Abstract

The Government and Enterprises' Active Development

In 2001, the Japanese government began to implement the e-Japan strategy, whereby the government has worked closely with the private sector to develop Japan's broadband infrastructure and promote the adoption of IT applications.

To stimulate the growth of the networked home appliance industry, the Japanese government has implemented a series of revisions of the Radio Law. In 2002, the law was revised to allow equipment vendors to use the 10KHz - 450KHz band for ECHONET control and feedback signal transmission. A further revision in 2003 made it easier for companies to undertake field-testing for PLC (Power Line Communication) research purposes.

Besides relaxing the regulatory framework, the Japanese government has also taken a leading role in encouraging the formulation of new technology standards. One of the objectives of the e-Japan plan is to create a ubiquitous IPv6 Internet environment in which all citizens will be able to access, process, and transmit the information they need safely, rapidly, and easily. The government has encouraged the establishment of IPv6 associations to promote the rapid adoption of IPv6.

The active involvement of the Japanese government has helped the rapid growth of Japan's broadband infrastructure, and has encouraged enterprises in Japan to develop new IT applications. Many of the world's leading home appliance brands are based in Japan. If these vendors can succeed in agreeing on the necessary digital home standards and establish themselves as leading suppliers of digital home products, they will be able to tap the enormous business opportunities.

Main Focus on Home Security and Remote Control

Japanese vendors have adopted a strategy of introducing Web services, such as Toshiba's Feminity service, to support their newly developed networked appliances. The types of service provided include lifestyle information services and home appliance and maintenance service; all of the leading vendors have developed comprehensive solutions for home security monitoring.

Security is one of the basic requirements for a consumer's home life. Japanese appliance vendors have developed a wide range of security services, including thumbprint entrance control systems (as developed by Hitachi), building monitoring systems (as by Matsushita), warning systems to notify consumers whether doors and windows are properly closed, and gas supply and indoor temperature abnormality warning systems.

The increased penetration of the broadband Internet will improve the connection between different security devices within the home. Wireless networks and mobile communications networks can be used to create a ubiquitous monitoring and remote control environment.

Unified Standards Needed

The biggest problem facing the Japanese vendors in their attempt to develop the networked appliance market is the need to achieve interoperability between different devices. Hitachi and Matsushita have achieved some degree of interoperability between their products by collaborating on new product development. Mitsubishi, Sanyo, Sharp, and Toshiba have established the iReady alliance to achieve interoperability through the use of an external adaptor solution.

The UOPF alliance has formulated a common standard to enable appliances to access broadband networks conveniently and securely at any time; this standard also supports the provision of e-commerce services.

As regards transmission methods for home networks, Mitsubishi, Matsushita, and Sony have collaborated on the development of high-speed power-line communication technology. In another collaborative project, Sony, Matsushita, and Hitachi have joined forces to develop a Linux-based consumer electronics operating system platform that provides a high level of interoperability.

Despite the active collaboration between Japanese vendors on the development of common standards, the conflicts of interest and competition concerns have been holding back these vendors' efforts. Some vendors have developed products supporting two different standards to reduce risks. For example, Toshiba appliances support both the Linux operating system and Microsoft Windows CE. Even when different vendors' networked appliance products conform to a common standard -such as the ECHONET standard -they may not be fully interoperable.

High Prices and Low Interoperability Affect Consumer Acceptance

While the price of conventional home appliances continues to fall, the leading Japanese vendors' networked home appliances are still very expensive. A networked refrigerator can cost more than three times as much as a conventional refrigerator. Furthermore, consumers have to pay membership fees and monthly dues to make use of the leading vendors' Web services for home appliances.  In the case of Hitachi's HoRaSo Network, consumers pay 3,150 Yen to join, plus an additional fee of 998 Yen per month.

The failure to establish a unified standard for networked appliances has put consumers in a position where purchasing these appliances involves an excessively high level of risk. As a result, take-up of the new networked appliance products by consumers has been very slow. Given the conflicts of interest that exist between the different alliances and standards bodies, it would seem that the creation of a unified standard is still a long way off. For the time being, the market for networked appliances will be largely confined to high-income consumers. Demand for these products among ordinary consumers will not increase significantly until the establishment of a unified standard has made it possible to reduce the cost of networked appliances. 

Appendix

List of Companies