Justsystem, Microsoft ready to slug it out over Kanji software

by Reiji Yoshida

Staff writer

It’s time for a showdown.

The final round of a Japanese word processor war may be beginning, as Microsoft Corp. releases a new version March 12 of its Japanese Word series, Word 98, accompanied with its latest kana-kanji conversion engine MS-IME 98.

Justsystem Corp., virtually Japan’s only major personal computer software maker, has long retained its top position with its ATOK kana-kanji conversion engine and the Ichitaro word processor series, despite recent challenges from Microsoft. For Japanese, whose writing system is among the most complicated in the world, an efficient kana-kanji conversion engine is essential for computer users.

In addition to the Western alphabet, Japanese programs must accommodate the hiragana and katakana writing systems, each consisting of 46 characters, and thousands of kanji. To input kanji, computer users must first type characters in kana and then convert them into kanji by choosing from a list provided by the conversion engine.

Justsystem has led Microsoft in this area with ATOK, touted as the best and most efficient conversion engine, based on the company’s long history of creating Japanese-language software. But now the Tokushima-based company appears to be losing ground in the Japanese market to the world’s most powerful software maker, whose Office package combines a word processor, spreadsheet and other useful business programs.

Justsystem is expected to operate in the red this year for the first time since its founding in 1981. In January, Justsystem slashed business performance forecasts for fiscal 1997 to March 31 to show unconsolidated pretax losses of 4.35 billion yen, compared to previously predicted profits of 3.06 billion yen.

What went wrong with Justsystem? Industry analysts point to a mistake in marketing strategy. “(Justsystem) made development and personnel investments into (its own) products that don’t sell well. It’s a marketing mistake,” said Tsuyoshi Kuwabara, an analyst at the Ichiyoshi Securities Research Institute in Tokyo.

Many industry analysts point out that Justsystem has been trying to develop too many applications, each competing with Microsoft and other powerful competitors. Justsystem has developed from scratch its own spreadsheet, database, graphics software and even a Web browser. In addition, to the surprise of many observers, Justsystem waged a direct war against Microsoft’s Office series software by releasing its own suite in September.

Microsoft has held a solid advantage in the office software market, as its package contains popular software such as the spreadsheet program Excel and presentation graphics program PowerPoint, both of which are de facto standards in the industry. In addition to Ichitaro with ATOK, Justsystem’s office suite contains its own spreadsheet program Sanshiro and database software Goro — both much less popular than Microsoft’s. Justsystem originally projected sales of 1.8 million office suites by the end of March, but lagging sales forced the company to lower its prediction to 800,000 units in January.

As a result, the company has hammered out a restructuring plan that will reduce employees from 1,700 to 1,000 by the end of March 1999 and close offices in Okayama and Kanazawa. Justsystem spokesman Ryuhei Tsuyama blamed an unexpected slowdown throughout Japan’s PC market for the poor performance of its office suite.

Tsuyama, however, also admitted that the company may no longer be able to compete directly with Microsoft in the office software market. “We don’t intend to continue producing the exact same kind of office suite as that of Microsoft,” he said. He said Justsystem may modify Ichitaro in the future, making it easier to use with Microsoft’s other applications, such as Excel and Access. Tsuyama said the company may introduce the new Ichitaro with the ATOK series “not far away” from the release date of Japanese Windows 98, which is expected this summer.

Microsoft, meanwhile, apparently has strong motivation to beat Justsystem’s Ichitaro with ATOK in the Japanese market. The U.S. software giant has released its Word series in 27 languages so far, including English, Spanish, Portuguese, French, German, Russian, Chinese, Korean, Arabic and Hebrew. Microsoft officials say Word has effectively captured the top share in all major markets except for Japan and South Korea, while Japan is the second-largest market for the software giant after the United States.

Microsoft has been aggressively concentrating its resources on Word and IME series development, brushing up its kana-kanji converter and refining its word processor. “In the past, (the Word series) was often called a ‘gaijin’ word processor, ” said Osamu Adachi, senior manager in charge of desktop document processing applications at Microsoft’s Far East Product Development. “But now we think IME 98 is in no way inferior to ATOK in terms of conversion efficiency,” he said.

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