Toshiba Launches $2.3B Internet Business Initiative

Japanese electronics giant Toshiba Corp. announced a $2.3 billion (US$) initiative Monday that will target electronic commerce and Internet content businesses.

The three-year investment will create i-Value Creation, a new arm of the company that is scheduled to debut on April 1st. The unit will focus on Internet-related services in the areas of finance, travel, video distribution, auctions, leisure and music — all to be offered through cellular telephones and other mobile devices.

To date, Toshiba has concentrated primarily on manufacturing. The new initiative aims to diversify the company’s efforts and to strengthen existing alliances with such industry powerhouses as America Online and Time Warner.

Although Toshiba’s entrance into the online commerce arena is decidedly late, the timing may be well-planned. In the spring of 2001, next-generation mobile phone service is expected to be introduced in Japan, allowing users to send and receive e-mail, hold videoconferences, shop at online stores, bank online, and conduct other e-commerce transactions.

Toshiba also plans to cut costs by having all of its procurement systems online by 2001.

Did Toshiba Wait Too Long?

Toshiba’s competition has some apparent advantages, in that other electronics companies have a lead in developing their Internet strategies. NEC, one of Toshiba’s chief competitors, made its major move online last fall, with the restructuring of its operation to combat declining revenues.

At that time, the company introduced BiGlobe, an ISP with more than three million subscribers. It also introduced NEC Solutions to focus on sales of Internet-related products to corporations and consumers.

Meanwhile, another competitor, Sony Corp., launched its own Web site to sell PCs and peripherals directly to consumers in Japan, while other competitors, including network solutions provider Fujitsu Ltd., continued to move ahead with their own strategies. At the same time, Toshiba suffered financial setbacks when it was alleged in a lawsuit that the company intentionally sold machines with faulty floppy disk controllers.

Although Toshiba admitted no liability in the case, it settled the case to avoid $8.8 billion in potential damages.

Aggressive New Initiative

Toshiba’s new Internet efforts will begin with a cooperative agreement with Matsui Securities, a large online stock trading concern in Japan.

Matsui’s customers will be able to access stock information through cell phones, portable computers and other devices. Toshiba will also invest in Hon-ya-san, one of Japan’s leading Internet bookstores.

As for its late arrival online, Toshiba may be banking on its worldwide name recognition as a key to its acceptance. The full impact of Toshiba’s newest venture remains to be seen, but the announcement caused its stock to jump 5.6 percent Monday, even though the market in Tokyo has been in decline.