including hardware,
software and services, will grow at least 7 percent-8 percent annually. To
reach 10 percent or even higher, Japan's economy needs to improve much more.
I estimate that NEC will grow 7 percent-8 percent in the year.
Related story: NEC Posts April-Sept. Consolidated Net
Loss of 19.7B Yen
Click here for more New Year features.
(BizTech News Dept.)
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