Advanced Media: Unveiling Japan's digital transformation landscape

We know that Japan shines when it comes to automated manufacturing, however, it is also known to be slow in adapting digital tools in private businesses when compared to daily life. For example, Japan was ranked 29^th in the IMD World Digital Competitive rankings in 2022. The recent digital agency tried to reverse this situation by offering incentives to private companies to adopt cloud solutions and IoT solutions into their operations. How would you rate Japan’s adoption of digital tools today, and why do you think it has been so slow in terms of adopting these tools recently?

There has been a lot of talk in Japan about digital transformation. Many people believe that digital transformation solely consists of implementing IT applications to increase productivity which is one of the issues in Japan. However, that is not actually the case as when using IT applications, people need to use a keyboard and a mouse. When entering Japanese into the computer it takes at least two keystrokes to enter one letter, and then it is fixed using the mouse. Therefore, it is two or three times less efficient than typing English words. As a result, using IT applications can lead to overtime work. That is why our speech recognition technology is key to improving productivity in Japan. We realized this and we have been developing our speech recognition technology for overcoming such problems over the years. Once our technology increases business efficiency, we can then increase the value of a company and in turn, increase the scale of a business.

In Japan, about 70% of companies outsource their IT infrastructure and systems, and with digital transformation in full swing right now, international companies such as IBM or Accenture, are investing a lot in the Japanese market. Why should companies embracing digital transformation choose Advanced Media over your international companies as a voice recognition partner, and why is your company regarded as a trusted partner when it comes to voice recognition systems?

Large companies such as Apple and Microsoft offer generic engines. To me, generic engines can be used for many things but cannot achieve anything. What we offer is a domain-specific engine. To develop such engines, we have to collect and accumulate a huge volume of data for learning. We now have more than 10 domain-specific engines with high accuracy.  With our products, we can overcome the low productivity issues facing Japanese businesses. One of our new products recently made its debut to help overcome these issues.

We have developed many great technologies over the years. However, we do not sell these technologies to anyone. Rather, we cater to the needs of our customers and develop solutions for businesses using our speech recognition technologies. We are focused on developing solutions that customers find useful and will continue to use consistently. The repeated use of our products drives us to develop more advanced solutions. Previously we were working on creating a keyboard revolution for PC users. In addition to that, we are currently focusing on a touch revolution for smartphones.  Since the advent of smartphones in the form of the iPhone in 2007, everyone has had a hard time flicking data input using their fingers. This has been the case for people around the world. That is why we have been working on a touch revolution for smartphones.

To be successful in that industry, we need to attract and capture users with a platform. To do this, we have developed both AmiVoice engines platform and AmiVoice solutions Platform which I believe are the key for us to beat GAFAM (Google, Apple, Facebook,  Amazon and Microsoft) and capture customers in every industry and every sector. It will allow us to cater to the different needs of each customer including sales partner and/or development partner by providing solutions of such as command and control and transcription service, for example. In that sense, we can see huge growth potential in three specific industries; the medical industry, local government municipalities and the call center industry.

We have launched a voice keyboard and voice mouse which improve the efficiency of PC-based work. However, the product that we are going to release is our speech board (SBX*) which is a voice activation app for smartphone or tablet. Currently, there is a free-of-charge app for consumers called UDTalk which was developed by our partner company and incorporates AmiVoice. Taking advantage of that success, we are going to launch our SBX for business users.

*SBX means domain-specific speech board with a flick-input-free data entry function for the medical field, the municipal field, etc..

It is very interesting to hear you speak about competing against the giants of the industry on a global scale. We know that in Japan you have the largest market share in terms of your solutions, but another interviewee from within your sector mentioned the fact that partnerships are sometimes key to reaching some international markets and locations that are considered difficult for Japanese corporations to reach. We know that for example, you have a business alliance with 3M Health Information System. How did this partnership help you reach new markets? What role do partnerships play in your business model, and are you currently looking for new overseas partners?

When I founded this company 25 years ago, our small business venture had to compete against the giants of the industry such as Fujitsu, IBM, Toshiba, and NEC. It was IBM who first developed speech recognition technology of statistical grammar-based dictation, and they had already created their own market in Japan. Our market share was initially quite small. However, our market share gradually grew over the past 25 years through a unique strategy of inventing customer needs by using domain-specific speech recognition engines, and today Fujitsu and NEC are partners of ours. To explain the reason for this growth further, I would like to tell you about a company named Multimodal Technologies which was acquired by 3M in 2018 and is now called 3M M*Modal.

The reason for my founding was to be able to meet members of the Carnegie Mellon University team in the United States, that has an impressive track record of winning the speech recognition at the competition sponsored by DARPA (Defense Advanced Research Projects Agency) two years in raw, 1996 and 1997. While working to spread the second AI at that time, I was concerned that it would be difficult to use a keyboard as a means of giving commands (prompts) to AI, but when I came into contact with their technology, it was enlightening. I told them about my dream of developing the speech recognition markets simultaneously in Japan and the United States, and I was able to establish our company AMI and they establish company ISI.  AMI was founded on the 10^th of December 1997 and ISI on November 1997.

Soon after the foundation of the company, we started the joint development of core technology with ISI. However, ISI was acquired by the Belgian AI giant Lernout & Hauspie in May 2000. However, that company was liquidated due to an accounting fraud scandal. The acquisition of ISI by Lernout & Hauspie was a crisis for my business as ISI was my partner. However, due to the bankruptcy protection procedures of Lernout & Hauspie, AMI and ISI members could establish the company Multimodal Technologies (MTL) by MBO using funds provided by AMI. The parts that we did not buy out became Nuance Communications which was acquired later by Microsoft. As a result of the MBO, ISI was fully absorbed into MTL.

MTL focuses its business on the US medical field and has increased its market capitalization 40 times in 10 years since 2001. As our largest shareholder, we sold out our shares of MTL in 2011 and used some of the proceeds to successfully lay the foundation for our current upward growth structure.

Are you seeking new foreign partnerships such as those you have spoken about to further enhance and grow your business?

One thing I would like to emphasize is that we provide the applications and services we develop with the convenience of our customers. It’s called JUI, which comes from initials as follows: Joyful, Useful and Indispensable. When we develop something as business, it is the customer who pays us, so we have to think about what the customer actually wants, rather than what we want to provide. Generally, there are two types: consumers and business users. Our applications and services are a little different from Joyful, so we don’t target consumers as customer. To do that, we need to offer it in a way that is useful to them. If they use the applications and services and find them useful, they’ll keep using it. As the result, the applications and services become indispensable to them. This concept is called JUI. MTL’s top readers also say that the JUI concept is effective in MTL’s growth myth.

What is difficult to see in this JUI concept is the temporal aspect. It takes a long time because we encourage our customers to start using our products, continue using them, and eventually become indispensable. We are different from other short-term companies that simply develop software and sell it.

It is very interesting to see that you have a lot of connections in the US. We also know that you are not only focused on Japan and that you have established a subsidiary in Thailand for example. We would like to learn more about your international expansion. Where would you like to continue your international expansion, and what type of strategy would you like to use to pursue this goal?

We are not very interested in expanding to the Western markets. M*Modal is focusing on the medical industry and that is why they have good synergy with 3M Health Care. However, we are only interested in Southeast Asia. Language is the key.

We founded our company in Thailand in 2008. It has a strong implication that it is a difficult challenge to Thai speech recognition for our speech recognition technology. But now, with the experience of business growth through JUI in Japan, we believe the time has come for us to try again and turn it into a business.

We also tried to expand our business to China in 2014, but we were not successful. We do some business in Taiwan; however, we do not do business in China. It is not the right market for us and can be considered as a competitor of ours when it comes to expanding our business in Southeast Asia.

Regarding the expansion of our business in Southeast Asia, there are three ways to do so. The first is to form an alliance with a large company in the region. The second is to acquire a Southeast Asian company or set up a joint venture, and the third is to partner with Japanese companies that have already made inroads into the Southeast Asian market.

When it comes to security, our products, particularly our minute-making products are very secure as our product is not on a cloud basis, but rather uses a native engine for making transcriptions. It has also adopted ChatGPT. That system can make not only the minutes but also a summary of the minutes in a very secure way running through AI engines. Toride city has announced that it will adopt this new product.