Site: Digital Vision Laboratories (DVL)
Place Canada, 3-37, Akasaka
Tokyo 107, Japan
Date Visited: 16 October 1998
WTEC Attendees : P.O'Neill-Brown, G. Gamota, I. Feller, P. Herer
Digital Vision Laboratories (DVL) is set up as a limited stock holding company, as are the other businesses established by the Japan Key Technology Center. The shareholders of DVL are Japan Key Technology Center, ASCIII Corporation, Sony Corporation, NEC Corporation, Matsushita Electric Industrial Co., Ltd., Toshiba Corporation, Hitachi, Ltd. and Fujitsu, Ltd. The planned period of test research is from March 1995 to March 2000. Support from JKTC will cease at the end of the five year project period. At the end of the project period, at the member companies' own expense, DVL will remain in business to manage the licenses that it will grant. DVL will license its technologies to its member firms, and as required under the terms of the JKTC grant, to any other party wishing to license the technologies. Member firms do not have first refusal rights-DVL can license its technologies to anyone in any order.
DVL's goal is to establish an international digital standard for data manipulation, including storage, retrieval and interchange across electronic devices. DVL is said to have competitors who are seeking to have their protocols for these procedures adopted as digital standards.
The operating cost of DVL for the five-year period is ¥6.1 billion (~$61 million), with ¥4.27 billion (~$42.7 million) from the Japan Key Technology Center. The staff members are sent to DVL by the member companies, and after the project is completed, they will return to their host organizations. DVL has a steering and a technical committee, upon which a representative from JKTC and MITI sit. DVL has applied for 150 patents in the United States and Japan, of which 40-50 are U.S. applications.
Interviewees implied that the sponsor firms joined together to form DVL and then approached MITI about support for the new firm. MITI then directed them to JKTC.
DVL is developing software specifications and protocols to enable efficient data handling and the sharing of data across a variety of electronic devices. These software specifications and protocols are as follows:
JKTC reviewed DVL's activities at the end of the company's third year of operation. DVL prepared a 100 page report on its technical work, patents, and papers and provided demonstrations of its technology to an evaluation committee. The technical reviews were conducted by university professors. DVL reports that JKTC's committee was favorably impressed by its accomplishments. DVL also submitted a business plan for an independent, third party review. The review comments were also favorable on the business plan; accordingly, JKTC gave its permission for DVL to proceed with its research and business activities.
DVL's shareholders can be grouped into four categories:
This combination of stakeholders creates an interesting and important dynamic. DVL managers described the company as somewhat of a novelty within JKTC, as the one software firm in a program essentially designed to support the development of key hardware technologies. However, while DVL may appear to be a novelty in the JKTC program, if viewed in the context of how the Japanese historically have approached software development, DVL turns out to be not so novel after all.
The panel was told that the member firms of DVL came together because each expected to achieve something that they could not develop on their own. In particular, the objective was to ensure that the software specifications being designed would be supported in the hardware. This has been a classic approach to Japanese software development.
The fact that hardware and software companies are cooperating with consumer electronic device companies to develop software specifications for data sharing and handling across these devices means that the software specifications will have strong support on the devices intended for them to run on. NEC, Toshiba, Hitachi and Fujitsu are what Smith and Cusumano term "classic software producers" (Smith and Cusumano n.d.). Classic producers are also the makers of the hardware and link development of the software they create intimately with the hardware intended for it to run on. For the classic producers, the support of hardware is a significant factor driving the content and schedule of a release. This release structure and strategy policy of the "classic software producers" is contrasted with that of the "PC software developers," who are not as strongly driven by issues of hardware support.
No similar effort in the United States is conceived of in this way. There are no instances of hardware manufacturers and software developers getting together, forming a new company, receiving government funding, and working together to develop digital standards.
In addition to developing digital standards, DVL is creating applications that implement the specifications and protocols the company is developing. For instance, MMF and MMP are implemented in an e-commerce system being deployed on InfoSeek Japan. Clearly, the deployment of this e-commerce system is more than a foray into the buying and selling of goods. It is also, and perhaps even more importantly, a proving ground for the partner companies to test the viability of the specifications and protocols they are developing.
The vision is that after the five-year period, what will be created are Japanese, and perhaps even international, standards that will enable the development of new technologies designed to run across a variety of media, including electronic commerce, education, and gaming applications.
DVL is working with JKTC to try to eliminate some of the administrative barriers that it faces as a software firm. DVL noted that there is a "linear" process in hardware development, in which a firm progresses from R&D to manufacturing, and then to marketing its products. By way of contrast, the software development and release life cycle is concurrent: R&D, manufacturing and marketing need to all occur at once. JKTC does not provide funds for marketing support. DVL is working with JKTC to try to see that this policy is changed.
The environment created by this limited stock holding company motivates and maintains the interest of researchers. The researchers WTEC panelists interviewed said that they enjoy the work they are doing at DVL more than the work they had been doing at their home companies. Their enthusiasm is most likely due to the fact that they are directly involved in the creation of the supporting mechanisms that will enable the growth and development of cutting-edge technologies, and they have their eyes directed towards the day when they can create their own applications based on these standards back in their own home labs.
Unlike the keiretsu model in which shareholders in a firm are held together by a bank, in the case of DVL the shareholders are tied together through government funding. However, there is a key distinction between the Japanese government funding DVL and a bank as a source of funding. The Japanese government has set itself up as the major shareholder in all of the companies funded by the Japan Key Technology Center in an attempt to ensure that the fruits of the research and development will be distributed on a wide basis. Thus, the role that the government has carved out for itself is to (a) support standards development and (b) ensure that the standards will be made available to any Japanese company that plans to support or develop products of this sort. A bank does not have and would not take on such a mission.
As the Japanese look into the crystal ball and see their digital future, DVL pops up as a vivid image. It is clear that the JKTC policy objective here is to see to it that member companies of DVL are not the only beneficiaries of this project, but Japanese industry at large as well as the consumer/citizen. The vision is surely that DVL's contribution to the "digital scene" will be to enable any company to develop new products and services based on the protocols and specifications it establishes.
DVL company brochure.
Handouts from corporate briefing and technical overview.
Maegawa, H., T. Saito and T. Chiba. n.d. Overview of the DVL Global Computation Platform.
Making communityware an actuality through distributed platform technology. 1998. In Nikkei Electronics 10.5 (no. 727): 171-178. In Japanese.
Sakata, T., H. Tada and T. Ohtake. 1997. Metadata mediation: representation and protocol. Sixth International World Wide Web Conference. April. Santa Clara, CA.
Smith, S. A. and M. A. Cusumano. n.d. Beyond the Software Factory: a Comparison of "Classic" and PC Software Developers. MITJP 94-04. The MIT Japan Program Science, Technology, Management, Center for International Studies. Cambridge: Massachusetts Institute of Technology.
The 6th Medium: towards the establishment of the development of software base technology-aiming at fusion of the Internet and DTV. 1998. In: Nikkei Electronics 8.24 (no. 724): 127-159. In Japanese.