Took a trip this week to Tokyo with some Yankee Group colleagues to attend a global industry analyst summit and iEXPO hosted by NEC.  I made time for the journey because I didn’t know them very well and wanted a better understanding of their experience playing in one of the most Anywhere savvy places in the world, Japan, and gain understanding of their plans to expand into other regions of the world.  After two intense days of executive meetings, lab tours, demos, and product pitches [and a belly full of raw fish], I am left with some distinct impressions about our host.

1. NEC is not [yet] a global company despite 46B in 2007 revenues and a formidable NGN portfolio with all the right pieces to compete with the Alcatel-Lucent, Ericsson, and NSNs of the world.  In fact, 75% of their revenues are generated in Japan despite being in the comms business for over 100 years.

2. They are far too product focused and are challenged in marketing their solutions outside of Japan [as admitted by the president of NEC, Mr. Yano in his keynote address]

3.  This company has a fascinatingly diverse product portfolio that includes satelllite/space technology, 3D digital video display systems, biometrics security systems, a cute talking robot, face recognition solutions applied to areas like security and digital signage/advertising impressions, and a full suite of carrier-class network hardware and software solutions [including their recent Netcracker acquistion], and a full suite of IT solutions including PCs, servers, storage, etc. 

4. I was impressed with their corporate values with a strong focus on reducing the environmental impact of what they do.  Firmly stiched into the corporate DNA, each of the business units is held accountable for their impact on the environment and it is refreshing to see them take their social responsibilites so seriously, from the top all the way down. 

Whilst an argument can be made for spreading ones competencies too thin, NEC has been able to make it work and find themselves diversified enough to withstand some tough times in the telco space.  They pulled all of their gear together for an NEC only tradeshow called iEXPO that we toured.  It was amazing to see all of the innovations this company is delivering in one place, they filled an entire Expo Hall the size of the Boston Convention Center in the heart of Tokyo.  Amazing.  A quick aside, they showed us a 3D preview of a film called The Sky Crawlers, a Japanese anime film seemingly about fighter pilots in a variety of breathtaking dogfights, I’ve never seen such realistic 3D animation, can’t wait to see it….

In terms of Anywhere, they are the driving force behind connecting people and things in Japan.  NEC is the dominant supplier in places like NTT, NTT Docomo, Softbank, and KDDI…some of the most bleeding edge service providers in the world.  Of a population of 120M, Japan has fixed broadband penetration of 55% and 100% mobile penetration [80% connected via 3G].  Taking a walk through a McDonalds [yeah, unfortunately I went...I really couldn't take another sushi meal] and on the subway…..nearly every person was connected to a laptop, portable gamer, and mobiles happily texting, emailing, playing, talking and working the night away. 

What does it all mean?  Its tough to say whether their success in ubiquitously connecting Japan will translate to other Anywhere markets.  They want to export their success but are up against many other well known, entrenched competitors at a time where supporting a migration from legacy networks [where NEC is weaker] is presently just as important as WiMAX/LTE/IMS/SDP skills outside of Japan.  Ensuring superior quality is an issue they have dealt with in the past [I couldn't help but notice that the face recognition software I encountered identified me as a 50 year old woman ].  But they have a shot and they are poised to take it, and I wouldn’t bet against them.