Omron 2005 Annual Report Download - page 30

The Business Development Group is engaged in the initial development of new busi-
nesses under a mandate to expand the platform of the Omron Group’s growth
domains. It also actively supports technological development and commercialization,
thereby contributing to the enhancement of the Group’s corporate value.
BUSINESS DEVELOPMENT GROUP AND OTHER BUSINESSES
Initial development of new businesses and businesses not covered by existing segments
REVIEW OF FISCAL 2004
In existing businesses, we expanded contents distribution
for cellular phones in the entertainment business and
increased sales in areas including modems and broadband
routers in the PC peripherals business. Accomplishments
in the exploration and fostering of businesses included
expanded sales of easy-to-install vehicle anti-theft systems
and the growing popularity of RFID tag systems*. Thanks
to these results of the Business Development Group and
the activities of businesses not covered by other seg-
ments, segment sales rose 9.4% year-on-year to ¥26.8
billion. Operating income, meanwhile, held at the previous
year’s level of ¥3.8 billion.
*RFID (Radio Frequency Identification) tag systems are anticipated as next-gener-
ation technology to replace bar codes, which can automatically take
simultaneous, multiple readings.
BUSINESS ENVIRONMENT AND KEY STRATEGY
•Exploration and fostering of new businesses are key
The existing businesses of the Business Development
Group, including the entertainment and PC peripherals
businesses, are strongly influenced by domestic consumer
trends, and thus they operate in an environment that does
not always imbue optimism. In response, we channel our
efforts to specific areas within these two businesses. In
the entertainment business, this includes content distribu-
tion for mobile phones and the prize business for commer-
cial game machines, as well as our existing business in
photo sticker machines. In the PC peripherals business, we
are promoting sales of telecommunications and power
supply equipment. Our activities in the exploration and fos-
tering of new businesses include the expansion of
easy-to-install vehicle anti-theft systems and full-scale busi-
ness development of RFID tag systems, which are
expected to experience rapid market growth.
MEASURES FOR ACCELERATING GROWTH
•Seeking an expansion of the RFID business
In March 2005, we commenced delivery of UHF-band RFID
tag systems (such as IC tags that can be read even at a dis-
tance of about three meters) to suppliers of the world’s
largest retailer Wal-Mart, representing a first among Japan-
ese manufacturers. Going forward, we plan to expand our
sphere of activity as an RFID vender by aggressively devel-
oping the North American market using our expertise
based on our extensive and proven business experience in
introducing RFID systems, combined with our exceptional
product technology skills. At the same time, we intend to
strengthen our market research in Europe and Asia and aim
for a global expansion of our RFID business in line with
trends in the distribution business and regulations for wire-
less communications in the countries concerned.
BUSINESS DEVELOPMENT GROUP
AND OTHER BUSINESSES RESULTS AND PLANS
Billions of yen
FY2005 Plan FY2004 Y o Y FY2003 FY2002
Net sales* 26.5 26.8 109.4% 24.5 34.7
Domestic 26.5 26.4 110.4% 24.0 32.8
Overseas 0 0.4 67.0% 0.5 1.9
North America 0 0(15.7%) 0.1 —
Europe 0 030.0% 0 —
Asia 0 00.0% 0 —
China 0 0.3 60.7% 0.4 1.6
Direct exports 0 0.1 873.3% 0 0.2
Operating income* 2.0 3.8 99.8% 3.8 4.5
Operating income margin* 7.5% 14.2% (1.3 pt.) 15.5% 12.9%
R&D expenses 9.0 10.6 107.8% 9.8 8.9
Depreciation and amortization 5.2 5.1 394.6% 1.3 1.9
Capital expenditures 5.2 5.8 61.1% 9.5 7.1
*Projections for FY2005 are based on an exchange rate of ¥100/US$ and ¥130/Euro.
*The sales figures given indicate sales to external customers and exclude intersegment transactions. Operating income indicates
income including internal income prior to the deduction of amounts such as intersegment transactions and headquarters
expenses that are not apportionable.
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KAZUNOBU AMAMIYA, Executive Officer,
Senior General Manager, Business Development Group
RFID Tag Systems
There are great expectations for RFID as a next-generation
technology to replace bar codes. RFID is gaining signifi-
cant attention in the logistics and distribution sectors.
Core Other Business Products