From net browsers and services for TV and automakers to white box solutions, ACCESS is making sure it is catering to an ever-digitalizing world
Japan shines when it comes to factory automation, however, it has been criticized for its slow adoption of digital technologies in business and everyday life, coming 29th in IMD's Digital Competitiveness Ranking. The former Suga administration created a digital agency and incentivized private industries to increase the adoption of IoT and cloud-based solutions. How would you rate Japan's adoption of digital technology today, and why do you believe the country has been slow in adopting these technologies?
Japan is not a leader when it comes to digital transformation. People list many different reasons for this. Some say that it is due to our lack of software engineers or the people's unwillingness to change. Others say that the educational system is not suited for digitalization, information is not digitalized, or top management could also be slow in adopting these changes. I think none of these alone, but all of these in aggregation, have resulted in this issue that Japan is now facing. However, if we look into the details, this is not the same across all the industries. For example, Japan’s manufacturing sector is not necessarily behind in DX (digital transformation) compared to other countries. It seems that the industries that are less exposed to international competition, for example, transportation or healthcare sectors, are the ones that are lagging. There is always a bigger cost than just introducing new hardware and software when we try to initiate DX because the true, extensive benefit of DX often requires changing the work process and/or business practices. For those who shy away from DX often use “Prioritizing the human touch, such as omotenashi, over efficiency” as a reason not to change the work process, and thus the costs of DX cannot be justified in light of the benefits. I think those industries behind the curve need to be exposed to more successful use cases in other industries before they jump on the bandwagon.
Nevertheless, we are optimistic. DX is a massive opportunity for a company like ours because we have expertise in all the aspects required to implement DX; from hardware customization to software development, which covers from front-end device software to back-end server. We have plenty of track records in a variety of use cases to contribute to the growing needs of DX in Japan. COVID-19 presented a wake-up call to lots of Japanese businesses as it forced people to work remotely and to decrease physical human contact, and because of these, we feel the real DX momentum across all industry sectors, recently. One of the main driving forces is the decreasing workforce. Japan’s population is decreasing, and we often hear on the news that companies are having difficulty hiring new workers or recruiting new graduates. This fundamental change in the game will be a factor in prioritizing workplace efficiency and cause companies to think about DX seriously.
The second driving force is generative AI (artificial intelligence). I believe that Japan has great potential in leveraging AI in DX. Hollywood movies often depict AI as a threat to humans. However, Japan has an AI culture defined by characters like Doraemon and Astro Boy, who are not perfect and sometimes make mistakes. They are AI who are friends and assist humans, and they grow with humans together. Being exposed to this kind of AI since childhood helps us nurture the optimistic vision of using AI and growing together. What’s great about recent developments in generative AI is that it can incorporate the “Human Touch” that we highly value in service sectors. I think AI and the change in the workforce will accelerate digital transformation in Japan.
Cars are becoming more like computers on wheels with the switch to EVs. The cost share of electronic components in relation to the car's total value is expected to grow to 35% by 2035. What are some opportunities that this emphasis on software and electronics presents to your firm? How are you planning on taking advantage of them?
The most significant opportunity for us is in connectivity. When our company started, our founders provided a TCP/IP protocol implementation in 1986 and developed NetFrontTM Internet browsing software in 1996. The first implementation was a browser on TV. It wasn’t a huge commercial success because the network was slow and very little content was available back then. Then, we developed a “Compact HTML“ browser for mobile phones (NetFrontTM Browser) and deployed it in NTT DOCOMO's i-mode, which became the most commercially successful mobile Internet service before the smartphone era. Since then, our browser solutions have been deployed in many other consumer electronics such as TVs, printers, E-books, and game consoles. As demonstrated in this company's history, “Connecting everything to the Internet” has been our company vision since inception, and now we see another opportunity in cars. We are happy to have found car applications that are being used today.
ACCESS’s Web Platform solutions enable UX and applications on any device and across any industry
We have been integrating our solutions in global car manufacturers’ platforms for many years now, including BMW, Jaguar Land Rover and others. We provide an engine based on the same core technologies as an Internet browser that can be used for the presentation of man-machine interfaces and applications, such as the media player and maps. This browser is the foundation of our business in the automotive industry. With our knowledge and experience on car browsers and terminals, we provide ACCESSTM Twine for Car (Twine4Car), a platform that delivers content to the car. We already have design wins with this end-to-end software and content solution, including deals with upstart EV companies such as Great Wall Motor (GWM) and XPENG from China, and Fisker from the US.
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Although full autonomous driving will not happen anytime soon, when it becomes a reality, the way people spend their time in the car will change. The same thing seen in the airline industry will occur in automobiles. If you fly on United Airlines, you can see the United video on a smartphone. However, if you have a larger built-in screen on the back of the seat in front of you, you probably prefer to use that one, especially if content you love is available. The same will happen with cars, and it is already happening in the rear seat entertainment. Many people like to watch on bigger screens. Even before fully autonomous driving, stationary use cases such as EV charging enable the front seat to become a part of the entertainment audience. This is one reason why the latest car concept models demonstrated at CES (Consumer Electronics Show by Consumer Technology Association) have massive screens. The important thing is the availability of content, and once that is resolved people prefer bigger screens. For car manufacturers, offering better content-consumption experiences to users will become crucial in “Owning the user experience” of their drivers and passengers. With our browser and ACCESS Twine for Car, we help car manufacturers refine their connectivity value proposition and offer new future routes to revenue through apps and services.
ACCESS’s Web Platform solutions for connected cars
Modern-day TV providers are facing a series of challenges. We see internet-only providers such as Netflix and Disney+ taking a part of the market, which raises cord-cutting. On May 23, ACCESS Europe launched ACCESS TwineTM for TV Operators (T4TO), enabling operators to embrace connected services across all their devices at a minimum cost by extending the life of their set-top boxes. Since this is a relatively new service, what are your expectations?
We followed NTT DOCOMO’s expansion of i-mode in Europe, and hoping for continued success in the US, we made our company public at the TSE（Tokyo Stock Exchange） market in 2001. We anticipated the need for mobile operating systems and acquired Palm Source in 2005, however, the market went in another direction, with Apple’s introduction of the iPhone in 2007, and Android’s release in 2008. Since then, the mobile phone industry has changed a lot. Platform owners gained momentum and the number of non-Asian phone brands decreased significantly. We see parallels within the TV market now. We wanted to provide a viable alternative so we are introducing ACCESS TwineTM for TV Operators (T4TO) as a complete package of white-label services coupled with a technology solution. Operators can fully utilize their branding and presentation of their services to best acquire and retain customers. We want to tell TV operators that they do not have to “pay a Platform tax”, and that they can make a profit for themselves instead. A lot of content with significant investments like Netflix is entering every country, leading to cord-cutting so it will be more challenging for TV operators to survive and stay relevant to their audiences. One way to achieve this is to have more control over the platform and to provide “super bundles” of integrated apps and services to encourage customer subscriptions, and even increase ARPU.
One solution could be leveraging local content, or local heroes as we like to call them. For example, major sporting organizations such as the NBA, NFL and Premier League can sell their content at very high prices because they have the power to do it. If the local soccer teams in Düsseldorf or Hamburg partner with local TV operators, they could immediately reach their local fans but also via the use of streaming technologies reach a wider audience of committed fans. TV is just a window to present information but to achieve this a software platform is necessary. We believe that our T4TO can be the foundation of this platform. It will initially be a content distribution only, but it will become a white-label platform allowing local operators to have control over branding the user experience and promotions for content and apps. This is the vision we have for this product.
ACCESS TwineTM for TV Operators
We also see growth in the gaming industry, as companies like Netflix attempt to penetrate that sector. Is gaming an area of interest when it comes to the services that you are offering?
Yes. Gaming is going to be a big one for ACCESS TwineTM for TV Operators (T4TO) and ACCESS TwineTM for Car (Twine4Car). We are partnering with gaming aggregators and enabling the operators to offer a wide range of games and genres, from traditional casual games to streamed AAA blockbusters that can take advantage of a connected gamepad. As with video content, we are enabling operators to take control of the customer relationship and revenue streams via relevant value-added services. Traditionally the platform has full control over the gaming user experience but with ACCESS TwineTM we empower operators and OEMs to provide a gaming experience that makes sense for their customers, whether that be casual on-screen games via remote control or streamed AAA blockbusters utilizing a game pad.
Nintendo SwitchTM Lite takes advantage of NetFrontTM Browser NX. However, surf browsing apps for devices are a very crowded market. Many browsers like Google Chrome, Firefox, Safari, and Microsoft Edge are available. What are some of the competitive advantages of your net browser specifically, and how do you differentiate yourself from such a crowded market with these big tech giants?
Google and Apple provide open-source browsers, but they are initially designed for PCs or smartphones with tremendous computing power and memory capacity. The devices we are talking about are comparatively low-performance with limited memory, so running their browsers on them with a good user experience is impossible. Furthermore, many chipset companies have compilers that are not fully compliant with the latest standards. The biggest challenge is making the available browsers run acceptably on resource-limited devices. This is where we have a considerable advantage because we have been in this browser business for nearly 30 years, and we started on resource-constrained devices.
In the TV field, there are a lot of additional tricks that are embedded in the browser. For example, all the TVs currently sold in Japan come with a ”d button” function. Simply pressing a “d button” on a TV remote control directs you to interactive digital services. This "d button” uses our browser technology. The browser has to be controlled with a remote control, so many TV-specific specifications are involved. There are additional specifications available only for TVs and not for PC versions. The same thing is true in automobiles. There are additional specifications adapted to specific devices.
It is human nature to have difficulty adapting to change. Looking at Japan as the oldest society in the world, many are tech-illiterate. When it comes to a new platform specifically for TV, how are you overcoming this tech illiteracy challenge and making it easily accessible for this demographic?
Our first step is working with the Japanese standards organizations and jointly coming up with the specifications so that every manufacturer does not have a different kind of navigation system. The second step is making navigation more generic. Older people have more difficulty adapting to the change and need help operating or navigating a pull-down menu. This is why we introduced the "d button”. We want to use only one button and also use cursors for directions. These are some of the unique tweaks and implementations we proposed to the standardization organization, which they later agreed to and implemented on consumer devices.
In addition to your work with consumer-end products like TVs and automobiles, you also work with white boxes and solutions similar to that. In 2006, ACCESS acquired US-based firm IP Infusion, which develops and provides network operating systems for white box systems such as the OcNOSTM that enables faster innovation, operated streamlining and reduces total cost of ownership through network desegregation. What are the backgrounds for its development?
I was the CEO of IP Infusion from 2012 to 2017, and during my time, our biggest challenge was increasing the value of software in that industry sector. Historically in the network industry, a handful of mega-companies, that provide software and hardware together in the box, dominate the majority of the equipment market. Compared to the software applications sector or client-side hardware sector, we haven’t seen much of a structural change in the network layer for the past 30–40 years. We wanted to challenge this convention with our innovative software technologies.
I wrote this picture diagram to explain how white box solutions bring benefits such as reducing network infrastructure investment costs and preventing vendor lock-in.
ACCESS’s Network business: IP Infusion’s white box solutions “ OcNOSTM”
What we are proposing to the world, with a couple of other new start-ups, is disaggregating the value supply chain into “Software” and “Hardware.” Disaggregation delivers the value of “Flexibility” to the users (Telecom operators, service providers, and data-centers) as it will give them the freedom to pick their preferred software and hardware, and it will emancipate users from “black-box supplier lock-in”. It will also promote competition in the software segment and hardware segment leading to quicker innovation and lower cost for the users. Software or hardware innovation won’t be hampered by the innovation on the other side. This disaggregation accelerated the growth of the PC market in the late 1980s, and we are hoping that a similar thing can happen in the network equipment industry.
In March of this year, IP Infusion announced that they provided support for the development of Beluganos - a new network operating system (NOS) for white box solutions to realize NTT's Innovative Optical and Wireless Network (IOWN) concept. Can you tell us more about this collaborative effort and how you got involved?
NTT, under their IOWN concept, is pushing hard on the All-Photonics Network, which is a key component of their IOWN network. This enables super low latency, super hi-speed, broadband network, with extremely low power consumption. We believe that network operating system plays a significant role in such architecture, and as an expert in the field, we wanted to contribute to this magnificent vision. Once this “All-Photonics Network” is deployed, the browsing and edge-computing paradigm may change dramatically, because of eliminated limitations on the network side. This is how NTT envision the digital twin world and cognitive network world. This latter idea also synchronized with our company expertise, vision, and businesses in browsing and embedded software. So when NTT offered to collaborate with us, we were more than happy to oblige.
Is partnering with international firms an area of interest, whether to develop products specific for Japan or, in the future, for similar countries that are improving their digitalization?
Absolutely. Two of our different businesses have different needs when it comes to partnerships. With the web platforms, we have to partner with manufacturers of consumer electronics such as TVs or automobiles to deliver benefits to the end users. Also, lots of chipset vendors are located in Asia, so we need to partner with such companies in the browser business.
The network business is highly complex, and we need partnerships in every layer of the supply chain. Although many theoretically agree with disaggregation, there is a lot of inertia because it will also change how people procure their equipment. This is the big challenge. Back in the 80s, people often joked that “No one gets fired by buying IBM”, but we still face a similar risk-averse mentality today. To overcome that mentality, we cannot do it alone, and we have to gain confidence, step by step, together with our channel partners in each layer.
Activities toward standardization are another crucial factor. We are part of organizations that promote open standards, and these standards are open and transparent to the companies we do business with. An example is TIP (Telecom Infra Project). We also work with silicon chip vendors and hardware manufacturers. Most of these key partnerships are with Taiwanese companies.
System integrators are very important too, because tier-1 operators in Europe or US have their preferred system integrators. Knowing their network and having a long history with them will make them more inclined to keep the status quo. They would rather work with system integrators, so we must partner with them. We cannot cover everything as a small company, so having partnerships in every single layer of the supply chain is crucial.
Are there any other new technologies that you are currently working on that you can share with our international readers?
There is a lot of work involved in the networking field. We must develop support for the latest, improved silicon chips every year and keep up with the new requirements of system integrators and operators. We expect that the browser paradigm/architecture will also change when the network becomes faster and broader with low latency. This is one of the areas that we are focusing on as well.
Today, a video image is converted to a certain video format and sent to a network. When the network is improved, the camera can send a raw RGB signal, maybe together with depth info and haptics data, and we can have the remotely distributed computing power process the information customized for each user's needs. Just send everything to the network, without worrying about clogging or delay, and process them in the network or on the client-side software. When this happens, the browser paradigm/architecture can be fundamentally changed. This is where we will be putting our R&D money into.
Since establishing your first overseas operations in Germany in 2001, you have established overseas bases in China, Korea, Taiwan, and others. Moving forward, which countries or regions have you identified as crucial for corporate growth, and what strategies will you employ to achieve it?
It depends on which business we are talking about. In automotive, there are many manufacturers in Europe. There are also many new EV companies in Asia, Japan, and the US. We cannot pick one country or region over the others in this business.
Similarly, in the networking business, our customers will be all over the world, as the Internet is deployed everywhere, but our disaggregation business ramped up first in developing countries in Africa, Latin America, and the Middle East. Although the value of our solution is innovation, scalability, flexibility, and low cost, developing countries were more risk-taking, open to changing the procurement practice, and cost-conscious. These markets are still important, but from this year, we expect to grow our business in developed countries like North America and Europe too. We feel that disaggregation will become a global trend, and for the next couple of years, we expect our network business revenue to grow the fastest. The switch and router global market is a huge, billion dollars plus market. Of course, not every operator will switch to disaggregation, but at the same time it will not be less than 5% either, so we expect growth in this business.
If we come back in 6 years, what goals would you like to have achieved by then?
As a company headquartered in Japan, we want to be able to encourage the next generations of Japanese with our challenge and success. When I started working in the late 1980s, Japan was considered to be a rising star and we were able to work with that pride as well as the responsibility associated with that position. Often, we were asked to comment on Japan’s strength, over the business dinners and in business school classrooms. But I think those occasions are diminishing, especially after Japan was suffering from a post-bubble-burst in the 90s, and new software tech companies started to increase their value in the past 20 years. With our vision of “Connecting everything to the Internet”, we want to be a significant player in the global software industry. I would be happy if we realized this goal in six years.
Of course, in the software industry, no business is stable for more than 10 years by keeping the status quo. Becoming a significant network operating system player does not guarantee our business in the long term. Other big companies may initiate the next change or new start-ups will try to disrupt the industry. In 6 years, we want to be successful in the network operating system and be ready to offer the next value based on new browsing/embedded-computing paradigm. This is my ultimate goal for the company.
Interview conducted by Karune Walker & Sasha Lauture