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Special Interview Transforming Advanced Japanese Technology, such as FeliCa and QR Code, into International Standards

International standards and technical standards play an extremely important role in the commercialization of technology and the development of new products that offer enhanced added value for users. In addition to the development of technology, Sony has also focused its efforts on standardization initiatives. This policy reflects the company's determination to provide enhanced benefits to consumers by effectively incorporating the added value created by technology into a wide range of products and services. Setsuo Harada, who heads Sony's Standards and Partnership Department, has earned widespread recognition for his contributions to the development of international standards based on advanced Japanese technology, including technology for contactless IC cards, such as FeliCa, and the QR Code. In October 2008, he received the 2008 Prime Minister's Award for the Industrial Standardization Project.

International Standards Vital to Survival in Domestic and Overseas Markets

  • Setsuo Harada

In the past, many Japanese companies, including Sony, excelled in the strategy known as "de facto standardization." Their approach was to create products far more attractive than those of their competitors, enabling them to win such overwhelming market share that their products gained recognition as unofficial standards. However, it is becoming increasingly apparent in recent years that this no longer ensures survival in either domestic or overseas markets. The turning point came in 1995, when Japan signed the Agreement on Technical Barriers to Trade (the TBT Agreement). Adopted by the World Trade Organization (WTO), the TBT Agreement requires that existing international standards be adopted as national standards wherever appropriate. Its purpose is to prevent the evaluation procedures used to ensure compliance in individual countries from becoming barriers to global trade caused by the proliferation of different standards. Under the Agreement on Government Procurement, which was also introduced by the WTO, international standards must also be applied to industrial products procured by government agencies. These changes ensured that companies ignoring international standards could no longer gain large shares of international or even domestic markets.


Early Focus on de Jure Standards

Harada first became involved in Sony's international standardization activities in 1991. In 1992, he established the Technology Standards Committee with the support and encouragement of then Deputy President Ken Iwaki. Standardization organizations were subsequently formed in the United States in 1992 and in Europe in 1993. Sony now had an international standardization structure spanning Japan, North America and Europe.

"No other company in the world had an organization like this," recalls Harada. At that time, most companies in Japan and throughout the world relied on de facto standards to attain market share. However, Harada had already concluded that de facto standards would not guarantee survival in the 21st century and was among the first to recognize the importance of international de jure standards established by international standardization organizations. He established an internal organization to coordinate Sony's response and began to visit departments within Sony to raise awareness of the importance of international standards. Harada's vision of the 21st century steadily gained acceptance throughout the Sony.

Establishing FeliCa Technology as an International Standard for
Close-near Field Communications---Adoption by East Japan Railway

One of the most notable examples of Sony's international standardization efforts relates to the Near Field Communication (NFC) technology that it developed in collaboration with Philips Semiconductor (now NXP Semiconductors). The FeliCa contactless IC card technology, which is used in passenger ticketing systems, including East Japan Railway's Suica system, and e-money systems, such as Edy, is a subset of NFC technology. The use of contactless IC cards had been increasing gradually until the technology was adopted by East Japan Railway for its Suica system a few years ago. Since then the pace of adoption has been extremely rapid. FeliCa technology is currently used not only in the Suica and Edy systems, but in a variety of other contactless IC card applications. However, this success would not have been possible if Sony had not been granted an international standard for its technology.

Because of the WTO Agreement on Government Procurement, FeliCa needed to be recognized as an international standard before East Japan Railway could adopt it for its contactless IC card system. Unfortunately, Sony was forced to abandon its attempt to register FeliCa as an international standard for contactless IC cards, in part because of opposition from European companies. Harada refused to give up, however, and instead tried another approach. He decided to seek approval for FeliCa as a standard not for contactless IC cards, but for Near Field Communication (NFC) technology. This time he was successful, and the way was open for East Japan Railway to adopt FeliCa. Harada's determination to gain approval for FeliCa as an international standard was driven by his awareness that adoption by East Japan Railway would be more significant than its adoption by an ordinary company.

Our Ideal: Succeeding in terms of both de Facto and de Jure Standards

  • Setsuo Harada

"Once East Japan Railway had adopted FeliCa, we could expect other companies in the JR network, including Central Japan Railway and West Japan Railway, to adopt it as well. Because of its capital tie-up with East Japan Railway, the Teito Rapid Transit Authority (now Tokyo Metro Co., Ltd.), could also be expected to adopt FeliCa, along with the private railway companies whose tracks are linked directly to Tokyo's subway system. And if the private railways adopt the system, they are also likely to use it for their other operations, including buses and taxis. In other words, adoption by East Japan Railway was the key to adoption across an expanding range of organizations." Harada's concept literally became reality, and the use of contactless IC cards based on FeliCa technology became commonplace almost overnight.

"The easiest way to win the market is to become the de facto standard. In the initial stages of marketing, you need to check for compliance with the TBT Agreement and the Agreement on Government Procurement. If there are no problems, you can go ahead based on the de facto standard. But if there is even the slightest chance of infringement, you need to take the de jure route to success. The ideal pattern is to win de facto standard status while also obtaining a de jure standard."

Harada's approach with Sony's NFC technology is a perfect example of this ideal combination of de facto and de jure standards. It is important to identify the networks that have formed in the market, and to consider what kinds of new business models can be built around those networks. Harada emphasizes the importance of initiatives based on broad perspectives, including the development of the technologies needed to implement each business model, and ensuring Sony remains victorious in attaining international standards.


We Succeeded Because "We are Sony"

Standardization success requires negotiations not only with multiple companies, but also with standardization and governmental agencies. "There are always major hurdles along the way," says Harada. However, he adds that Sony's status was the key to success. "In the future, international standardization will be an essential part of our efforts to gain widespread acceptance of our technologies and create a more convenient world for consumers. Sony is one of the few companies that have succeeded not only in the development of new technologies, but also in the establishment of international standards based on those technologies. I have been successful on this front because Sony has built an effective organization capable of supporting our efforts to win international standards. Standardization is very satisfying work. I want to help build a strong foundation not only for Sony technology, but also for the Japanese industry."


What is International Standardization?
Four organizations are involved in international standardization. The International Electrotechnical Commission (IEC) formulates international standards in the electrical and electronic fields. Standards for other industrial sectors are established by the International Organization for Standardization (ISO). These two organizations have jointly established the ISO/IEC Joint Technical Committee 1 (JTC1), which formulates standards for information technology. The fourth organization is the International Telecommunication Union (ITU), which produces international standards, known as "recommendations," relating to telecommunications. National representatives participate in all of these organizations, and the international standards and recommendations they produce are the result of deliberations and voting among participating countries. There are some differences in the processes by which each organization formulates standards, but all employ methods similar to those used by the IEC, as shown in the chart below. International standards formulated by these international standardization organizations are known as "de jure" standards.
  • Flowchart for IEC Standardization Process


1 Nomination of project leader
2 Project draft prepared by project leader with assistance from experts
3 Submission of all comments
4 Collection of comments, compilation and discussion of comment book, recirculation on a separate CD if forwarding is required
5 Ballot if consensus is in doubt (At least 2/3 of votes needed for approval)
6 Preparation of final draft within four months
7 Immediate shift to issuance stage possible if there are no negative votes
8 No comments allowed with positive votes Comments on negative votes discussed during future reviews
Abbreviations
NP: New work item Proposal
WD: Working Draft
CD: Committee Draft
CDV: Committee Draft for Vote
FDIS: Final Draft International Standards
IS: International Standards
TC: Technical committee
SC: Subcommittee
SMB: Standardization Management Board
P-member: Participating membership
O-member: Observing membership

Reference
IEC Business Outline, 2008 Edition (IEC Activity Overview 2008)
See website of IEC Activities Promotion Committee of Japan



Setsuo Harada
Setsuo Harada
Standards and Partnership Department, Sony
Curriculum Vitae
1970 Joined Sony Service Corporation
1986 Transferred to Sony Corporation
1998 International Standards Manager, Technical
Support Center, Sony
2003 Standard Strategy GP Director, Standard &
Partnership Strategy Office, Sony
2007 Current position


Principal Achievements

Japanese Representative on IEC Standardization Management Board
Setsuo Harada has attained the status of international secretary of TC91, and subsequently served as the Japanese representative on the IEC Standardization Management Board (SMB) since 2005. He has helped ensure that Japanese views are represented. He has also made a major contribution to international standardization activities through his service in other capacities, including as international secretary of a technical committee (TC).

CJK-SITE (Japan-China-Korea Standardization Forum on Information Technology and Electronics)
Setsuo Harada lobbied the governments of Japan, China and South Korea, standardization organizations, industrial organizations and private sector companies and was instrumental in the establishment of a revolutionary international standardization promotion group based on participation at all levels from governments to private sector companies. The purpose of this initiative was to create a forum for cooperation on international standardization issues stemming from the problems over the standardization of China's WAPI wireless LAN standard. The Japan Electronics and Information Technology Industries Association (JEITA) is currently acting as secretariat for the Forum, which held its first general meeting in China in 2007. The second general meeting was held in South Korea in 2008. Companies are now able to use the Forum to resolve issues concerning international standardization in Japan, China and South Korea before they arise.

International Standardization of Near Field Communication (NFC)
Near field Communication (NFC) technology was developed collaboratively by Sony and Philips Semiconductors (now NXP Semiconductors). Sony was able to meet the requirements of the WTO Agreement on Government Procurement by bringing the technology to the market for use in East Japan Railway's Suica system under the NFC standard, instead of a standard covering contactless IC cards.

International Standardization of QR Code-Two-Dimensional Bar Code
The QR Code system was developed in Japan by Denso Corporation (now Denso-Wave). The derivative standard covering the use of QR Code on packaging for electronic parts was withdrawn from IEC TC91 (electronic mounting technology) and a Western standard was about to be applied. However, a renewed proposal for an international standard covering the QR Code system was successful. The QR Code system is currently used widely in Southeast Asia and has contributed to the rationalization of the Japanese electronic component industry.

International Standardization of Lead-free Solder
As international secretary, Setsuo Harada supported the establishment of an international standard for ternary lead-free solder, which was developed in Japan. In addition to global environmental benefits, this means that a low-cost solder produced by Japanese manufacturers can now be used in manufacturing.


Prime Minister's Award

This award was established to recognize contributions to the advancement of Japanese industry. Each year it is presented to one person in recognition of leadership and extremely meritorious achievements in the field of international standardization activities. It was established in 2007 as the highest award presented by the Ministry of Economy, Trade and Industry and complements the existing Minister of Economy, Trade and Industry Award (formerly the Minister of International Trade and Industry Award), which was introduced in 1953 as an industrial standardization award.

Explanation of technology




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