Copyright © Hitachi,Ltd.2003 All rights reserved 1
Nex t MADE IN JAPAN.Nex t MADE IN JAPAN.’’
Isao OnoSenior Corporate OfficerSenior Group Executive, Information Business GroupPresident & Chief Executive OfficerInformation & Telecommunication Systems
Hitachi, Ltd.
June 12, 2003
“i.e.HITACHI Plan II”Medium-Term Management PlanInformation &Telecommunication Systems Strategy
ContentsBusiness Plan for Information & Telecommunication Systems1Basic Strategy for Information & Telecommunication Systems2Expanding Global BusinessIncorporating Advanced Technologies3Expanding Earnings in Core Businesses4Creating New Businesses and New Technologies5Strengthening Consolidated Group Management6Conclusion7
ContentsBusiness Plan for Information & Telecommunication Systems1
Basic Strategy for Information & Telecommunication Systems2Expanding Global Business Incorporating Advanced Technologies3Expanding Earnings in Core Businesses4Creating New Businesses and New Technologies5Strengthening Consolidated Group Management6Conclusion7
Copyright © Hitachi,Ltd.2003 All rights reserved 5
1-1Reasons for the Improved Results
Strong sales of storage products (Disk Array Subsystems, HDD), particularly overseas
Up 15% year on year
0
¥1 trillion
¥2 trillion
:Hardware:Software and Services
Net Sales (Consolidated)
FY01 Result
¥1,829.6 billion
¥868.8 billion
47%
¥960.8 billion
53%
:Composition ratio
¥886.8 billion
¥978.2 billion
FY02Forecast
¥1,865.0 billion¥1,899.6 billion
¥914.7 billion
¥984.9 billion
FY02Result
(Mar. 2003)(Oct. 2002)
48%
52%
48%
52%
Strong sales of servers, including OEM contracts
Firm sales in SI services, centered on e-local government projects
Up 13% year on year
Up 4% year on year
Fiscal 2002 Net Sales
Copyright © Hitachi,Ltd.2003 All rights reserved 6
Fiscal 2002 Operating Income1-2Strong performance in SAN/NAS storage solutions business
Raised productivity in software and services, and expanded project management services
Higher operating margin 4.7% (Fiscal 2001) 6.2% (Fiscal 2002)
0
¥50 billion
¥100 billion
:Hardware :Software and Services
Operating Income (Consolidated)
FY01 Result
¥35.7 billion
-¥9.3 billion
¥45.0billion
:Composition ratio
¥23.2 billion
¥64.8 billion
FY02Forecast
¥88.0 billion
¥110.5 billion
¥49.9billion
¥60.6 billion
FY02Result
(Mar. 2003)(Oct. 2002)
Reasons for the Improved Results
26%
74%
45%
55%
Benefits of structural reforms in telecommunications businessReturned to profitability in fiscal 2002
Higher operating margin 5% (Fiscal 2001) 6% (Fiscal 2002)
Copyright © Hitachi,Ltd.2003 All rights reserved 7
Fiscal 2003 Net Sales and Operating Income Forecasts
¥1trillion
¥2trillion
:Hardware:Software and Services
:Composition ratio
Net Sales (Consolidated)
¥50 billion
¥100 billion
Operating Income (Consolidated)
:Hardware:Software and Services
:Composition ratio
00
¥2,200.0 billion
FY03 Forecast
¥1,219.0 billion
55%
¥981.0 billion
45%
FY03 Forecast
-¥5.0 billion
¥67.0billion
¥62.0 billion
FY02 Result
¥110.5 billion
¥49.9 billion
¥60.6 billion
55%
45%
¥1,899.6 billion
¥914.7 billion
48%
¥984.9 billion
52%
FY02Result
1-3
Copyright © Hitachi,Ltd.2003 All rights reserved 8
※Market share: At least 15%, 5-15% (FY02) Source: Hitachi, Ltd. estimates
Market Positions
Market Share and Strategy for expanding Main Businesses
1-4
Market Market share Strategy
Financial informationsystems
Publicand socialsystems
Develop new financial products and expand outsourcing business
Expand package solutionsand business targeting medium-sized andregional customers
Delivering solutions for localgovernment consolidations and e-local government
Solutions BusinessProduct Market share Strategy
Servers
Network
Storage
Establish strategy for servers for next term
Strengthen mid-range diskarray subsystems and management software
Expand overseas business focused on network products for IPv6
Hardware and Software Business
Industrial and
distribution systems
Copyright © Hitachi,Ltd.2003 All rights reserved 9
Review of “i.e.HITACHI Plan” for Information & Telecommunication Systems
(FY 1999-FY 2002)
・Expand total solutions business leveraging Group’s collective strengthsCapture synergies between
information and control systems ・Cultivating “e-Japan II” related business
・Expand sales of mid-range disk array subsystems
・Develop new middleware following JP1
Develop solutions based on strong hardware and middleware
・Make HDD business profitable quickly・Make server business more competitive
Selection and concentration of management resources to generate stable earnings in hardware
・Expand new high-profit services businesses
・Raise productivity of solutions includingSE and software
Rebuild a profit structure (software and services)
1-5Ongoing ThemesEvaluation Business Policy
ContentsBusiness Plan for Information & Telecommunication Systems1Basic Strategy for Information & Telecommunication Systems2Expanding Global Business Incorporating Advanced Technologies3Expanding Earnings in Core Businesses4Creating New Businesses and New Technologies5Strengthening Consolidated Group Management6Conclusion7
Copyright © Hitachi,Ltd.2003 All rights reserved 11
Targeted Domains Fiscal 2005 Targets: Positive FIV*
“i.e.HITACHI Plan II” (Fiscal 2003-Fiscal 2005)
Fiscal 2005 Net Sales and Earnings
(*) FIV : Hitachi’s economic value-added evaluation index in which the cost of capital is deducted from after-tax operating profit. After-tax operating profit must exceed the cost of capital to achieve positive FIV.
(**) : Fiscal 2002 net sales: ¥8,191.7 billion
New Era Lifeline Support Solutions
2-1
Global Products Incorporating Advanced Technology
“Best Solutions Partner”
Net sales: Current level **
Operating margin: at least 5%
ROE: at least 8%
Copyright © Hitachi,Ltd.2003 All rights reserved 12
HITACHI:Information Lifelines
The best solution partner:supporting the ubiquitous society most with its diversity,integration,responsibility and activity for making lifeline
Home
Individuals Companies
2-2
Services and solutions
Comfortable
Anytime, anywhere, anybody
Ubiquitous access
Service platform
Safe and secureInformation Lifelines
Public institutions
Copyright © Hitachi,Ltd.2003 All rights reserved 13
SI services Fee-based businesses
Creating New Businesses and New Technologies
Hardware
Components and modules
Application software and middleware
Expanding E
arnings in Core B
usinesses
高度技術製品・部品・モジュール
Strengthening Consolidated Group Management
Basic Plan for Information&Telecommunication Systems to achieve the Goals of “i.e.HITACHI Plan II”2-3
Expanding G
lobal business IncorporatingA
dvanced Technologies B
usiness
Copyright © Hitachi,Ltd.2003 All rights reserved 14
% of sales from overseas businesses: at least 40%
新事業売上高比率:30%
Targets and Key Strategies for Information & Telecommunication Systems
*excludes HDD operations
2-4Target:Fiscal 2005
Key StrategiesBusiness Policy・Make HDD business profitable rapidly・Expand SAN/NAS storage solutions business
Expanding global business incorporating advanced technologies business
・Enhance sophistication of service platforms based on the Harmonious Computing concept
Expand earnings in core businesses
Make hardware and open middleware more competitive
・Raise productivity and strengthen sales operationsPromote solutions businesses by market
・Quickly create cross-market solutions・Cultivate new businesses related to “e-Japan II”
Create new businesses and new technologies
・New corporate government structure・Eliminate of redundant investment and reorganize business
fieldsStrengthening consolidated group management
Operating margin: at least 7%
Overseas businesses :at least 40% of net sales
New businesses :
30%* of net sales
ContentsBusiness Plan for Information & Telecommunication Systems1Basic Strategy for Information & Telecommunication Systems2Expanding Global BusinessIncorporating Advanced Technologies Business3Expanding Earnings in Core Businesses4Creating New Businesses and New Technologies5Strengthening Consolidated Group Management6Conclusion7
Copyright © Hitachi,Ltd.2003 All rights reserved 16
Targets and Structure for Global Storage Business
Direct sales
Indirect sales
OEM
Hitachi: SAN/NAS storage solutions businessHitachi GST: HDD business
SAN/NAS Storage Solutions Business
Development, manufacturing and domestic sales
Hitachi, IBM, EMC, DELL, HP,
Hitachi, IBM, EMC, DELL, HP,
OEM
Indirect sales
HP customersHP customers
HDS customersFortune500 companies data center providers
HDS customersFortune500 companies data center providers
Business partnersBusiness partners
End usersCustomersEnd usersCustomers
3-1
Hitachi
HDD Business Business
Hitachi GST Development, manufacturing
and sales
Hitachi GST Development, manufacturing
and sales Distributors worldwideDistributors worldwide
Capture the top share in the worldwide market and promote higher earnings
HDSSales and support
HDSSales and support
Expand global storage business
Copyright © Hitachi,Ltd.2003 All rights reserved 17
SAN/NAS Storage Solutions Business Strategy
Strategies for Achieving Targets
3-2
Sales
FY04Target
FY03Forecast
75%
10%
15%
FY05Target
15%
15%
70%
20%
20%
60%200.0
Hardw
areSoftw
areServices
Sales: ¥400.0 billion / Operating margin: 8%
400.0
350.0
300.0
SoftwareExpand sales of storage management software (JP1/HiCommand + program product)Fiscal 2005 target: 8% worldwide market share
HardwareHigh-end disk array subsystems: Maintain top shareFiscal 2005 target: 29% worldwide market share
Mid-range disk array subsystems: Bolster lineupand strengthen system for indirect sales overseas
Increase software and services workforce(By 1,500 by fiscal 2005)
Targets
250.0
150.0
300.0
350.0
400.0
ServicesStrengthen global solutions services-deepen strategic alliances with ISV/IHV
(¥ billion)
Copyright © Hitachi,Ltd.2003 All rights reserved 18
HDD Business Strategy (1)Hitachi Global Storage Technologies
Basic Strategy
Expand an industry-leading worldwide market share by capturing new customers globally
Hitachi Global Storage Technologies
Implement structural reforms Seize the initiative in non-IT
market by capturing synergies across the Hitachi Group
3-3Targets
Sales
FY03 FY04 FY05 FY06
Turn to profitability in fiscal 2004Achieve pre-tax profit margin of 6% in fiscal 2006
3.0
4.0
5.0
3.5
4.5
5.5
4.1
4.7
5.1
5.5
(1 billion $)
Average annual growth rate of 10%
The No.1 HDD supplier in the worldThe No.1 HDD supplier in the world
Copyright © Hitachi,Ltd.2003 All rights reserved 19
HDD Business Strategy (2)Ubiquitous HDD Project
Gro
wth
in m
arke
t siz
e (F
Y05
fore
cast
/FY
02 a
ctua
l)
Source: Hitachi Research InstituteMarket size (HDD-equipped, 2002, logarithmic scale)
1 10 100 1,000 10,000 100,00010 thousand
units
10
1
Times
Desktop PCs
Notebook PCs
Servers
5
Video recorders
Mobile music players
Automotive applications(in-vehicle terminals)
Game players
3-4A project to expand sales of HDD in non-IT industry
StrategyExpected HDD Market Landscape by Application
Promote as one of the most important projects of Hitachi group that draws on the collective strengths of the Group
Fiscal 2005 target: Capture more than 10% of the market share for high-growth and non-IT HDD applications
ContentsBusiness Plan for Information & Telecommunication Systems1Basic Strategy for Information & Telecommunication Systems2Expanding Global Business Incorporating Advanced Technologies Business3Expanding Earnings in Core Businesses4Creating New Businesses and New Technologies5Strengthening Consolidated Group Management6Conclusion7
Copyright © Hitachi,Ltd.2003 All rights reserved 21
Harmonious Computing
A new service platform concept Harmonious Computing; which provides a business-oriented autonomous computer system using a resource-independent virtual platform.
ServersNetwork equipment Storage equipmentMainframes PCs/terminals
System integration
HardwareHardware
ApplicationsApplications
Service provision
JP1/HiCommandVOS3,UNIX,Linux,Windows
Partners’software/hardware
Web services / E-business foundation
Open middlewareOperating
systems
Open middlewareOperating
systems
Partners’software
Customer’s business processes
4-1
JP1Cosminexus HiRDB
Policy-based autonomous operationGrid computing
Customer’s business processes
Customer’s business processes
Copyright © Hitachi,Ltd.2003 All rights reserved 22
Introducing the Harmonious Competence Center
Opened on June 9, 2003 in the Shinagawa East One Tower
The largest floor area as a system verifying center in Japan -Approx. 1,500㎡ per floor
Features and Advantages of the Center
・The necessary multi-platform environment for constructing, testing and verifying systems, including main products of other companies ・Provides systems environment and technologies through new products based on the Harmonious Computing service platform concept
・Can be used to give optimal presentations, demonstrations and seminars for customers
・The center has a system technology support function for center users
Copyright © Hitachi,Ltd.2003 All rights reserved 23
Strategy for Making Open Middleware Business More Competitive4-2
Key strategies for open middleware supportingHarmonious Computing
Strategic ProductField
Integrated management
system
Japan, China, South Korea, and Southeast
Asia
JP1
Database HiRDBJapan (Aim
overseas markets)
Storage management
JP1/HiCommand World Wide
ApplicationServer
Cosminexus
Key Markets Market Position
No.1 market sharein Japan
26%(2001)
Cumulative shipments (2003/2)
Cumulative shipments (2003/3)
Becoming the de facto world standard with storage system in high share
Enhancement of Functions to Improve
Competitiveness・Policy-based system management・Strengthen linkage with heterogeneous computing environments
・Storage-linked provisioning・Tuning advisor
・Web service integration
・Policy-based transactioncontrol
・Policy-based autonomousstorage management
・Storage pool managementusing virtual technology
・ Over 10,000 serversTarget: 9,000 servers
in 2003
・ Over 10,000 servers・ Over 1,400 users
Japan (Aim overseas markets)
Copyright © Hitachi,Ltd.2003 All rights reserved 24
Making the Hardware Products Business More Competitive4-3
Implement selection and concentration of management resources based on market needs and leveraging Hitachi’s strengths
Storage
Servers
Network
Terminals
PCs
Field
・High-end disk array subsystems・Mid-range disk array subsystems
・HDD
・POWER servers
・IA servers
・Mainframes・1x EV-DO・PHS・IPv6 routers/switches・ATM/Retail shops・Cache modules
・Broadband/mobile
Key Markets
Japan
Overseas(OEM)Japan
・Develop only competitive Products・Otherwise procure standard products
Develop by Hitachi
Full line
Focus onproducts
Focus on competitive
products
Development and ProductionLineup
Measures to Improve Competitiveness
Provide products
matched to customers’
system needs
・Integrate development and manufacturing and develop competitive products・Source by forming alliances with others
Strategic Products
World
Wide
JapanChinaEuropeNorthAmerica
Copyright © Hitachi,Ltd.2003 All rights reserved 25
Basic Policy:Making Software and Services Business More Competitive4-4
Introduce frontline-driven system・Integrate sales and systems engineers・Ordering, sales, profit and cash flow responsibility
Target more medium-sized customers・Expand package business・Stimulate indirect sales
Trial in financial information systems division
Expand across the board
20%13%
Nurture effective project managers・Training courses・Three-tier certification system(Platinum, gold and silver)
Thoroughly reuse contents(proposals, designs, code, etc.)
400 staff
1,000 staff
25% increase in productivity
Steadily strengthen competitive by continuing restructure business
Software and Services Business
Operating Margin Target
Key Measures Fiscal 2002 Results
Fiscal 2005 Target
5
FY01Result
FY02Result
Basic Policy
Strengthening solutions sales
Raise solutions productivity
Customer coverage ratioFY03Forecast
2002 2003~10
FY05Target
Expand software development in China and India
800 staff
2,700 staff
Increase Top-level IT consultants・Management, business processes, IT
300 staff
1,000 staff
(%)
ContentsBusiness Plan for Information & Telecommunication Systems1Basic Strategy for Information & Telecommunication Systems2Expanding Global Business Incorporating Advanced Technologies Business3Expanding Earnings in Core Businesses4Creating New Businesses and New Technologies5Strengthening Consolidated Group Management6Conclusion7
Copyright © Hitachi,Ltd.2003 All rights reserved 27
Creating New Businesses and New Technologies
Target (Fiscal 2005) New businesses:30%* of net sales
10 Key New Businesses
Commercialization of new technology Cross-market new businesses
Business model transformation
“e-Japan II” RelatedNew Business
Vibrant, reassuring, exciting and convenient 7 pioneering applications
Implement Hitachi’s strong technologies
5-1
*excludes HDD operations
Copyright © Hitachi,Ltd.2003 All rights reserved 28
10 Key New Businesses
10 Key New Businesses
Recent Main ImplementsBusiness・Get large orders, become business divisions1.Strategic outsourcing
・Upgrade functions to integrate the Hitachi Group2.Cyber security
・Bulk purchasing, establish a organization of support and service
3.MSP
4.Open platform support and service
・ Upgrade functions to integrate the Hitachi Group 5.e-learning solutions・Integrate organizations related to IC cards, memory cards and electronic tags6.ID solutions
・Increase workforce and enhance qualification certification system7.Top-level consulting
・Upgrade functions to integrate the Hitachi Group 8.ITS
・Step up formation of alliances with professional companies 9.Ubiquitous information services10. Application of existing information technologies
・Stimulate by capturing synergies with other business divisions
5-2
Copyright © Hitachi,Ltd.2003 All rights reserved 29
Strategic Outsourcing
29
Achievements
Strategies for Achieving Targets Increase the number of consultants
(Fiscal 2003) Present proposals that leverage the
collective strengths (finance, logistics, etc.) of the Hitachi Group
Develop outsourcing business overseas(focus on North America)
Start examining next-generation data center models(various fee-based services)
Established business division that consolidated all outsourcing businesses (April 2003)
Get major orders :UFJ Bank Limited
(UFJ & Hitachi Systems Co., Ltd.): Nichirei Corporation
(Hitachi Foods & Logistics Inc.): Marubeni Corporation
(Marubeni Information Systems Co., Ltd.)
FY05 Target
Average annual growth rate
of 48%
¥130.0 billion
5-3Sales
¥40.0 billion
¥120.0 billion
(June 2003)(June 2002)FY02 Result
Copyright © Hitachi,Ltd.2003 All rights reserved 30
Sales Achievements
Strategies for Achieving Targets
Cyber Security
Established Security Solution Promoting Divisionas the central body in the Hitachi Group for security technologies & businessIntegrated information and solutions menus with Secureplaza (April 2002)
Differentiate Hitachi with proprietary leading-edge technologies (Encryption, digital watermarking, hysteresis signature)
Pioneer de facto standard technologies(PKI: Public Key Infrastructure, SSL: Secure Socket Layer)
Integration of cyber security and physical security(Information vault)Provide one-stop services
Total security-related systems
FY02 Result FY05 Target
¥24.0 billion
5-4
Consulting Authentication
Information leak prevention
Confidentialinformation safekeeping
Total outsourcing
¥150.0 billion
(June 2003)(June 2002)
¥150.0 billion
Average annual growth rate
of 84%
Security systems Information services
Copyright © Hitachi,Ltd.2003 All rights reserved 31
Achievements
Strategies for Achieving Targets
Open Platform Support and Service
Established Hitachi Open Platform Solutions, Ltd. as a specialist company to provide platform support and services for open products (November 2002)
Upgrade platform solutions suite to offer everything from IT consulting and design through systems construction, operation and maintenanceProvide one-stop solutions over entire life cycle (Integrate MSP)Improve ability to construct systems and efficiency through specialist platform solutions organization
FY05 TargetFY02 Result
Average annual growth rate
of 22%¥150.0 billion
¥83.0 billion
5-5Sales
(June 2003)(June 2002)
Copyright © Hitachi,Ltd.2003 All rights reserved 32
IT Thermal Solutions5-6
Shift to a new business model Expand range of applications
Servers
Office equipment
Information appliances
Game players
Automotive terminals
Muster collective strengths of Hitachi
Quiet, Quiet, highhigh--performanceperformance
Generate cash from core lab technologies
One-stop service for intellectual property, components and
consulting
Become global de facto standard
Integration of IT hardware technologies and liquid and air-cooling technologies gained through experience in mainframe and power & industrial systems
Hitachi silent water-cooling system
Copyright © Hitachi,Ltd.2003 All rights reserved 33
Hitachi’s Approach to “e-Japan II”Related New Business
FieldMedical
FoodLifestyle
Small and Medium-sized Enterprises
KnowledgeEmployment and
WorkGovernment Administrative Services
Raise level of service by sharing treatment information
Details
Improve safety and peace of mind through traceabilityBuild safe, secure and convenient living environments through greater use of electronics in the home
New financial services by deregulation
Distance learning and content value creationMake it easier to start businesses and facilitate various ways of workingRaise efficiency and quality through deregulation and outsourcing
Establish nextEstablish next--generation information generation information and communications infrastructureand communications infrastructureCreate environment that is secure and safe Create environment that is secure and safe to useto useResearch and development that creates Research and development that creates nextnext--generation intellectual propertygeneration intellectual propertyTrain and educate people knowledgeable Train and educate people knowledgeable in IT for the new erain IT for the new eraDevelop new international relations Develop new international relations centered on ITcentered on IT
Pioneering Application Fields
Outline of “e-Japan II” Plan
Hitachi’s Approach
Estimated market size: ¥2-3 trillion in investment
by 2005 Collective strengthsSecurity
Differentiate and pioneer new businesses drawing on Hitachi’s strengths
New IT Social Infrastructure
5-7
Copyright © Hitachi,Ltd.2003 All rights reserved 34
5-8
Warehouse
Consumer
μ-Chip
Facilitate the provision of delicious, safe and reliable food thFacilitate the provision of delicious, safe and reliable food through tracing rough tracing the movement of food products from the farm to the dinner tablethe movement of food products from the farm to the dinner table
Target Businesses for Hitachi
SCM solutions for the recording and management of information during production and distribution processes
Electronic tag solutions (μ-Chip) that make possible individual identification
Total logistics solutions, including hardware and distribution services
Farm- -米
μ-Chip
Supermarket
FactoryTesting institution
Designated purchasingDesignated purchasing Information searchInformation search
Distribution
Farm
Food: Traceability Business
Copyright © Hitachi,Ltd.2003 All rights reserved 35
5-9
Dramatic cost savings in storage, postage and printingSafe, long-term storage and quick searching
Facilitate the safe storage and quick searching of large volumesFacilitate the safe storage and quick searching of large volumes of electronic of electronic data created by legislative amendmentsdata created by legislative amendments
TargetBusinesses for Hitachi
SAN/NAS storage solutionsOutsourcing using iDC
Total security solutions based on disaster recovery functions
Deregulation JapanPermit electronic storage of paper-based information that must be retained by the private sector
Requirement to keep e-mails and business records for an extended period of time in the wake of the Enron scandal
Tougher regulations
U.S.
Electronic storage
Law Changes Advantages of Electronic Storage of Documents
Government Administrative Services: Data Lifecycle Management
Copyright © Hitachi,Ltd.2003 All rights reserved 36
5-10
ShopsWorkplace Local government
Lights
SensorTV
Community
Facilitate safe, comfortable lifestyles even for elderly people Facilitate safe, comfortable lifestyles even for elderly people living aloneliving alone
Service provider
Home server
PCWater and gas
OK TOPOK TOPOK TOP
Home
Lifestyle: Net Life
TargetBusinesses for Hitachi
Energy service solutions (Joint inspection & monitoring)Home healthcare service solutions (Care for the elderly)Home entertainment solutions (Home server & Information appliances)Security service solutions (Disaster and crime prevention monitoring, communication and warning)
● Power, Gas and Waterworks companies
● Hospitals, Care centers● Retail stores, Home delivery
service companies● Police, Fire stations
Copyright © Hitachi,Ltd.2003 All rights reserved 37
Medical: Electronic Patient Records and Online Reception
Testing centers
Online receptionInformation disclosure
5-11Realize reliable, safe and lowRealize reliable, safe and low--cost patientcost patient--centric medical treatment by linking centric medical treatment by linking medicalmedical--related institutions. related institutions.
日立の強み
Eliminate redundant testingEnhance emergency responsePromote use of IT at small and medium-sized institutions
Eliminate redundant testingEnhance emergency responsePromote use of IT at small and medium-sized institutions
Hospitals
Clinics
Pharmacies
ICカード
Security
Medical condition and condition dataTreatment and prescription dataMedical institution data
Medical condition and condition dataTreatment and prescription dataMedical institution data
Target Businesses for Hitachi
Home healthcare service solutions (Care for the elderly)Security service solutions (Electronic patient records, personal identification, personal information protection)ID system solutions (IC cards, memory cards, μ-Chip)
Electronic patient record
IC cardsHealth
insurance
Pharmaceutical history management
ContentsBusiness Plan for Information & Telecommunication Systems1Basic Strategy for Information & Telecommunication Systems2Expanding Global Business Incorporating Advanced Technologies Business3Expanding Earnings in Core Businesses4Creating New Businesses and New Technologies5Strengthening Consolidated Group Management6Conclusion7
Copyright © Hitachi,Ltd.2003 All rights reserved 39
Strengthening Consolidated Group Management
Share strategy and goals with Hitachi group companies to improve consolidated results
Strengthen consolidated management in each business category
Clarify missions Restructuring and
amalgamation of businesses
Introduced new corporate government structure
Separation of roles of management oversight and business executionExternal directors from Hitachi ensure that strategies are consistent with those of the entire group
6
Hitachi Information Systems, Ltd.Hitachi Software Engineering Co., Ltd.
Publicly listed companies
Unlisted companies
Hitachi Systems & Services, Ltd.Hitachi Electronics Services Co., Ltd.
Hitachi HBM Co., Ltd.Hitachi Data Systems Co.
ContentsBusiness Plan for Information & Telecommunication Systems1Basic Strategy for Information & Telecommunication Systems2Expanding Global Business Incorporating Advanced Technologies Business3Expanding Earnings in Core Businesses4Creating New Businesses and New Technologies5Strengthening for Consolidated Group Management6Conclusion7
Copyright © Hitachi,Ltd.2003 All rights reserved 41
Conclusion
Strengthening for consolidated Group management
10 key new businesses “e-Japan II” related new business
Storage solutions business(SAN/NAS, HDDs)
Server business Global and specialist
businesses
Harmonious Computing Hardware, software and
services businesses Solutions business by
market type
Ubiquitous Information Society
Create new businesses& market
promoting “e-Japan II”
Create new businesses& market
promoting “e-Japan II”Best Solutions PartnerBest Solutions Partner
7Create new businesses and new technologies
Expand global Business incorporatingadvanced technologies business
Expand earnings in core businesses
Fiscal 2005 Targets
Operating margin: at least 7%New Business:30% of net sales*
Overseas business:at least 40% of net sales
Fiscal 2005 Targets
Operating margin: at least 7%New Business:30% of net sales*
Overseas business:at least 40% of net sales
*excludes HDD operations
Cautionary StatementThis document contains forward-looking statements which reflect management’s current views with respect to certain future events and financial performance. Words such as “anticipate,” “believe,” “expect,” “estimate,” “intend,” “plan,” “project” and similar expressions which indicate future events and trends identify forward-looking statements. Actual results may differ materially from those projected or implied in the forward-looking statements and from historical trends. Further, certain forward-looking statements are based upon assumptions of future events which may not prove to be accurate.
Factors that could cause actual results to differ materially from those projected or implied in any forward-looking statements include, but are not limited to, rapid technological change, particularly in the Information & Telecommunication Systems segment and Electronic Devices segment; uncertainty as to Hitachi’s ability to continue to develop products and to market products that incorporate new technology on a timely and cost-effective basis and achieve market acceptance; fluctuations in product demand and industry capacity, particularly in the Information & Telecommunication Systems segment, Electronic Devices segment and Digital Media & Consumer Products segment; increasing commoditization of information technology products, and intensifying price competition in the market for such products; fluctuations in rates of exchange for the yen and other currencies in which Hitachi makes significant sales or in which Hitachi’s assets and liabilities are denominated, particularly between the yen and the U.S. dollar; uncertainty as to Hitachi’s access to liquidity or long-term financing, particularly in the context of restrictions on availability of credit prevailing in Japan; uncertainty as to Hitachi’s ability to implement measures to reduce the potential negativeimpact of fluctuations in product demand and/or exchange rates; general economic conditions and the regulatory and trade environment of Hitachi’s major markets, particularly, the United States, Japan and elsewhere in Asia, including, without limitation, continued stagnation or deterioration of the Japanese or other East Asian economies, or direct or indirect restriction by other nations of imports; uncertainty as to Hitachi’s access to, or protection for, certain intellectual property rights, particularly those related to electronics and data processing technologies; Hitachi’s dependence on alliances with other corporations in designing or developing certain products; and the market prices of equity securities in Japan, declines in which may result in write-downs of equity securities Hitachi holds.
These factors listed above are not exclusive and are in addition to other factors that are stated or indicated elsewhere in this document, or in other materials published by the Company.
Copyright © Hitachi,Ltd.2003 All rights reserved 44
Nex t MADE IN JAPAN.Nex t MADE IN JAPAN.’’