Square Enix 2005 Annual Report Download - page 6

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The Impact of Ubiquitous Networking
When I say “changes of the industrial structure,”
I mean the fundamental changes that ubiquitous
networking will bring.
The chart below shows the performances of various
terminals. (To simplify, we used the clock speed of
CPUs as a proxy to the performance of the terminal).
This represents the supply curve.
The vertical axis uses a logarithmic scale, so you can
really see how much progress had been made over the
past decade or so. Also, it is clear that game consoles
have been leading the performance of terminals since
the late 1990s, especially when taking market penetration
into account. This leadership gave the video game
industry the leverage to make advances in entertainment.
The more important point, however, is what is
happening to the customers’ demand curve.
All new game consoles, including portable ones, are
now equipped with networking connectivity. Personal
computers (PCs), personal data assistants (PDAs) and
even car navigation systems can now connect to the
Internet. The various terminals that have evolved
independently now have common functions as
network terminals.
The processing power of each terminal may already
be “good enough” since they offer new value to
customers by becoming a new window to the Internet.
In other words, the customers’ demand curve is not
rising as much as the terminal capability supply curve,
and it may not rise any further.
The remaining issue is communication infrastructure.
The chart on page 5 shows the home broadband
penetration rate in Japan. Japan now has one of the
best Internet infrastructures in the world, overcoming
its slow start in the 1990s.
Communication is borderless, and communication
environments in all countries are synergizing and
advancing irreversibly. In the near future, I believe
communication infrastructures will not be an issue
in most countries.
4SQUARE ENIX CO., LTD.
Progress of Terminals —Taking CPU Power as an Example—
Next Generation Consoles
Created by SQUARE ENIX from various sources
Low
High
Processor Speed
Mobile Phone
Handheld Game Console
Video Game Console
92 93 94 95 96 97 98 99 00 01 02 03 04 05
PS
N64
PS2
GC
Xbox
Arcade Game
Set Top Box
PC (Desktop)
Car Navigation System