CEO Comments

Kaoru Hayashi

Representative Director,
President Executive Officer and Group CEO,
Digital Garage, Inc.

CEO Comment “As Digital Garage Enters Fiscal Year Ending June 2011”

Yesterday, we announced our new business structure approved at the board meeting on June 30, 2010.

To further accelerate our social media incubation in this new fiscal year, while continuing business development focused on Twitter, which has already overcome its own chasm, we established
– The “Social Media Project Office”
– The “Technology Division”

The “Social Media Project Office” is aimed at deploying new overseas media that would follow Twitter in Japan. We assigned Mikihiro Yasuda, who transferred to as Director and COO, as new Senior Operating Officer of Digital Garage and Chief of the office with the aim of promoting the discovery, cultivation and marketing of Internet services to drive the Digital Garage Group’s next generation.

Initially, we are planning to start the fast-growing business SNS as early as this fall.

At the same time, we set up the new “Technology Division,” which integrates the scattered technology resources from the entire Digital Garage Group with a view to strengthening our technical capability and drive the marketing of Internet services. Under the division’s Director and Senior Operating Officer Mikihiro Yasuda and Deputy Director and Operating Officer Taro Watanabe, we will optimize the allocation of all of Digital Garage Group’s technical resources and transplant the latest technologies from overseas, etc., more strategically from now on.

The latest circumstances by segment are as follows.

Media Incubation business
The popularity of Twitter is still far from weakening, with the number of visitors from PCs hitting 9.88 million and outperforming mixi in April 2010, according to Nielsen Online.

Monetization is also thriving, with the advertising space on the PC Twitter site for July immediately sold out as soon as it went on sale. The advertisign space on the mobile version will soon be commercialized at last following the test marketing during the FIFA World Cup 2010.

Next, as for the “Tweetmanager Enterprise version,” the management tool currently used when a company carries out Twitter-based CRM, we are planning to start selling it as a full-fledged service from this month after test-marking it with slightly more than ten participants including Kao, Nippon Television Network, Family Mart and Mitsui Fudosan Residential. Not only have we already received inquiries from a large number of companies, but the fee-based service is also being used by 15 companies.

Finally, we launched the beta version of Twitter’s official navigation site, “twinavi”, today. Considering the number of official corporate accounts has already reached 3,722 as of today, twinavi is likely to continue to grow smoothly.

Venture Incubation business
The Open Network Lab that was launched in a bid to create Japan’s first global standard originating in Japan started off on a good note. The first screening of our incubation program, “Seed Accelerator,” finished yesterday and seven teams were selected from a total of 41 entries. The selected teams are slated to develop technologies to realize their services with the support of the Lab until the second screening in August and the results will be announced at the “New Context Conference” event scheduled for the fall. As a result of participating in the first screening this time, I even felt that many of the teams that weren’t among the seven that were selected also held great potential and that the base of entrepreneurial engineers is broad and as a result, it is quite possible that global Internet services originating from Japan will be born.

We also jointly built up “Qpon,” a flash sales site where jointly-purchased “services” are sold as limited time offers, with netprice Ltd. and launched the service on June 17.

Hybrid Solution business
Digital Garage established NEXDG, a JV with Nippon Express Co., Ltd., on June 1 and started its operation on June 24.

NEXDG plans to offer a system that can unify the management of fulfillment operations such as establishing an e-commerce web shop, as well as support the building of a customer base, payment settlement, inventory management and arranging delivery as an ASP service.

I am convinced that Nippon Express will deploy the service to a lot of corporate customers, while the service will become the new fulfillment gateway service between NEXDG’s parent companies Nippon Express and Digital Garage at the same time.

Finally, we set up the “Digital Garage Fellow System” targeting board members and employees that have made a contribution to the corporate development of the Digital Garage Group. The system supports the independence of employees while certifying them as successors of Digital Garage’s business philosophy since its foundation, to create “context” from the “cyber (Internet) x real” world and contribute to society.

We have chosen Kinya Atsukawa and Yoji Nagumo as the first employees certified by the system. They are both founders of Digital Garage’s predecessor From Garage and have made a contribution to the Digital Garage Group’s development for many years.

With the continued support of Digital Garage, I expect them to contribute to society at large and the group’s development from outside by expanding their own networks beyond national borders and the corporate framework as successors of Digital Garage’s “first penguin spirit.”

We are determined to strive to increase shareholder value as a company that makes a contribution to the world through the next-generation Internet business by precisely catching the waves of the “real time web Twitter revolution” and the “evolution and diversification of the smartphone” that are taking place almost simultaneously all over the world, as well as “cloud computing,” the third wave of the information society that lies behind the former two waves.

We sincerely appreciate your continued support and guidance for both Digital Garage Group companies and Digital Garage, Inc.

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