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- 00:59:02.2 Thank you. I have two questions. First on slides 36 and 37, you estimate that the market for services will be around ¥20 billion in FY2020. In response to an earlier question, you indicated that you expected that you would only start to see revenue contributions from services from around FY2020. Is there not a risk that your competitors could take the lead in the data analytics market if they roll out services before you? Your share of the BPM market is 50% but are you at risk of being a lagging player in data services? You have highlighted the development of a BPM + ECG device platform. If you were able to roll out a platform even 1 year earlier, it seems to me that you would be able to develop a significant advantage purely through the lead you would have in accumulated data. Could you consider buying a start-up to get a head start? Could you be more aggressive in hiring human resources? Aren’t there things that you could do to accelerate your entry into this business? How are you thinking about these issue? Are there things you can share with us now? I apologize for the very broad and open-ended question. This is my first question.
- 01:00:17.6 (Ogino) First of all, having accumulated data is very important for a data service. We are already selling devices that can collect such data on a global basis. The key here is to ensure that our devices are being used as the de facto standard for measurement accuracy in academic studies, as I touched upon earlier. Fortunately, we are already in this position. In other words, if a study uses a device with different standards of accuracy, it would raise questions about the validity of the study itself. For us, selling equipment is very important, but having major hospitals accumulate data generated by our equipment will ensure that we are well positioned going forward.
On your question about whether accelerating a service launch would make us more competitive, this is something we are constantly looking at. That said, as discussed earlier, there are constraints in the form of the Pharmaceutical Affairs Law in Japan or the FDA in the US. Given the regulatory framework, there is probably greater potential to accelerate our efforts in the US. I would certainly agree that accelerated a launch is advantageous from a competitive perspective.
- 01:01:47.9 Thank you. My second question relates to slide 8. You have been consistently updating us on your revenue progress for the four focus industries. You have highlighted automotive and digital, including semiconductors, as strong but can you tell me if you are also seeing growth in Food & Beverages or Infrastructure? If you are seeing growth in these areas, is that because of a rising adoption of automation? Or an increase in OMRON’s market share? Or is it simply that the expanding middle class has led to an increase in food processing plants? Given that you have talked about automotive and digital, could you talk a little about what is going on with demand in the other two focus industries? Could you also talk about IAB sales approach in these industries and progress you have made in the first nine months of FY2017?
- 01:02:44.6 First of all, the reason we have selected these 4 industries is related to the differences in volatility and pace of growth for each. All four are driven by different factors. Conceptually, we are aiming to stabilize our earnings performance through the diversification achieved by targeting these 4 industries. This is the background to why we have selected these 4 industries.
Within the four industries, the growth in the Food & Beverage industry is relatively less volatile (and therefore more stable) than the other industries. As an example of our initiatives in this area, we are focused on food packaging equipment players in Europe as mainstay customers. These players are increasingly adopting automation and are struggling with labor shortages. In particular, the global players are keen to automate. In response, we have appointed a point person in Europe to spearhead our efforts on a global basis, targeting the key global players. This is why Food & Beverage and Cosmetics are important for growing our European business. In terms of our customers’ actual manufacturing bases, many are located in Asia or China, which has also supported growth. This is an industry that generates stable and solid growth.
For Infrastructure, the key focus is China. There is a major central government initiative to build out an underground infrastructure network for utilities and lifeline services. Our controllers and sensors are being used in these projects. These projects require huge volumes of sensors. Another major area is elevator controllers, which is driven by urban development. China is the key focus here and we benefit from government infrastructure projects.
The Infrastructure business is therefore also growing but if you are simply comparing growth rates, we are seeing the highest growth rate in digital, followed by automotive. Our aim with the 4 focus industries is to try to combine the different rates of growth and volatility in such a way to ensure we achieve consistent and steady growth for IAB over time.
- 01:05:26.1 Thank you.
- 01:05:28.9 Thank you. We will now close the Q&A session. We would be grateful if you can take the time to complete our feedback sheet.
This concludes the results briefing. Thank you for your participation today.
- 01:05:43.2 (Nitto) Thank you.