News Releases

4/17/2000

Hitachi's Net Business Strategy

Apr 17, 2000 09:08 AM

-- Being the Net Society's Best Solutions Partner --

Tokyo, Japan, April1 17, 2000 --- Hitachi, Ltd. (TSE:6501/NYSE:HIT) today announced that the company has formulated an Internet-driven net business strategy that is based on the "i.e. HITACHI" medium-term business plan disclosed last November. The Internet is rapidly evolving into a social infrastructure that shows limitless potential with respect to changing the way people live and do business. To make the best of the convenience and choices offered by this new infrastructure requires platforms that can participate reliably and effortlessly, and a full range of business solutions. To answer the needs of network communities, Hitachi is using its customer base, expertise, knowledge and Internet technology to build and provide network infrastructures that are secure and competitive. For this, Hitachi is moving forward on two fronts: a business platform operation that provides secure, competitive net infrastructures, and a solutions business in which the focus is on providing support for the planning, implementation and operation of Internet businesses based on those infrastructures. Hitachi's solutions business offers net usiness solutions for each industry or business model in the following five market categories.

1) Business: Solutions for the financial, distribution, manufacturing and service sectors

2) Industry: Network services for industrial, transportation and electric power systems having a high public utility component

3) Consumer: Services oriented toward lifestyles of consumers in the net society

4) Government: Solutions for central and local government ministries and agencies

5) Academia: Total services for educational and research institutions

For these net businesses, on April 21st a new organization, Information & Network Services, will be established under the direct control of President Shoyama. Information & Network Services will work with the Electric Service & Business Development Division, which was established in February2000, as well as with internal and third-party service providers and content holders to promote the net business of the Hitachi Group. For business platform operations, a new company, called Hitachi netBusiness, Ltd. will be established, also on April 21st. Hitachi netBusiness, Ltd. will provide a full range of the type of services required for business platforms, including operation of Internet data centers, proxy operation, collection of fees and charges, customer management, certification and encryption. Working together, the aim of Hitachi's business platform operations and solutions business is to be the net society's best solutions partner able to create Internet-based value networks that surpass industry divisions and borders. By 2003, this is expected to increase annual net-related sales by the Hitachi Group, which now stand at 180 billion yen, to 900 billion yen.

1. Business platform operations
Hitachi netBusiness, Ltd. will act as a one-stop service provider of secure, competitive business platforms. By combining the expertise obtained from operating the TWX-21 inter-company electronic commerce service, Japan's largest such service, with the MULTI2 encoding system used for digital satellite broadcasting in Japan and technologies for ensuring the security of Internet-based transactions, such as the "Internet/Marks" digital watermark technology, which has been approved by the Japan Chamber of Commerce and Industry, Hitachi is able to provide service providers, content holders and other customers with the business platform management and operating know-how required to quickly get their net business up and running. Internet data centers, proxy operation, provision of middleware, collection of fees and charges, customer management, security services such as certification and encryption and Internet banking and debit card settlement centers are specific examples of service areas in which Hitachi will provide business platforms for promoting net businesses. When the focus is on expanding from the B-to-B to the B-to- market, adapting net-based transactions to a real-world distribution network can be a major challenge. Hitachi is well placed to help customers with this transition by utilizing its net-based value chain, nation-wide network of ten consumer products sales companies and 6,800 Hitachi stores, 963 service and maintenance bases, and distribution/transportation network consisting of Hitachi Transport System, Ltd.

2. Market-specific solutions
The Hitachi Group has a very extensive customer base that includes Hitachi, Ltd.'s 35,000 corporate customers and Hitachi Credit Corporation's 80,000 corporate customers and 1.87 million private customers. Hitachi will use these resources, together with its advanced technological capabilities and expertise, to develop solutions for each industry or business model in the market categories of 1) Business, 2) Industry, 3) Consumer, 4) Government, 5) Academia.

1) Business: Internet-based solutions business and ASP business
- Solutions business (SI) The "Cyberfront" solutions structure will be focussed more closely on the Internet. Internet technology will be used to provide a full range of solution proposals, consulting services and system implementation and management services to enable customers, regardless of industry, business model or size, to develop their Internet business. - ASP business
ASP services that provide open, secure applications ranging from business consulting to the provision and operation of ERP products and other such packages will be developed in various areas, starting with the industrial, financial, distribution and public utility sectors. In addition to ASP services providing SAP's R/3, Oracle Applications and other such ERP products, ApinetLand, will be established, to develop and market ASP services by Hitachi Group companies and outside sales and other business partners for medium-sized and smaller companies. ApinetLand will start service operations in June. Hitachi is also initiating a service that uses the Internet to provide access to the company's patents and design expertise. Moreover, TWX-21, which is already Japan's largest inter-company electronic commerce service, with 3,200 corporate members, is being given a larger range of business applications and an expanded overseas presence. Hitachi is also expanding Internet sales of PCs and solutions for enterprises and the SOHO market.

3) Consumer:Personalized Net services to enrich individual
- Promoting e-Service Community for consumers In this area, the aim is to provide services that help to enrich the individual lifestyles of consumers by using personalized electronic services. For net-business entrepreneurs with consumer-oriented ideas, Hitachi's e-Service Community can provide these entrepreneurs with significant opportunity to immediately get their service up or smoothly integrate with various type of electronic business through Hitachi's incubation programs and sales channel promotions with a business platform. The e-Service Community employs a concept Hitachi calls lifestyle portals, which can be personalized to create a rich variety of service scenarios. In-house and third-party service providers and content holders are using this portal concept to develop online community services and services tailored to match the needs of various consumer lifestyles, including those of corporate employees. One example is a net-based cafeteria-style benefit plan for corporate employees, who can use various welfare services like housing, pension operations and leisure etc. by their choice, with corporate supports by fare points management. A lifestyle support business is being started that utilizes Hitachi's nation-wide network of consumer product outlets, and other startups including a venture capital and an incubation activities relating to intellectual property and asset management.

- Digital-broadcasting compatible EC New technology for digital data broad casting allows consumers to enjoy interactive TV such as TV shopping, home banking, and ticketing. New internet appliances give consumers a chance to get digital contents such as music and maps on demand under the mobile environment. Hitachi is going to offer such new services in partnership with third- parties such as Digital Cast International Limited.

4) Government: Electronic government solutions based on advanced technology
Hitachi is promoting a broad spectrum of electronic government solutions that provide national and local agencies and organizations with total support that ranges from consultation services to the implementation of systems and outsourcing. Hitachi is using its extensive systems expertise and the security provided by its advanced encryption, certification and settlement system technology to provide administrative services and services relating to the disclosure of information and the filing of online applications over networks linking government, business and consumers. On March 31, in Tokyo, Hitachi opened "CyberGovernment Square," Japan's first showroom for electronic government products.

5) Academia: Portal services and remote educational systems for academic institutions
- Portal services May will see the start of the membership-based "Hitachi Academic Network Service. This will be used to set up a network-based "supply chain" between Hitachi's knowledge base, comprising more than 1,000 research laboratory personnel with PhDs, and academic institutions. The aim is to expand opportunities to participate in joint research partnerships and projects involving industry, academic institutions and government. A further aim is to increase the outsourcing of research laboratory knowledge resources.

- Solutions business
Hitachi is promoting remote educational system services for universities and other academic institutions. For this, Hitachi is developing remote educational systems that use MPEG-4 data editing systems and XML technology to provide real-time interactivity. Looking to the future, further efforts in this area will include support services for an Internet-based "Citizen's University."

3. Net business promotion system
To promote net businesses, on April 21st Information & Network Services will be established as an entity under the direct control of President Shoyama. The Information & Network Services unit will work with e-Service & Business Development, which was established in February, and with in-house and third-party service providers and content holders to promote the net business of the Hitachi Group. Business platform business strategies will be handled by a company called Hitachi netBusiness, Ltd. that is to be established, also on April 21st. In addition to providing the type of Internet data center services that form the backbone of a net business, Hitachi netBusiness, Ltd. will act as a one-stop provider of platforms for all businesses, encompassing upstream consulting and development support services, middleware products required for system operation, basic services relating to the collection of fees and charges, customer management, certification and encryption technology, end-user interface services in the form of electronic mail and call center services, and proxy operation services.

Outline of Hitachi netBusiness, Ltd. Capital:
400 million/

President:
Masanori Kataoka

Investment:
30 billion (in total over the coming 4 years)

Location:
World Commerce Centre Building, 31F 2-4-1 Hamamatutyou Minatoku, Tokyo Japan 105-6104

Trademarks and product names

SAP and names of SAP products and/or services appearing herein are trademarks or registered trademarks of SAP AG.

Other names of products and/or companies appearing herein are trademarks of the respective owners

For Media/Investor Inquiries, please contact:

Gerard F. Corbett
Hitachi America, Ltd.
Vice President
Corp. Communications Group
Tel:(650) 244-7900
Fax: (650) 244-7920
gerard.corbett@hal.hitachi.com

Takeshi Okamoto
Hitachi, Ltd., Tokyo
03-3258-2054
okamoto@cm.head.hitachi.co.jp

Masanao Sato
Hitachi, Ltd
03-3258-2056
syoujiki@cm.head.hitachi.co.jp

Terry Kubo
Hitachi America, Ltd.
Tel: (650) 244-7902
Tatsuya.kubo@hal.hitachi.com

For all other inquiries please call:
1-800-HITACHI

If you have any questions specifically about Investor Relations in the United States, please contact our Investor Relations Department at investor.info@hal.hitachi.com