Letter to a friend from Jean Devos
My Dear Friend January 1, 2005. Letter to my Japanese friends, “The dawn of a new era” More than 10 years ago in Europe, the submarine system industry was structured around two suppliers: STC in the UK and Alcatel Submarcom in France. A handful of people had the vision that the world was then moving toward a three pole structure: Americas/Europe/Asia. I remember well being involved in explaining that the times of bloody “domestic” struggles which had torn the involved parties needed to be over. I can tell you it has been a long, painful route!! Because many people who agree with the concept of a single, strong European supplier had their view on how to reach such a result: By killing one of the two! Then the process started by an over competition in place of established “armed peace”, a kind of quasi respect for each other. Only few peoples are aware of the attempt to create a 50/50 join venture which was very close to happening, and would have been in my view the best
solution. But this requires a lot of wisdom and forward looking which was not there. STC was then owned by Northern Telecom and Submarcom by Alcatel. Both were formally in agreement with 50/50 solution, but both wanted the management of the combined unit! The solution came several years later through an acquisition process. My friend from Japan, I fully appreciate the difficulties of such a process; but it remains true that a single “Japanese supplier” is an absolute must. There is no model here. But I am quoting the European example to finger point the net result. For the last 10 years this single European supplier has been a success story! During the same period, the Japanese supplier industry has been torn in a whirlwind of struggles! Everyone has taken advantage of such situation, but you! The customers have taken the full benefit of it and your competitors have taken great advantages from your divisions. KDDI SCS was an attempt to create such a single supplier -- A good idea with the wrong implementation. My reading is that it finally failed due to the lack of consensus over the concept. SCS never managed to bring peace on board. The concept was not leaving sufficient room to the equipment suppliers, pushing
them down to a sub-contractor role instead of the one of a partner. From day one, Fujitsu was unable to accept it. NEC was in the same mood but was not in a position to refuse. And SCS did exacerbate the situation in pushing Mitsubishi into the arena. Today’s difficult period is the right time to get ready for the future. The market will not come back to the 19972000 peak; the coming years will see a 1B$ market and around 2010 we will see the start of the construction of a new global network (3B$/year). When there is a will, there is a way: My sense tells me that you should create JSS, “Japan Submarine Systems”, a joint sales and marketing team. Such a body would market and sell the “Japanese solution”, in a global way but on a project-by-project basis. This entity would be the sole interface with the customers, the entry door to Japan Inc. Sharing the activity between the various players and managing them would become a domestic issue. Your good future is at stake. Asia is going to be at the very centre of the submarine cable world, in the coming period. JSS should logically become the number one supplier, keeping at some distance your “Western” competitor Alcatel, and your “Eastern” competitor Tyco, both very strong. These competitions will require all of your attention, all of your capabilities. Do not get exhausted by domestic affairs!! If you do so, 2005 will be the dawn of a new era. There must surely be someone in Japan who can stand up and make this happen.
Jean Devos Jean Devos. Submarcom Consulting
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