The survey results from last June forecast a relatively large impact on orders/shipments in the first half of the fiscal year, but expected a recovery in demand in the latter half due to respective vendor efforts. However, the uptake was not expected to be enough to fill the gap from the first half (negative 10% or more impact on over 50% of equipment category orders/shipments destined to the domestic market).

The response from this survey in February 2012 (follow-up survey) indicates that the recovery from the disaster is moving quicker than expected in the June survey. In addition, the impact on the entire fiscal year shipment figures is forecast to be minimal.

I.Great East Japan Earthquake and Tsunami Impact on ICT Equipment Orders/Shipments

1. Great East Japan Earthquake and Tsunami impact on ICT equipment orders/shipments and timing of recovery
   [Survey on recovery (1Q-4Q response)]

   Results

   In the domestic market, most equipment recovered in 1Q-2Q. (see table below) For export market, most equipment recovered in 1Q-2Q. (see table below)

   [Survey on forecast of impact on entire fiscal year figures (response using ranks A~D)]

   Results

   In the domestic market, difficult to distinguish from other factors, but almost no impact. (see table below) For export market, difficult to distinguish other factors, but almost no impact. (see table below)

2. Negative/Positive Factors
   The most significant negative factor impacting ICT equipment orders/shipment figures was parts & material procurement problems (39%), followed by damage to production facilities (24%), then followed by consumer mindset and decreased willingness to invest (13%). Positive factors included increased investment in recovery and rebuilding efforts, replacement demand (to advanced function models, such as One Seg broadcasting, and due to loss/repairs), BCP-related demand for equipment and services.

    

   

3. Respective vendor efforts to tackle negative factors
   • Early recovery of earthquake/tsunami-damaged factories
   • Strengthen parts procurement system (redirect procurement routes, switch to multi-vendors, etc.)
   • Change to alternative parts (including change in production location) or in-house design
   • Creation of framework for regular exchange of risk information among manufacturing and sales divisions.
4. Forecast of the timing of recovery and impact on fiscal year
   [Timing of recovery from earthquake and tsunami] (Choose from among 1Q-4Q)

   Equipment type	Domestic market	Export
   	Response	Response
   Key telephone systems	1Q	1Q, 2Q, 4Q
   Intercoms	2Q	-
   Facsimile equipment	2Q	2Q
   Cellular phones	2Q	2Q
   Central office switching equipment	2Q	1Q, 2Q
   PBXs	2Q	1Q, 2Q
   Digital transmission equipment	2Q	1Q, 2Q
   Optical access equipment (ONU, MC)	1Q	1Q, 2Q
   Fixed telecommunications equipment (terrestrial)	1Q	1Q, 2Q
   Fixed communications equipment (satellite)	1Q	-
   Base station equipment	2Q	1Q, 2Q
   Routers, LAN switches	2Q	1Q, 2Q
   Comprehensive total of 12 types	2Q	1Q, 2Q

   [Earthquake and tsunami impact on total FY2011 figures] (from ranks A-D)
   A: Positive recovery demand, B: Almost no impact (less than 10%),
   C: Significant negative impact (10% or more), D: Impact from a different factor

   Equipment type	Domestic market	Export
   	Response	Response
   Key telephone systems	B	B
   Intercoms	B	-
   Facsimile equipment	B	B
   Cellular phones	B	B
   Central office switching equipment	B	B
   PBXs	B	B
   Digital transmission equipment	B	B
   Optical access equipment (ONU, MC)	B	B
   Fixed telecommunications equipment (terrestrial)	B	B
   Fixed communications equipment (satellite)	B	-
   Base station equipment	B	B
   Routers, LAN switches	B	B
   Comprehensive total of 12 types	B	B

5. Request to the government or other authorities
   The following requests were raised concerning future disaster recovery efforts and continued risks to domestic business activities.
   • Building a stable domestic power supply system in order to eliminate destabilizing factors, such as rolling blackouts.
   • Promotion of infrastructure construction (such as emergency communication systems) in disaster-affected areas.
   • Tax-exemption measures for recovery-related activities.
   • Support of exports in relation to recovery efforts of domestic industries (negotiation to eliminate import duties of respective countries, support in exporting infrastructure equipment)

II. Survey Outline

1. Scope of forecast: 12 major ICT equipment categories
   Key telephone systems, intercoms, facsimile equipment (including multi-functioning devices), cellular phones, central office switching equipment, PBXs, digital transmission equipment, optical access equipment, fixed telecommunications equipment (terrestrial), fixed communications equipment (satellite), base station equipment, other network equipment (routers, LAN switches, etc.)
2. Questions referring to the impact of the Great East Japan Earthquake and Tsunami
   • Impact of the disaster on fiscal year orders/shipment figures for both domestic market and exports.
   • Timing of recovery from the disaster, specific positive/negative factors.
   • Specific measures to tackle negative factors.
   • Request to the government and other authorities.
3. Survey timing
   Friday, February 3, 2012 – Tuesday, February 14, 2012
4. Survey target
   17 CIAJ member companies voluntarily participated in this survey

For details, contact:
Mr. Miya
Market Research
CIAJ
tel: 81-3-5403-9356 fax: 81-3-5403-9360 e-mail: s_miya[at]ciaj.or.jp

For more general inquiries, contact:
Mr. Kawai
Corporate Communications
CIAJ
tel: 81-3-5403-9351 fax: 81-3-5403-9360 e-mail: kawai[at]ciaj.or.jp

  As Japan marks the one-year memorial of the Great East Japan Earthquake and Tsunami, there are many on-going efforts to rebuild the affected areas, but numerous challenges have surfaced in moving forward. CIAJ proposes the effective use of ICT in building attractive cities and emphasizes the necessity and early adoption of a platform (a common social infrastructure), which would act as a basis for building cities.

The Purpose of the Proposal　

• In realizing attractive cities which maximize the potential of ICT, building a platform which acts as the basis for efficient systems needs to be promoted with broad regional alliances and sustained as a viable business.
• This platform would be the foundation for creative reconstruction of cities in areas devastated by last year’s earthquake and tsunami. Since positive economic impact and the creation of new markets to reinvigorate the Japanese economy can also be expected, CIAJ urges the early implementation, not only in the disaster-stricken areas, but also throughout the nation. This initiative would create attractive cities while stimulating Japanese industries, led by the communications and information network industry, resulting in the advancement of Japanese society as a whole.

Outline of the Proposal

• As Japan marks the one-year memorial of the Great East Japan Earthquake, there are many initiatives underway for creative reconstruction of cities. CIAJ regards ICT to be the key in solving many of the diverse challenges in this endeavor, by linking the various components which make up the urban framework and assisting in the dissemination of information. By building cities utilizing ICT and the following six concepts, CIAJ believes a safer and more comfortable lifestyle will be realized, while boosting the competitiveness of Japanese industries and leading to sustainable business activities.
  1. “Cities that can withstand disasters”
     Effective dissemination of disaster information and allow quick decisions for initial action by decision-makers, realizing safe evacuation of local residents.
  2. “Cities where information can be protected”
     Convert important information, such as local resident registry, school enrollment records and medical information, into digital format and store them safely in a distributed cloud system to avoid loss of important data.
  3. “Cities that are ecologically friendly”
     Inexpensive and effective energy use and a management system to monitor energy usage will promote leading ecology industries to locate in the area and realize effective use of energy resources.
  4. “Cities with highly value-added primary industries”
     Integrated management of production, shipment and market transactions of agricultural and marine products will link producers, markets and consumers, preventing over-production and excessive harvesting.
  5. “Cities with competitive secondary industries”
     Realize reduction in distribution costs by rebuilding a more efficient logistics infrastructure and assuring distribution lot size, thus, promoting use of harbors in the disaster-stricken areas (Tohoku region).
  6. “Cities where communities recover quickly”
     Promote the rebuilding of commercial districts, provide efficient healthcare, nursing care, educational and shopping services as well as realize sustainable communities for mid to small-sized retailers in compact communities by harnessing the power of networks.
• Proposing a platform for building cities
  Many cities, including those outside of the disaster-affected areas, face diverse challenges.
  CIAJ proposes building a platform acting as the basis for overcoming the present challenges and building cities which realizes the 3 “links” below:
  1. “Bonds (kizuna)” which link people with other people
     Linking the major players of a city – dwellers, businesses, local authorities. Support the creation of vibrant cities founded on people being able to link freely with others.
  2. “Efficiently” linking systems with other systems
     Among the numerous functions provided by systems, link those which can be shared and provide them as services. Streamline applications designed for local authorities.
  3. Assuring “continuity” by linking today with the future
     Support sustainable and upgradable systems linking planners, developers and users which serve multiple purposes.
• What is a platform?
  A platform is a social infrastructure which can be shared.
  By sharing numerous common ICT systems needed in building a city and supporting diverse services and terminals, the entire framework will become more efficient. By making it possible to share information amongst numerous systems, applications will be given added value, realizing and expanding to new business models.
• What are networks which support the platform?
  Networks supporting the platform are the technical basis for processing massive volumes of data quickly and economically. They should conform to the following 3 requirements:
  1. Robustness (Non-stop provision of minimum services at times of disasters and system failures).
  2. Flexibility (Able to combine numerous physical networks and utilize them effectively)
  3. Friendly (Anyone can receive necessary services whenever necessary)
• Scalability of platforms
  Implementation of the platform over a wide area will enhance scalability, with additional benefits. Virtualization will keep expansion costs under control, decrease the burden of operation costs from user increase, assure business viability, provide redundancy with distributed systems, and realize provision of services beyond the region. Furthermore, packaged services will make it possible to expand businesses abroad, potentially becoming an engine for strengthening global competitiveness of Japanese businesses.
• Impact on ICT use by implementing a platform

  ICT initial investment

  approximately 18 trillion yen

  Platform services investment

  approximately 10 trillion yen over 5 years

• Revitalization of Japan, starting with disaster affected areas
  As mentioned above, the ICT usage impact from implementing the platform is expected to have a significant economic impact. The first step is its early implementation in the disaster-affected areas, providing strong support in their recovery, then, creating a model for expansion nation-wide to promote attractive cities which maximizes advantages of ICT use, followed by promotion of Japan’s ICT industry in overseas markets. Private and public sector cooperation will be vital in these endeavors.
  CIAJ will be an active player in its promotion and is working towards the realization of this proposal.

For details, contact:
Mr. Hanaoka
Business & Promotion Dept.
CIAJ
tel: 81-3-5403-9357 fax: 81-3-5403-9360 e-mail: hanaoka[at]ciaj.or.jp

For more general inquiries, contact:
Mr. Kawai
Corporate Communications
CIAJ
tel: 81-3-5403-9351 fax: 81-3-5403-9360 e-mail: kawai[at]ciaj.or.jp

1. Production Trends in the First Half of FY2011

  The total value of production in the first half of FY2011 was 568.2 billion yen (-14.2% year-over-year growth). This was the 8th consecutive negative growth, but an improvement over the 1Q (April – June) year-over-year growth rate of -24.0%.

[Figures by equipment categories]

• Wireline terminal equipment: 44.1 billion yen (+2.3% year-over-year growth)
• Mobile terminal equipment: 282.6 billion yen (-24.5% year-over-year growth) of which:
  • Cellular phones 242.6 billion yen (-27.1% year-over-year growth)
  • Public-use PHS terminals 12.5 billion yen (+9.7% year-over-year growth)
• Wireline network equipment: 169.6 billion yen (-4.1% year-over-year growth).
  • Switching systems: 61.6 billion yen (-5.8% year-over-year growth)
  • Transmission equipment: 108.0 billion yen (-3.2% year-over-year growth)
• Wireless network equipment: 41.6 billion yen (-13.9% year-over-year growth)
  • Base stations: 11.4 billion yen (-32.7% year-over-year growth)
• Network access equipment: 20.4 billion yen (+79.2% year-over-year growth)
• Wireline parts: 9.8 billion yen (+24.4% year-over-year growth

<Major equipment category trends in the first half of FY2011>

• The figure for wireline terminal equipment reflects the shrinking of the market itself, but the recovery of parts supplies after the earthquake/tsunami contributed to 2-digit growth for telephones and intercom equipment.
• In mobile terminal equipment, there was a growth in the number of subscribers, but an influx of foreign products and a continuing shift of manufacturing abroad contributed to the lasting drop in manufacturing figures. With the launch of new services by a telecom carrier, there was an increase in subscribers to public-use PHS terminals – focused around young users – however, this was offset by the lower pricing of the terminals themselves.
• In wireline network equipment, modems and digital transmission equipment figures exceeded previous year’s figures. However, with the completion in the round of NGN-related investments, figures for switching systems and other transmission equipment (including optical transmission equipment) decreased over the previous year.
• The figure for wireless network equipment dropped substantially, due to the decrease in fixed communication equipment and a large drop in base station equipment.
• Network access equipment, such as routers, and wireline parts indicated a significant spike after the earthquake/disaster, with disaster recovery efforts and BCP measures taken by enterprises to strengthen system durability.

2. Noteworthy Export Developments in the First Half of FY2011

  The total figure for exports in the first half of FY2011 was 176.8 billion yen (-20.8% year-over-year growth)

Telephone sets and terminal equipment	4.3 billion yen
Cellular phones	1.1 billion yen
Facsimiles	0.9 billion yen
Cordless handsets for landline phones	1.1 billion yen
Other	1.3 billion yen
Network equipment	77.0 billion yen
Base stations	9.1 billion yen
Data communication equipment	65.9 billion yen
Other network equipment	2.1 billion yen
Parts	95.5 billion yen

Significant increase in year-over-year figures were in cellular phones (+27.4%) and cordless handsets for landline phones (+104.0%), while significant decrease was recorded in data communication equipment (-3.6%), other network equipment (-38.9%) and parts (-31.9%)

By region, Asia was 106.6 billion yen (-29.5% year-over-year growth, accounting for 60.3% of the overall figure), of which China was 49.3 billion yen. North America was 41.8 billion yen (-0.3% year-over-year growth, accounting for 23.6% of the overall figure), of which the U.S. accounted for 40.4 billion yen. Europe was 18.6 billion yen (-15.0% year-over-year growth, accounting for 10.5% of the overall figure) of which the EU was 12.5 billion yen.
The figure for export of parts to Asia saw an especially steep decline at 59.4 billion yen (-41.7% year-over-year growth).

3. Noteworthy Import Developments in the First Half of FY2011

The total figure for imports in the first half of FY2011 was 692.1 billion yen (+13.8% year-over-year growth)

Telephone sets and terminal equipment	328.0 billion yen
Cellular phones	319.3 billion yen
Facsimiles	2.3 billion yen
Cordless handsets for landline phones	3.4 billion yen
Other	3.0 billion yen
Network equipment	239.4 billion yen
Base stations	35.1 billion yen
Data communication equipment	197.5 billion yen
Other network equipment	6.8 billion yen
Parts	124.7 billion yen

Significant increase in year-over-year figures were in cellular phones (+36.5%) and data communication equipment (+22.8%), while significant decrease was recorded in facsimiles (-45.2%), base stations (-2.7%) and parts (-21.3%)

By region, Asia was 16.2 billion yen (+17.8% year-over-year growth), of which China was 429.7 billion yen. North America was 38.6 billion yen (+9.0% year-over-year growth), of which the U.S. accounted for 36.8 billion yen. Europe was 26.4 billion yen (-31.9% year-over-year growth) of which the EU was 26.0 billion yen.
Import figures from Asia for cellular phones was 318.3 billion yen (accounting for 51.7% of the overall figure), data communication equipment was 149.5 billion yen (accounting for 24.3% of the overall figure) and parts was 110.6 billion yen (accounting for 18.0% of the overall figure), with cellular phones accounting for over half of the total figure.

Note: The figures mentioned in this press release are based on tallied figures as of the press release date. It is possible that revisions will be made at a future date.

For details, contact:
Mr. Miya
Market Research
CIAJ
tel: 81-3-5403-9356 fax: 81-3-5403-9360 e-mail: s_miya[at]ciaj.or.jp

For more general inquiries, contact:
Mr. Kawai
Corporate Communications
CIAJ
tel: 81-3-5403-9351 fax: 81-3-5403-9360 e-mail: kawai[at]ciaj.or.jp

1. Outline of the "FY2011 Mid-Term Demand Forecast for Telecommunication Equipment"

Since FY2003, the domestic telecommunication equipment market has been led by cellular handsets and the transition to IP and broadband, with steady growth up to FY2007. However, the global recession originating in the U.S. resulted in a significant negative growth in FY2008 through FY2009.
The popularity of smartphones helped to bring about a recovery in demand in the cellular handset market and a resumption in capital investments among enterprises is reflected in the recovery of business equipment. All categories under infrastructure equipment showed positive growth and despite the year-over-year decrease in Internet equipment due to tapering off of NGN investments by telecommunication carriers, the total telecommunications equipment market figure for FY2010 was approximately 3.459 trillion yen, or a Year-over-year positive growth of 7.8%.

The domestic market in FY2011 is expected to show acceleration in demand growth of smartphones and the resulting spike in data traffic increasing investments in base stations. Strong performance of exports is expected to push digital transmission equipment and office-use multi-functioning facsimiles into positive growth. On the other hand, the Great East Japan Earthquake and Tsunami in March is expected to have resulted in negative Year-over-year growth for consumer market categories, such as cordless phones, personal facsimiles, personal multi-functioning facsimiles, office-use facsimiles (excluding multi-functioning facsimiles), PBX, fixed communication equipment and optical access equipment.
All together, the total telecommunication equipment market figure for FY2011 is forecast at approximately 3.588 trillion yen, or a positive Year-over-year growth of 3.7%.
A gradual decline in the overall population and number of households, as well as the number of enterprises and offices is expected from FY2012 onwards. Looking at the mid-term future, the wide-spread use of smartphones and the accompanying capital investment by telecommunication carriers for high-speed services should stimulate new demand growth, but after peaking in FY2012, it is expected to revert to gradual negative growth.
From these assumptions, the total market value in FY2016 is forecast at approximately 3.416 trillion yen, or a decrease of 1.2% over the figure for FY2010.

2. Forecast Figures

[1]FY2011 Forecast

The FY2011 telecommunication equipment market is expected to be approximately 3.588 trillion yen (3.7% Year-over-year growth), with the domestic market accounting for 3.1 trillion yen (5.1% Year-over-year growth), and exports accounting for 487.4 billion yen (3.9% Year-over-year growth).

(1) Consumer equipment: 1.903 trillion yen (5.8% Year-over-year growth)
Domestic demand for cordless phones, personal facsimiles and personal multi-functioning facsimiles has been influenced by the continued decline in fixed telephone subscribers (including optical fiber line subscribers) as well as longer purchase cycles and price erosion of the devices themselves, but is expected to rebound temporarily in FY2010. Demand abroad for multi-functioning personal facsimiles led the category to positive growth in FY2010, but is expected to have reverted to negative growth in FY2011 both in number of equipment and value.
The cellular phone market is reviving with demand for smartphones and mobile data devices. As a result, upgrade cycles of handsets made longer by the new purchasing plans are expected to have become shorter. Foreign brands are making significant inroads, especially in the smartphone market, but with domestic makers pushing into the market further in this year’s fall/winter holiday selling season, the smartphone market will grow dramatically.

(2) Business equipment: 521.0 billion yen (5.9% Year-over-year growth)
Demand for key telephone systems and office-use cordless phones will continue to recover. However, demand for PBXs is expected to continue to decrease, as the market shifts towards small-scale PBXs and key telephones. The domestic market for office-use multi-functioning facsimiles is expected to undergo consolidation, which should lead to flat growth. Demand is expected to grow in emerging markets, mainly Southeast Asia, South America and Africa.

(3) Infrastructure equipment: 665.3 billion yen (0.8% Year-over-year growth)
Central office switching equipment is expected to show negative growth over the midterm future, but in FY2011, flat growth is expected as a result of recovery efforts in the aftermath of the Great East Japan Earthquake and Tsunami. Demand for fixed communications equipment is expected to show a significant drop due to completion of a wave of capital investments by telecommunication carriers and the withholding of further investment in the wake of the March earthquake and tsunami. Despite demand from recovery efforts following the March earthquake and tsunami, domestic figures for digital transmission equipment will decrease. However, exports, especially to emerging markets, should record dramatic growth. The explosive popularity of smartphones and the resulting surge in data traffic, as well as continuing investments in LTE is expected to translate into a large spike in the figure for this category, but the trend is towards smaller devices, meaning lower installation costs.

(4) Internet equipment: 398.3 billion yen (-2.4% Year-over-year growth)
With demand from telecommunication carriers tapering off, and taking into account the impact of both the Great East Japan Earthquake and Tsunami as well as the global economic recession, investment by both private and public sectors is expected to remain low. In the router category, even though the surge in mobile data traffic will encourage facility upgrades, deterioration of port unit prices will result in overall negative growth. Optical access equipment figures will decline with completion of major investment in NGN area enlargement and no significant increase foreseen in the number of subscribers.

[2]Midterm Projection

Altogether, the telecommunication equipment market for FY2011 through FY2016 is expected to gradually decline, despite the slight growth in FY2011 through FY2012, with the FY2016 figure projected at 3.416 trillion yen (-1.2% over FY2010), with the domestic market accounting for 2.857 trillion yen (-3.2% over FY2010) and exports accounting for 558.8 billion yen (10.1% over FY2010).

(1) Consumer equipment: 1.867 trillion yen (3.8% over FY2010)
Dramatic changes in terminals, networks and services supporting the cellular phone market, marked by increased use in smartphones and data communication terminal equipment, evolution in LTE services and emergence of diverse applications, are all expected to stimulate demand for upgrades, purchase of a second handset and the corporate account market. In particular, the smartphone market is expected to reach 31.97 million devices in FY2016. The number of subscribers to public-use PHS is forecast to temporarily increase after a gradual decline, but will then settle at flat growth.

(2) Business equipment: 455.7 billion yen (-7.4% over FY2010)
Despite upgrade and export demand for key telephone systems, PBX and office-use cordless phones, the overall figure is forecast to decrease with shrinking number of offices and the switch to cellular phones. The downward trend in office-use facsimiles is forecast to accelerate, with rapid switchover to multi-functioning facsimiles, price erosion due to competition from foreign brands and the consolidation of devices in the aftermath of the global recession.

(3) Infrastructure equipment: 726.4 billion yen (-4.3% over FY2010)
The number of base stations is forecast to decline drastically with the termination of PSTN services from 2020 through 2025. Terrestrial fixed communications equipment will see a short-lived demand growth for digital radio equipment in the aftermath of the Great East Japan Earthquake and Tsunami for emergency/disaster communication systems, but will then revert to a decline. In addition, demand for satellite fixed communications equipment, excluding public sector demand, is forecast to remain flat or show a slight increase. Domestic demand for digital transmission equipment is forecast to decrease with the completion of major investments in NGN service area expansion, but it will show overall growth, supported by large increase in exports. Base station equipment is forecast to show healthy growth from the need to accommodate rapid data traffic growth in connection with widespread use of smartphones and video services. Demand will especially be pronounced among cell phone carriers expanding base station capacity and from the public sector/telecommunication carriers in the wake of the March earthquake and tsunami to meet emergency/disaster communication system needs.

(4) Internet equipment: 367.0 billion yen (-10.1% over FY2010)
Despite the surge in mobile data traffic and the resulting need to upgrade relevant systems, the decline in unit price of ports has led to a forecast of negative growth from FY2012 onwards in routers and LAN switches.
Optical access equipment will continue to drop as investment in NGN service area expansion tapers off and no specific timeline announced for the “New Broadband Super Highway.” However, FY2014 onwards may see advances in the implementation of NGN systems, which could lead to creation of new demand.

Please contact Mr. Miya (e-mail: s_miya[at]ciaj.or.jp) to purchase a copy of the CIAJ FY2011 Mid-Term Demand Forecast for Telecommunication Equipment (6,300 yen for CIAJ members, 21,000 yen for non-CIAJ members). The CIAJ FY2011 Mid-Term Demand Forecast for Telecommunication Equipment is available only in Japanese.

For details, contact:
Mr. Miya
Market Research
CIAJ
tel: 81-3-5403-9356 fax: 81-3-5403-9360 e-mail: s_miya[at]ciaj.or.jp

For more general inquiries, contact:
Mr. Kawai
Corporate Communications
CIAJ
tel: 81-3-5403-9351 fax: 81-3-5403-9360 e-mail: kawai[at]ciaj.or.jp

CIAJ Yearbook 2011 (PDF)

Summary

  This study has been conducted since 1998 to capture on-going changes in the domestic mobile communications market.
  CIAJ mailed questionnaires to 1200* cellular phones users (100 male & 100 female users in each of the following age groups: under 20, twenties, thirties, forties, fifties, sixties) residing in the larger Tokyo and Osaka metropolitan areas from the end of March through April of this year.
  Unique findings from this year’s study are as follows.

* In order to gain a more precise reflection of actual trends, the number of samples was doubled from previous years.

(1) Handset Trends and Actual Purchases

<Significant jump in smartphone users>
The ratio of smartphone users jumped from 9.2% (55/600) in the 2010 study to 14.8% (177/1200) in 2011. The growth was especially strong among female teens.

<Even longer purchasing cycles – about 3 years>
The average use of respondents’ previous model (the one before the handset currently in use) rose 3.4 months over last year to 34.9 months.

<Huge growth in intent to purchase replacement. Strong interest in new purchases>
66.2% of respondents said they intended to purchase replacement handsets. This is a 31 point jump over the previous year, and an indication that the market is about to see a surge in demand. If this becomes an actual trend, purchasing cycles may become shorter.

<Clear interest in smartphones>

• 66.5% of respondents who indicated intention to purchase a replacement indicated intent to purchase a smartphone as their next device. This is approximately a 30 point surge over the 2010 results. This is clear indication that the popularity of smartphones is fueling user interest in making new purchases.

Intended type of device to be purchased as primary handset (n=792)

Ratio of respondents intending to purchase a smartphone among all respondents intending to purchase a new handset

• The important considerations at the time of replacement purchase are the same in 2011 as in 2010, but the weight of the responses were different. There was a greater emphasis on design, while less importance on size. Both are likely the impact of the popularity of smartphones.

(2) Use of Services and Functions of Cellular Phones

<Smartphone users showed a higher tendency to use all of the services and functions >

• Of the cell phone functions and services used, “e-mail” was approximately 90%, “camera function,” “web surfing” and “decorated e-mail” were about 50% each.
• On the other hand, smartphone users showed a higher tendency to use all of the services and functions mentioned in the survey. There was an especially greater use of certain services and functions not used by owners of other types of handsets, such as scheduling and social games.

For details, contact:
Mr. Ohkawa
Products and Technologies Development
CIAJ
tel: 81-3-5403-9351 fax: 81-3-5403-9360 e-mail: ohkawa[at]ciaj.or.jp

For more general inquiries, contact:
Mr. Kawai
Corporate Communications
CIAJ
tel: 81-3-5403-9351 fax: 81-3-5403-9360 e-mail: kawai[at]ciaj.or.jp

I. Impact of the Great East Japan Earthquake on Telecom Equipment Orders and Shipments

1. Forecast impact of the Great East Japan Earthquake on Telecom Equipment Orders and Shipments

Overall domestic impact: -1.2% to -9.7%, or in yen value, -27.6 to -221.8 billion yen
Overall impact on exports: -0.3% to -10.3%, or in yen value, -1.5 to -50.1 billion yen
FY2011 impact by quarter will differ per equipment category, but common trends are as follows:

QI:  The impact from the earthquake is greatest, with production suffering from challenges in procurement of parts and components, logistics, direct damage of production facilities and impact of blackouts. Cellular phones saw a temporary spike in demand for models with functions likely to be available despite the disaster (such as One-Seg broadcasting and Twitter), especially in the regions directly affected by the earthquake and tsunami.

QII: Challenges in procurement of parts and components and direct damage in production facilities continued, but improvements in power supply and parts supplies led to better conditions compared to QI.

QIII:Despite some concerns over procurement of parts and components, gradual alleviation of impact from the earthquake and recovery of production facilities continue. Positive ingredients include recovery efforts including infrastructure spending, with figures expected to recover to the level of the previous year.

QIV:Most of the impact from the earthquake will be overcome. Investment in infrastructure as part of recovery efforts will be in full swing, and a review of the role of telecom networks expected to contribute to the demand surge.

FY2011 impact by quarter

2. Quarterly Impact by Equipment Category

3. Negative/Positive Factors

  The greatest negative factors influencing orders and shipments of telecommunications equipment were: 1) problems in procuring parts and components (34%); 2) drop in demand or reluctance in capital spending as a result of the earthquake (19%); 3) rolling blackouts and energy conservation efforts (15%); and 4) direct damage of production facilities, export restrictions or negative rumors resulting from radiation leaks (11%).
  Positive factors include demand growth from investments as part of recovery efforts, and recovery of capital spending.

II. Outline of Survey Scope

1.Scope of equipment categories: 12 major telecom equipment categories
Key telephones, intercoms, facsimiles (including hybrid devices), cellular phones, central office switching systems, PBX, digital transmission equipment, optical access equipment, fixed communication equipment (terrestrial), fixed communication equipment (satellite), base station equipment, other network equipment (routers, LAN switches, etc.).

2.Items covered in the survey on the impact of the earthquake.

(1)The study surveyed estimated telecom equipment orders and shipment figures in FY2011 for the 12 equipment categories (for both minimum and maximum impact scenarios) and calculated the average impact.
(looked only at impact of the earthquake and tsunami, based on forecast figures for FY2011)

(2)Major negative and positive factors.

(3)Countermeasures against negative factors.

3.Implementation period
June 3, 2011 through June 13, 2011

4.Participating companies: 17 companies

For details, contact:
Mr. Kenmotsu
Market Research
CIAJ
tel: 81-3-5403-9356 fax: 81-3-5403-9360 e-mail: kenmotsu[at]ciaj.or.jp

For more general inquiries, contact:
Mr. Kawai
Corporate Communications
CIAJ
tel: 81-3-5403-9351 fax: 81-3-5403-9360 e-mail: kawai[at]ciaj.or.jp

  As part of this endeavor, TCA, with the cooperation of mobile operators providing cellular phone and PHS services, created MRN in April, 2001, which voluntarily collects used cellular and PHS terminals, battery chargers, and the batteries, mainly through the approximately 9,000 retail outlets throughout Japan, regardless of carrier or manufacturer.

   Meanwhile, CIAJ established the “Environmental Assessment Guideline for Cellular and PHS Equipment,” which outlines measures to reduce, re-use, and recycle. The CIAJ guideline aims to promote such activities, and encourage product assessment by manufacturers based on the guidelines.

  The actual figures for recycling in FY2010 are as follows.

1. Figures for Recycling and Re-Use in FY2010

(1) Figures for Recycling

  With the efforts of MRN, the number of cellular and PHS terminals collected in FY2010 increased from the FY2009 figure by 423,000 terminals (+6.1%). As handsets were increasingly equipped with multiple advanced features, consumers began holding on to older models to be used for non-communication purposes even after switching to another model. Despite this phenomenon, collection rates have continued to rise since 2009, reaching 734,000, the highest figure in the past five years.

  The number of handsets shipped by manufacturers for the market itself has hovered in the 30 million terminals range (FY2008: 35.85 million terminals to FY2009: 31.43 million terminals) since 2008. This trend continued in FY2010 with 32.2 million terminals (data source: CIAJ). Despite only a slight increase of 2.4% in the number of terminals shipped to the market, the number of terminals collected rose by 6.1%. This is a reflection of persistent efforts by MRN to gain wider understanding among consumers.

  The collection of batteries and re-chargers continues to increase as well.

(2) Figures on Re-use
  Metals used in cellular and PHS terminals include steel, aluminum, magnesium, gold, silver and copper. Gold, silver, copper and palladium are refined and re-used. The slug resulting from this refining process is used for road beds and shore-line tetrapods.
  Non-metallic material (plastic, glass, etc.) are also processed for recycling. Plastics are dissolved at low temperatures into resins to be made into hangers, plastic containers, toys and other every-day goods.

(3) Voluntary Numeric Targets

  Since FY2009, MRN establish several numeric targets in order to further promote recycling activities. Last year’s achievements per target are listed below.
  Efforts to further improve collection rates will continue.

2. Survey on User Awareness and Behavior

  As with last year, a survey of two thousand cellular phone and PHS users was conducted to gain a better understanding of circumstances surrounding recycling.

(1) The survey shows that among those who changed handset models or terminated the contract for their handset in the past year, 14.3% had returned their handsets to the retail shop.
  The figure for those who had not returned their handsets includes people who held on to their handsets after changing or terminating their previous devices as well as those who didn’t change or terminate the contract for their handsets during the period covered.

(2) Among those who have returned their handsets, the largest group, 67.2% turned in their most recent used handset, 29.4% turned in a handset that was two models past and 10.8% turned in a handset that was three models ago. This reflects a continuing trend of significant number of people who are turning in models that are older than the most recently used handset.

(3) The rate of people who returned their handsets to a store specializing in mobile handsets was 58.8% and those returning their devices to a large retailer were 11.8%, signifying that the large majority of consumers are turning in their handsets to retailers.

(4) 67.2% of respondents have a handset(s) used for a purpose other than as a communication device, a gradual increase resulting from the advanced features that come with the handsets.
  Reference: In the 2008 survey, the figure was 52.6%

(5) Among the respondents who have a handset(s) used for a purpose other than as a communication device, the most popular use of such handsets (multiple answers possible) was “kept to hold on to data (photo, e-mail, contents, etc.)” (40.0%), followed by “use of non-communication functions (alarm, camera, etc.)” (29.4%), and “kept as part of a collection or for sentimental reasons (emotional attachment to the handset)” (23.6%). With handsets becoming increasingly equipped with multiple and advanced functions, they have become a personal tool. At the same time, people feel the need to hang on to various data in the device, even after it is no longer used for communications, indicating that devices are being used for secondary reasons and that users become attached to them.
  Furthermore, as many as 16.2% of respondents chose “worried about disclosing personal information” as a reason for holding on to their handsets, even after they no longer used them. 10.4% indicated that the reason for holding on was that they “did not know how to dispose of their handsets.” Awareness of MRN is spreading with time, but more efforts to promote the system, especially information on such measures as proper erasure of personal data at MRN participating retailers is still necessary.

(6) Among the respondents who have a handset(s) used for no purpose, 46.9% stated that they would like to dispose of the most recently used handset and about 60% for even older models. This indicates there is potential for greater collection. Since intentions to hand over handsets for recycling would increase if data on used handsets could be transferred or backed up to another device, new possibilities in this direction will need to be sought.

(7) Only 10.6% of respondents said they had seen notices from local governments concerning how to dispose of no-longer needed mobile devices, indicating that more effort needs to be made in gaining cooperation from local authorities. Of the respondents who had seen notices, 47.2% said they got information through a “newsletter issued by the local government,” while approximately 40% said they saw the information in a “waste disposal calendar” or “waste disposal manual” distributed by the local government.

(8) Awareness of the recycling of cellular phones and PHS equipment, including the logo, is decreasing, indicating the need for further efforts.
  Awareness of MRN: FY2009 (72.1%) FY2010 (64.8%)
  Recognition of logo: FY2009 (21.2%) FY2010 (17.8%)

(9) From FY2010, smartphone users were surveyed as a distinct category. Only about 10% of those surveyed were smartphone users, so the numbers are for reference only, but one finding was that though these users had a relatively high awareness of MRN, their intention to hold on to their handsets not currently being used for communications was high. It will be necessary to monitor the trend of these users, since the numbers are expected to grow.

3.Measures to Improve Recycling

(1) Take steps to increase awareness
  In order to increase awareness of recycling activities by MRN, efforts will continue to provide information on websites, catalogs, manuals and billing material. Emphasis on activities such as posters introducing MRN at stores specializing in mobile handsets, stickers, pamphlets/leaflets, ads in newspapers, magazines and other media, coverage by the press and collection at events will continue. In order to decrease the number of users who dispose of their handsets as trash, we will continue to work with local authorities who are responsible for trash collection, to increase awareness. In order to promote collection, we will strengthen efforts to provide guidance at specialty stores when users change models or terminate their contracts.

(2) Increasing the opportunities for collection
  MRN will work closely with the “Cellular Phone Recycling Promotion Council (tentative translation)” announced by the Ministry of Internal Affairs and Communications (MIC) and scheduled to be made up of large-volume retailers, ICT manufacturers, telecom carriers and relevant organizations, to encourage easier consumer access to recycling, conduct appropriate protection of personal information, increase collection opportunities and raise awareness.

(3) Take measures to increase collection

1. To increase collection rates among users who have sentimental attachments to information and data (photos, e-mail records, etc.) on their used handsets, more information on availability of data transfer and improving the ease of backing up or transferring data stored on old models to new models will be made.
2. In order to ease user anxiety over leaking personal data, more effort to improving implementation of complete data erasure/destruction at specialty and retail stores (i.e. handset destruction) will be made and improving awareness that MRN-participating stores handle personal data appropriately will be key factors in encouraging users to feel more comfortable taking their handsets they no longer use to retailers.

(4) 3R measures

1. Make further improvements in the “Environmental Assessment Guideline for Cellular and PHS Equipment” to strengthen promotion of product designs which incorporate the spirit of the 3 Rs.
2. Strive to increase the recycling rate and also consider the possibilities for re-using equipment parts.

Mobile Recycling Network
URL: www.mobile-recycle.net (Japanese)

For details, contact:
Mr. Ohkawa
Products & Technologies Development
CIAJ
tel: 81-3-5403-9358 fax: 81-3-5403-9360 e-mail: ohkawa[at]ciaj.or.jp

For more general inquiries, contact:
Mr. Kawai
Corporate Communications
CIAJ
tel: 81-3-5403-9351 fax: 81-3-5403-9360 e-mail: kawai[at]ciaj.or.jp

I.Domestic Production

The total value of production in FY2010 was 1.338 trillion yen (negative growth of -10.9% over the previous year), resulting in the fifth consecutive negative growth for the fiscal year.

[By categories]

Wireline terminal equipment	90.6 billion yen	(-2.0% over FY2009)
Mobile terminal equipment of which:	723.7 billion yen	(-16.2% over FY2009)
Cellular phones	623.1 billion yen	(-21.3% over FY2009)
Public-use PHS	27.7 billion yen	(+83.2% over FY2009)
Wireline network equipment of which:	377.0 billion yen	(+2.7% over FY2009)
Switching systems	132.6 billion yen	(+7.9% over FY2009)
Transmission equipment	244.5 billion yen	(+0.1% over FY2009)
Wireless network equipment of which:	104.3 billion yen	(-25.4% over FY2009)
Fixed telecommunication devices	72.6 billion yen	(-22.6% over FY2009)
Base station equipment	31.7 billion yen	(-31.2% over FY2009)
Network access equipment	26.8 billion yen	(+6.4% over FY2009)
Wireline parts	16.0 billion yen	(+17.5% over FY2009)

<<Noteworthy developments in 2010>>

• The break down of wireline terminal equipment (90.6 billion, -2.0% over FY2009) is as follows: telephone sets 9.8 billion yen (-5.6% over FY2009), applied telephone devices 69.8 billion yen (+1.7% over FY2009), telegraph & imaging devices 11.1 billion yen (-17.8% over FY2009). Despite recovery in private sector investments, the wireline terminal equipment market itself shrank in FY2009. Intercoms amounted to 35.8 billion yen (+2.7% over FY2009), reflecting the increase in housing construction.
• Mobile terminal equipment amounted to 723.7 billion yen (-16.2% over FY2009), of which cellular phones accounted for 623.1 billion yen (-21.3%). New demand for smartphones and data terminals and an increase in upgrading to newer models contributed to a net growth of 7.53 million in cellular phone subscribers, the highest number in 9 years. However, the influx of imported models and the shift to overseas production resulted in a large drop in domestic production output. The surge in public-use PHS (27.7 billion, +83.2% over FY2009) reflects the popularity of PHS as a low-cost voice communication choice.
• Among wireline network equipment (377.0 billion, +2.7% over FY2009), switching systems accounted for 132.6 billion yen (+7.9% over FY2009) and transmission equipment accounted for 244.5 billion yen (+0.1% over FY2009). In switching equipment, investment in central office switches remained flat, but private sector investment in PBX showed substantial growth. Investment in digital transmission equipment to keep up with traffic growth remained flat. Capital spending in others – including optical transmission equipment, continued to increase, with investment towards NGN area expansion.
• In wireless network equipment (104.3 billion, -25.4% over FY2009) fixed communications equipment accounted for 72.6 billion yen (-22.6% over FY2009) and base station equipment accounted for 31.7 billion yen (-31.2% over FY2009). The public sector market for fixed communication equipment shrank significantly, and though there was spending in base stations in anticipation of traffic growth and LTE service area expansion, demand concentrated in small-scale base stations or renewals of existing equipment. Combined with the influx of imported equipment, the domestic production figure showed a large decrease.
• The network access equipment figure was 26.8 billion yen (+6.4% over FY2009). Demand remained steady in anticipation of NGN services, with added demand in preparation for LTE services. Economic recovery encouraged investment in anticipation of traffic growth, expansion of IP networks and enhancements in network reliability, functionality and security in the private sector.
• Wireline parts showed a growth in demand to 16.0 billion yen (+17.5% over FY2009), due to the impact of economic recovery.

II.Exports

The total figure for exports in FY2009 was 426.8 billion yen (-21.6% over FY2009) – the third consecutive year of significant drop over the previous year, and 51% of the actual figure in FY2007.

Telephone sets and terminal equipment	6.5 billion yen	(-71.3% over FY2009)
Cellular phones	1.5 billion yen	(-89.7% over FY2009)
Facsimiles	1.3 billion yen	(-68.2% over FY2009)
Cordless handsets for landline phones	1.6 billion yen	(-10.8% over FY2009)
Other	2.1 billion yen	(-6.3% over FY2009)
Network equipment	163.3 billion yen	(-10.4% over FY2009)
Base stations	18.1 billion yen	(-48.4% over FY2009)
Data communication equipment	139.6 billion yen	(-2.1% over FY2009)
Other network equipment	5.7 billion yen	(+20.6% over FY2009)
Parts	256.9 billion yen	(-24.3% over FY2009)

The large drop in cellular phones and facsimiles pushed the growth figure for telephone sets and terminal equipment down -71.3% over FY2009. Network equipment and data communications equipment remained basically flat, but with a substantial drop in base station demand, the category as a whole showed a significant decline of -10.4%. By region, the ratio of exports to Asia shrank by 4.6 points and exports to North America grew by 4.8 points.

III.Imports

The total figure for imports in FY2009 was 1.274 trillion yen (+27.1% over FY2009, recording the largest figure since the revision of item categorization in January, 2007.

Telephone sets and terminal equipment	527.5 billion yen	(+60.0% over FY2009)
Cellular phones	504.9 billion yen	(+63.2% over FY2009)
Facsimiles	7.1 billion yen	(-7.0% over FY2009)
Cordless handsets for landline phones	8.9 billion yen	(+34.5% over FY2009)
Other	6.7 billion yen	(+9.5% over FY2009)
Network equipment	459.6 billion yen	(+29.6% over FY2009)
Base stations	64.7 billion yen	(+48.8% over FY2009)
Data communication equipment	377.4 billion yen	(+28.2% over FY2009)
Other network equipment	14.8 billion yen	(-1.4% over FY2009)
Parts	286.5 billion yen	(-9.9% over FY2009)

The telephone sets and terminal equipment figure jumped to +63.2% growth with the explosive popularity of smartphones. In the network equipment category, base stations and data communications equipment showed significant positive growth, pushing the entire category up to +29.6% over FY2009. Parts showed negative growth of -9.9 % over FY2009. By region, the ratio of imports from Asia grew by 1.0 points, raising its ratio to 87.1%.

IV.Data by Region

Regional breakdown of exports
1.Asia	283.1 billion yen 66.3%	(-26.7% over FY2009) (-4.6 P)
2.N. America	83.8 billion yen 19.6%	(+4.0% over FY2009) (+4.8 P)
3.Europe	42.6 billion yen 10.0%	(-15.6% over FY2009) (+0.7 P)
Regional breakdown of imports
1.Asia	1,108.7 billion yen 87.1%	(+28.4% over FY2009) (+1.0 P)
2.N. America	75.6 billion yen 5.9%	(-9.8% over FY2009) (-2.5 P)
3.Europe	66.1 billion yen 5.2%	(+74.5% over FY2009) (+1.4 P)

For details, contact:
Mr. Kenmotsu
Market Research
CIAJ
tel: 81-3-5403-9356 fax: 81-3-5403-9360 e-mail: kenmotsu[at]ciaj.or.jp

For more general inquiries, contact:
Mr. Kawai
Corporate Communication
CIAJ
tel: 81-3-5403-9351 fax: 81-3-5403-9360 e-mail: kawai[at]ciaj.or.jp

1. Production Trends in the First Half of FY2010

The total value of production in the first half of FY2010 was 675.5 billion yen (negative growth of 9.6% over the same period of the previous year). This was the seventh consecutive negative growth for the period.

[Figures by equipment categories]

1. Wireline terminal equipment: 44.1 billion yen (-2.7% over the same period of the previous year)
   • Telephone sets: 4.8 billion yen (-5.6% over the same period of the previous year)
     >> Reflects shrinking of the market itself.
   • Applied telephone equipment: 33.6 billion yen (+0.5% over the same period of the previous year)
     > Key telephones account for 15.5 billion yen (+9.3% over the same period of the previous year)
     >> Reflects economic recovery and pickup in private sector investments in facilities.
   • Telegraph & imaging devices: 5.8 billion yen (-16.1% over the same period of the previous year)
     >> Reflects switch to MFPs.
2. 2. Mobile terminal equipment: 386.9 billion yen (-12.2% over the same period of the previous year)
   • Cellular phones 344.8 billion yen (-15.1% over the same period of the previous year)
     >> Invigorated by the popularity of smartphones, though led mostly by foreign brands.
3. Wireline network equipment: 177.0 billion yen (-1.6% over the same period of the previous year).
   • Switching systems: 65.4 billion yen (+15.9% over the same period of the previous year)
     >> Reflects PBX growth from economic recovery and pickup in private sector investments in facilities.
   • Transmission equipment: 111.5 billion yen (-9.6% over the same period of the previous year).
     > Digital transmission equipment accounts for 64.7 billion yen (-13.0% over the same period of the previous year).
     >> Reflects second consecutive year of low growth after the large-scale investment in FY2008 for NGNs.
4. Wireless network equipment: 48.3 billion yen (-22.6% over the same period of the previous year)
   • Fixed telecommunication devices: 31.3 million yen (-18.3% over the same period of the previous year).
     >> Reflects end of investment cycle by telecom carriers.
   • Base stations: 17.0 billion yen (-29.4% over the same period of the previous year)
     >> Reflects continued upgrade of existing stations and addition of small-scale stations. Market penetration of foreign brands continues.
5. Network access equipment: 11.4 billion yen (-11.7% over the same period of the previous year)
   >> Despite investment by businesses and telecom carriers, reflects second consecutive year of low growth after the large-scale investment in FY2008 for NGNs.
6. Wireline parts: 7.9 billion yen (+32.0% over the same period of the previous year)

2. Noteworthy Export Developments in the First Half of FY2010　

The total figure for exports in the first half of FY2010 was 223.3 billion yen (a negative growth of 27.0% over the same period of the previous year)

[Positive growth categories]

• Other network equipment: 3.4 billion yen (+69.3% over the same period of the previous year)

[Negative growth categories]

• Cellular phones: 800 million yen (-93.7% over the same period of the previous year)
• Facsimiles: 600 million yen (-69.0% over the same period of the previous year)
• Base stations: 8.5 billion yen (-58.4% over the same period of the previous year)
• Data transmission equipment: 68.3 billion yen (-9.8% over the same period of the previous year)
• Parts & components: 140.2 billion yen (-26.5% over the same period of the previous year)

[Data by region]

• Asia: 151.1 billion yen (-30.5% over the same period of the previous year)
  >> China: 60.1 billion yen (-31.6% over the same period of the previous year)
• North America: 41.9 billion yen (-6.6% over the same period of the previous year)
  >> U.S.: 41.2 billion yen (-7.1% over the same period of the previous year)
• Europe: 21.8 billion yen (-19.9% over the same period of the previous year)
  >> EU: 17.9 billion yen (-12.7% over the same period of the previous year)

3. Noteworthy Import Developments in the First Half of FY2010

The total figure for imports in the first half of FY2010 was 608.4 billion yen (a positive growth of 24.6% over the same period of the previous year)

[Positive growth categories]

• Cellular phones: 233.9 billion yen (+59.3% over the same period of the previous year)
• Facsimiles: 4.2 billion yen (+24% over the same period of the previous year)
• Cordless telephones: 4.3 billion yen (+51.2% over the same period of the previous year)
• Base stations: 36.1 billion yen (+99.6% over the same period of the previous year)
• Data communications equipment: 160.8 billion yen (+14.7% over the same period of the previous year)

[Negative growth categories]

• Other network equipment: 7.3 billion yen (-7.5% over the same period of the previous year)
• Parts and components: 158.4 billion yen (-4.4% over the same period of the previous year)

[Data by region]

• Asia: 522.9 billion yen (+25.1% over the same period of the previous year)
  >> China: 388.5 billion yen (+52.5% over the same period of the previous year)
• North America: 35.4 billion yen (-19.9% over the same period of the previous year)
  >> U.S.: 33.3 billion yen (-22.1% over the same period of the previous year)
• Europe: 38.7 billion yen (+125.5% over the same period of the previous year)
  >> EU: 37.9 billion yen (+126.5% over the same period of the previous year)

4. Focus for the Second Half of FY2010

1. Trends in smartphones
   The market will be further invigorated by full-force entry of Japanese brands from FY2010 onwards, pushing widespread acceptance of smartphones even further.
2. Telecom carrier investments
   Investment is expected to continue with expansion of NGNs, complete conversion to IP, fixed-mobile convergence (FMC), growth in traffic and launch of commercial LTE services.
3. Network equipment
   Telecom carrier demand for routers will diminish following the end in large-scale investment for NGNs, but investments in LAN switches for data centers and voice/data in-house networks are expected to grow.
4. Economic outlook
   Keeping track of investment trends, employment data, downward economic forecasts abroad and currency exchange/stock index fluctuations will be necessary to measure impact on the industry.

For details, contact:
Mr. Kenmotsu
Market Research
CIAJ
tel: 81-3-5403-9356 fax: 81-3-5403-9360 e-mail: kenmotsu[at]ciaj.or.jp

For more general inquiries, contact:
Mr. Mano
Corporate Communications
CIAJ
tel: 81-3-5403-9351 fax: 81-3-5403-9360 e-mail: mano[at]ciaj.or.jp