## Chapter 2: Transformation of ICT Industries and Society, induced and accelerated by the “Smart Revolution”

Chapter 2, from the standpoint that the combination of the now fully available ubiquitous networks environment with the utilization of a vast amount of information through the proliferation of smartphones should be considered as a “Smart Revolution,” analyzes, from the side of the industry and the users, its potential power driving the economic growth

### 1. The ubiquitous network environment is now fully available and the smarter is leading to the “Smart Revolution”, but various problems being exposed

The ubiquitous network environments, now available through the Internet that has become part of the social infrastructure, combined with the capability of distributing and utilizing a vast amount of data — Big Data, is leading to the “Smart Revolution.” (p.16)

Threats from cyber attacks, of which the targeted attack is most serious, have been realized as actual threats; while 97% of corporations have prepared security measures, the more powerful measures are being prepared through the tight collaborative actions, including the government and the private sector. (p.17)

Recently, the international discussions on what cyber space should be or how it should be regulated has expanded, and Japan has actively participated, provided useful information, and sent messages. As a result, the Japan-U.S. joint statement mentions that the collaboration of both countries will be strengthened. (p.17)

The utilization of Big Data will greatly improve the potential power of ICT; while the U.S. has already started strategic activities, Japan is focusing on it as a national strategic resource. (p.16)

### 2. “Smartphone Economy”: the structural transformation of ICT industries and users led by the proliferation of smartphones

The smartphone market grew from 2009 to 2011 by 270% world-wide, 420% in Asia-Pacific; the majority of that growth has been captured by Apple and the companies of China, Taiwan, and Korea (they belong to the Android Group). Japanese telecommunication carriers are accelerating the shift of their business into smartphone services and the fields where added-value will be expected by cross-industrial collaboration. (p.18)

Japanese ICT industries (Internet-related industries) are distinctive because more than 50% of their revenue is network-related, especially mobile networks. In the U. S, on the contrary, revenues from the upper layer or terminal layer are significant. (p.19)

The debut of smartphones has led the industries into “competitions among eco-systems”; the strategy is, first acquiring the platform (terminal OS or application-store), adding application vendors, and finally guiding users into their own eco-system. As users shift to smartphones, the ratio of usage of services available on their phones, such as search and music distribution will increase. As a result, especially for movie distribution, Google or Apple are more likely to be used.

The proliferation of smartphones or other information terminals has stimulated the use of services available on the Internet, such as electronic commerce. The annual economic ripple effect of the money consumed in the service, advertising, and terminal markets is about 7.2 trillion yen, and 338 thousand jobs are created annually. (p. 21)

### 3. The switchover to digital terrestrial broadcasting and acceleration of smart TV and broadcasting-social-media collaboration

Smart TV, especially through broadcasting-social-media collaboration, will potentially contribute to the expansion of broadcasting media through, for example, communicating directly with the individual members of the audience or increasing advertising value. In June, 2012, MIC drew up the basic strategies for international-standardization, technical development, and expansion of the user-base of smart TVs.

The Japanese people, especially those in their 20’s, highly recognize the Internet as media (p. 24); at the same time, for document-oriented media, social media leads over newspapers/magazines for evaluation as “entertainment” and “gossip source.” (p. 25)

### 4. Toward the steps to accomplish new growth (summary of Chapter 1 and 2)

Japan has maintained its lead in mobile industries, while it proceeds slowly in the ICT field; the first thing we have to do is to get rid of the illusion that Japan has a lead in the field, and then invest there to have more power for growth.

Japan’s ICT industries are becoming domestically-oriented; powerful management strategies with a view toward the global market are required to proceed into the global market taking advantage of systematic strengths, such as the combination of hardware with software, and the collaboration of corporations on the user-side and ICT vendor-side.

The economic impacts of ICT introduction have been proven; in the public sector, the significance of ICT proliferation and promotion should be positively recognized and accepted as indispensable.

The proliferation of smartphones and other information terminals should be used as a trigger for the economic growth of Japan as a whole; in addition, because the international standardization of the common platforms, such as HTML5 is becoming more important, Japan should proactively participate in the standardization activities, taking into account the expected expansion of smart TV, which is expected to emerge as a growth area.