Newsletter

NEWSLETTER- the JAPANALYZER

November 2002

Market Snapshot - Japan
Nippon vs Nimda

Each month the Japanalyzer takes you inside one of Japan’s IT industries or topics- showing you who’s who and where the market is heading. This month we focus on the global threat of computer viruses and how vendors in Japan deal with antivirus protection. Japanese companies, like others around the world, saw last year’s Code Red and Nimda attacks as a wake up call to the importance of computer Security. Such attacks have been particularly shocking to the Japanese, who have historically taken Security for granted. As a nation of islanders, which have always had the benefit of physical distance from neighbors and the comfort of a predictable organized society, the Japanese have always felt Security to be an inherent right. In fact, while there is a word for Safety (“anzen”) in Japanese-meant to address known threats, there is no Japanese word for Security, which implies protection from unknown threats. Today however, all Japanese are familiar with the English term “security” due to the increased awareness of unknown threats from the virtual world and the need for software and systems to prevent such attacks.

According to Japan’s Information Technology Promotion Agency, there were 24,261 computer virus incidents reported in Japan 2001- an increase of 118% from the previous year. Of these incidents reported in 2001, 19% resulted in infections. And the overwhelming majority (88.9%) came from e-mail viruses such as Nimda and Badtrans. It’s not surprise then that the antivirus software market is doing so well in Japan. Industry leaders Trend Micro, Symantec, and Network Associates have been reporting positive results and inspiring new entrants from the US to introduce their products and services into the Japanese market.

The top dog in antivirus software in Japan, Trend Micro recently reported a 42% increase in its overall Japan sales, sales to individuals climbing an amazing 140%. A key partner for the company is Japan Telecom, which uses Trend Micro’s Interscan VirusWall as part of its VPN solution. In a major win against rival Symantec, Trend Micro recently announced that Sony’s VAIO line of PCs now incorporates Trend Micro’s PC-cillin in its PCs sold in the US and Canada- the PCs were previously pre-installed with a Symantec product. Trend Micro, as a company, is much better know in Japan than in the US, where Symantec is the PC antivirus leader. PC-cillin is sold under the name “Virus Buster” in Japan.

Network Associates Japan, on the other hand, has made news of late due to its partnerships and shift in strategy. In addition to offering its McAfee antivirus software as desktop software, the company is now partnered with Sumitomo to provide McAfee as an ASP service to small and medium sized businesses. The service is designed to use the Internet to distribute virus definition files in order to identify weaknesses in customer networks.

Success by incumbent providers has even spurred startups from the US to try their hand at the Japanese market. In February of this year, SecurityFocus (now part of Symantec as of 8/02), a security firm known for the management of a mailing list called the "Bugtraq," announced it would provide its services in Japan through an exclusive business tie-up with Network Security Technology Japan Inc. The company said it plans to provide two services: Security Intelligence Alert (SIA), which is designed to provide information related to the vulnerability of systems, and ARIS Threat, which is designed to issue warnings before a new type of virus attack would pose a threat.

So does all this mean the Japanese can start to feel more secure when it comes to their computers and networks? According to Trend Micro’s virus damage report for the first half of 2002. The number of damage cases rose to 28,938 within the first six months, already surpassing the 24261 recorded during the whole of 2001. The virus that resulted in the greatest number of damage claims was "Worm_Klez" while "Nimda" was still number 5 on the list.

Previous Issues

Archive
View content from past editions of our monthly Japanalyzer newsletter!

Subscribe Now
To our free monthly Japanalyzer newsletter!

This Month's Bridge Builder
Featuring the real voice of IT across the Pacific

November, 2002

The Six Secrets to Success in Japan
Mr. David Flynn, Vice President Marketing, NetScreen

Our Japanese customers often ask us “given the state of the US economy, are US IT companies still interested in expanding to Japan?” The answer we tell them: ”yes, particularly if the company is involved with Security”. The increasing awareness of the internal and external threats to corporate networks have made success stories out of US startups that make Firewalls, VPNs (virtual private networks), Intrusion Detection Systems (IDS), and related products. Some of these firms have already replicated this success in Japan thereby becoming role models for newer firms ready to expand to Asia and Europe. One such company is Sunnyvale-based NetScreen, maker of a wide range of network Security equipment that according to the company’s Vice President of Marketing, David Flynn, now generates 35% of its $138 million business, in the Asian market. Mr. Flynn recently gave a presentation at JETRO (Japan External Trade Organization) San Francisco’s “Locking up Opportunity: Network Security Japan” event where he put forth the six key factors that contributed to NetScreen’s success in Japan. This month’s Bridge Builder presents these Six Secrets in order to inspire and educate managers on both sides of the Japan/US technology equation.

1. Excellent Market Opportunity. Mr. Flynn and the other presenters were quick to point out that the rapid build-out of broadband in Japan over the last few years has made networking, and the resulting inherent security risks, pervasive. VPNs, a cost effective alternative to leased lines, have also become popular and there is increasing acceptance of Security as a Managed Service. The overall effect of these advances is a heightened demand for networking equipment that can provide the necessary Security. NetScreen’s entrance into the Japanese market prior to this spike in demand generated a key window of opportunity.

2. Right Product. NetScreen offers the right set of products to meet the demand. By providing depth and breadth in the product line (products range from SOHO to large enterprise network compatibility), the company quickly established itself as full-service. And by giving each product line the additional testing necessary for the Japanese market, Netscreen proved its commitment to meeting the specific needs of Japanese customers.

3. Effective Relationships with Local Partners. Mr. Flynn expressed the importance of finding local partners early and of establishing close, committed relationships. Commitment can be derived from an equity investment by the Japanese partner and from a “dedicated headcount” of local resources. One pitfall to watch for however is the expansion of distribution too early. NetScreen established a relationship with Hitachi in 1998 but did not begin to add on new distributors until 2000. This avoided dilution of NetScreen’s initial impact on the market and gave NetScreen and Hitachi a chance to develop as partners- today, Hitachi is NetScreen’s biggest distributor.

4. Strong local team. The local team in Japan supporting the company’s product should be both experienced and empowered. NetScreen started servicing Japan from California but soon realized that having a local team was a true requirement. Netscreen looked for experience in its new team and made sure to empower them to manage channel and customer relationships as necessary.

5. Headquarter responsive to local requirements. NetScreen makes a point of having a meeting every quarter between its Executives and key Japanese partners. When the local Japanese team makes a request, it is listened to with great attention. In Japan, additional feature requirements are often important to convince customers. For example, NetScreen added dual DSL links to its device in order to accommodate customers with two DSL connections, a phenomenon unique to Japan because of the low cost of DSL.

6. Strong execution to the plan. Mr. Flynn concluded his presentation by emphasizing that the overall key to success in Japan is solid planning and implementation. NetScreen attributes its rapid growth in Japan to the successful meeting of goals laid out at the beginning of its Japan market entry.

For more information on JETRO events and how to work with JETRO, please contact Ms. Miyuki Doi, Director of Trade and Investment Promotion, at 415-392-1333 or visit the JETRO San Francisco website at www.jetro.org/sanfrancisco .

Previous Interviews

,

Semicon Japan 2002
December 4-6, 2002 Makuhari Messe Tokyo
An International exhibition and technical seminars on semiconductor equipment and materials.

C&C User Forum & iEXPO 2002
December 11-13, 2002 Tokyo Big Sight
A conference emphasizing collaborate creativity and innovation. At the C&C User Forum, solutions will be presented with the focus on selected case studies of real-world problems that give pointers for innovation. The results of NUA research activities and a series of papers will also be presented. Cutting-edge applications/services for innovations in business and supporting platforms will be presented at iEXPO2002.

3G Mobile Forum
January 14-17, 2003 Hilton Tokyo Bay
Following last year’s successful forum Marcus Evans is again putting on its 3GMobile World Forum.

Advertise
Use the Japanalyzer newsletter to reach a technology savvy, high profile Japanese audience. Send inquiries for advertising in the Japanalyzer to advertise@kanaboconsulting.com!