Toyota Motor Corp and Nippon Telegraph and Telephone Corp Joint Press Conference

Mar 24, 2020 AM UTC 查看原文

7203.T - Toyota Motor Corp
Toyota Motor Corp and Nippon Telegraph and Telephone Corp Joint Press Conference
Mar 24, 2020 / 06:00AM GMT

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Corporate Participants
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* Akio Toyoda
Toyota Motor Corporation - CEO, Chief Branding Officer, President & Representative Director
* Jun Sawada
Nippon Telegraph and Telephone Corporation - President, CEO & Representative Director

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Conference Call Participants
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* Hiromi Osada;Chunichi Newspaper;Journalist
* Naoki Ogawa;Shimbun Newspaper;Director

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Presentation
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Unidentified Company Representative, [1]
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Ladies and gentlemen, thank you very much for your patience. We would like to start a joint press conference by NTT Corporation and Toyota Motor Corporation.

Let me first introduce the speakers to you: from NTT Corporation, the Representative Director and President, Mr. Jun Sawada; and from Toyota Motor Corporation, Representative Director and President, Mr. Akio Toyoda.

Now then, we would like to, first of all, call upon President Sawada to take the floor.

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Jun Sawada, Nippon Telegraph and Telephone Corporation - President, CEO & Representative Director [2]
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Thank you for your kind introduction. My name is Sawada. First and foremost, thank you for joining us despite this very difficult circumstances in relation to the novel coronavirus. Appreciate your participation. As far as we are concerned, Toyota and NTT, we are very excited about this capital business alliance. So let me share with you, talk about the thinking and the backdrop pertaining to NTT behind this alliance to begin with.

So novel coronavirus has created a very difficult circumstance, but there's some blessing in disguise. I think we have seen progress in telework or working from home. But having said that, for the workers to collaborate and having to work despite the isolation, if we are to pursue this, then we need innovation to further advance such remote work. So isolation and collaboration needs to be compatible. We need to have a structure. That is our thinking.

So similar examples can be seen in environmental production arena and also the question pertaining to growth or the environment. We can realize both and create a better society and community. That type of innovation is required. That, I believe, is our view. So when we take a look at this recent situation, even prior to this novel coronavirus situation, we have seen a situation pertaining to decoupling. So globalism -- the distortion brought on by globalism is evident. We have also seen the rise of nationalism. For example, such and such first, we begin to shift to this type of various nationalisms. But what is required is to -- is very consistent philosophy that allows both to be achievable in parallel. So this type of new globalism is required, I believe.

So let's apply the situation to Japan domestically. Right now, we are faced with those challenges such as change in the demographics, aging and decline in birth rate and also the weakening of the regional communities. We see various social challenges. So we want to create development for company, for our country as well as for the world. We need to also create a livable and comfortable community. So we need to do this in parallel. That type of thinking is required. So as we go forward, we need to achieve the concept of smart city. We need to spread the concept of smart city.

Around the world, Toyota Motor is tackling these challenges, inclusive of autonomous drive. So the collaboration and partnership between NTT and Toyota Motor Company can create and build a foundation for the regional communities and for the people at large. That, I believe, is the basic thinking behind our business capital alliance.

And as far as smart city is concerned, we have 8 requirements or factors that enable such a smart city. NTT is based on the concept of B2B2X model as we want to pursue smart city partnership based on the B2B2X model, although we -- and expand partnerships with diverse partners. So this, I believe, is also connected to Society 5.0 which [kaizen] and the national government is also pursuing. As far the 8 elements are concerned, they are very broad-ranging all the way from infrastructure up until the super layer of the society. Various factors are embraced all the way from mobility to help medicine. All these factors are embraced in these 8 elements.

So NTT and Toyota. I believe Toyota is indeed the #1 company in terms of mobility around the world. And as far as NTT is concerned, we want to support Toyota's efforts to further spread this mobility concept. Already, cars are now entering a connected universe. In other words, things are connected. Smart cities are based on this connectivity, and automobile is one element for this connectivity. And actually, ICT, so far, is the element that connects these connected cities.

So as far as NTT is concerned, our resources and initiatives in place are such supportive of Las Vegas, Yokohama, Fukuoka and in some places like Cyberjaya. And we'll be involved in such programs, and we are also involved in partner programs. We also have set up a standard-based urban solution company for this purpose. And furthermore, using new renewables, we want to create new regional grids and also pursue wellbeing and also pursue regional revitalization. We are really involved in these initiatives and programs.

But this partnership represents a new core. That is the backdrop of this new partnership. It is the core. So Toyota and NTT go in this partnership to create a social foundation for the smart city, working together to create the foundation. This is going to be cascading from here to Fuji all the way to the global community at large. This is going to be a long-term initiative and exercise, and that is my discussion with Mr. Akio Toyoda. And so both sides will be investing JPY 200 billion each for this initiative. And we have -- both companies have made -- passed the resolution on this point.

As far as Smart City Platform is concerned, this is the name of this new social foundation. This will continue to evolve. This platform will continue to evolve. And together with partners and, of course, we, the 2 companies, are the core, but we want to invite various other partners to join this program and further spread this. And also, we also want to pursue partnerships with other cities and municipalities. And also, we want to make sure that we also have linkage and connectivity with the OS architecture of other government cities. We want to create such an environment.

And technology factors that support this. From this technology side, there are 5 enablers. We have a project for this called IOWN. This is a future network concept. This will be all-photonics network and digital twin computing and so a cognitive foundation. And the third will be the 5G technology. Next week, we will be launching 5G -- sorry, excuse me, this week, we'll be launching 5G services and also direct current -- a direct-current grid and renewables and data management.

As far as IOWN is concerned, the Board made an announcement about IOWN, or Innovative Optical and Wireless Network, 3 factors are involved. So one is transition of electronics to photonics from digital to natural. We want to lead the way for this type of universe going forward. And as far as 5G is concerned, I will not delve for -- of deeply today. But this is a technology that was -- this is a key service that connect or disconnect computer-related elements. And also, we are going to succeed in also data management. This helps this assimilation to grasp and analyze the flow of people. Toyota and NTT has already a partnership in the autonomous drive area as well.

So in the Woven City initiative, how can we visualize mobility, how can we digitalize and also manage that and try to predict the future and, at the same time, create a better society for the future? This is where these technology factors can be applied and utilized.

And with regard to renewables, in principle, we want to have local production for local consumption. And we'll be employing direct current. We want to store energy, and that's the initiative which we want to pursue. And also through virtual power plant, we want to deliver more greener power. That type of urban -- that type of regional integration, that is what we want to attempt.

Last but not least, this capital business alliance. The basis of the business capital alliance is human resources. On January 8, Mr. Akio Toyoda provided an in-house speech, and that speech can be observed on YouTube. I believe his speech was about 40 minutes and actually observed this speech as well by Mr. Toyoda. And he had provided a valuable insight in the presentation, and these are all insights which all the managers should consider. I believe his speech really embraces all those factors which all managers should consider. It involves love and affection and also contribution to -- public contribution and also integrity and vision and aspiration. And also very sincere, I was totally moved by his speech.

And that really was the foundation for this alliance. I really wanted to work with a company led by such a manager, by such a leader. By working and partnering with such a company, we can create a brighter future through smart city. So in this triangle, you see people at the center. So connect, trust and integrity, you see those shared values. With that, we want to -- we are aspiring to be such a company. That is the picture from our midterm plan. And I believe the business and capital alliance with Toyota will allow us to achieve this vision going forward. So toward the brighter future, we have full of expectations and much aspiration. That is my personal view.

Thank you for your kind attention.

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Unidentified Company Representative, [3]
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Thank you. Now President Toyoda, please.

As you all know, with the advent of the CASE evolution, the automotive industry is entering an era in which the very essence of the automobile is undergoing change and in which the goods and services that support people's lives will be connected by information.

In other words, when thinking about our business, it's necessary to have in mind the concept of connected cities in which we need to think about things from a broad, car-inclusive, community-wide and society-wide perspective, rather than viewing cars as a separate entity. Against such a backdrop, we have embarked on a new collaboration with NTT. So please allow me to explain the reasons for our alliance with NTT from the perspective of 2 changes that we are now facing.

One change that Toyota itself must address is a change in how software is positioned in monozukuri or manufacturing. In conventional product development, the basic approach has been to implement coupled development of hardware and software. However, with the speed of the evolution of software outpacing that of the evolution of hardware, exposed now is the coupled-development problem of improvements in product performance and product value being susceptible to the limitations of slowly evolving hardware.

In recent years, to secure a degree of development freedom and to improve product competitiveness, the concept of software first, in which hardware and software are separated and software is developed and put to use in advance, has been gaining wider acceptance. Smartphones are a successful example of this. Full-scale redesigns of smartphones have been timed to coincide with the introduction of new hardware technologies, such as the adoption of larger displays, the dawn of ultrahigh-resolution organic electroluminescent displays and the use of foldable screens. Yet, without waiting for such timing, operating systems and applications can expand the functions of smartphones through updates while using the same hardware.

If we were to express this in terms of car-making, complete redesigns would be when our customers replace their cars with new ones upon our updating the hardware and delivering value by doing so. And other improvements, such as partial redesigns, would be when we offer new functions and new value by updating the software while owners continue to use the same hardware. Easy-to-understand examples of this can be found in advanced technologies such as advanced driving-assist functions for which software and data are key. By having the basic software first in place, we could collect real-life data to heighten the level of our AI and could then, at some point, add functions in the form of updates. And things such as this will become possible. I believe that becoming able to think of partial redesigns along the lines of software updates will enable Toyota to more fully apply the strength of its hardware.

I believe there are 3 strengths to Toyota's hardware: one is durability, the soundness of our hardware; next is parts availability, the ease of access to replacement parts; and finally, we have repairability, the ease of repair. If the software is always updated to the latest version and the hardware is used over a longer period of time, then these 3 strengths can be demonstrated even more to the fullest. And actually, it is the positive evaluation of these 3 strengths that has led MaaS operators who are our collaborative partners to choose Toyota vehicles. I believe that applying the strength of our hardware and adopting the thinking of software first will enable us to innovate Toyota car-making to the next phase.

Another major change necessary for Toyota's rebirth is one Toyota cannot address on its own, and that's the change in the role of the automobile itself. About 10 years ago at the 2011 Tokyo Motor show, Toyota exhibited a concept vehicle called the Fun-Vii. At that time, I said, "This is the kind of car we came up with when we put 4 wheels on a smartphone." My thoughts were that in addition to running, turning and stopping, adding the function of connecting allows cars to give birth to new value. Then 7 years later at CES in January 2018, we unveiled the e-Palette. The e-Palette was a new attempt to see what will happen if software engineers at TRI and Toyota Connected made a car.

Next, thinking that we needed roads on which the e-Palette could run, came the idea for the Woven City. For Toyota, Woven City means changing by 180 degrees how we look at and think about the things around us. Shifting from the conventional notion of, "First, there are cars and there are houses, let's connect them" to the notion of "connecting cars and houses to the communities in which people live." I think that accomplishing this means greatly innovating how we work. And this is why Toyota is engaging in the creation of a city platform.

Through the advance of connectivity and the advancement of IoT, cars will cease to be simply objects of personal ownership or means of getting around. They will become structural elements of the society itself. And the role that the automobile must fulfill is starting to change. For example, in times of emergency, cars will become emergency power sources. And through their sensors, they will provide society with useful information such as hazard maps. So various possibilities are now coming into being. Hence, this will result in the evolution of cars having a close relationship with the evolution of society.

I believe that NTT is a partner who can best put to use cars that are incorporated into the societal system. That is because NTT's operations are directly connected to the creation of society. The various forms of infrastructure that construct society are supported by the information infrastructure that NTT provides. Expressing this in terms of the human body, I think that cars and houses are like muscles and bones, respectively, while communications are like veins through which flows the blood of information. Among such, NTT, as the main artery, supports blood circulation all the way to the capillaries, moving the entire body. In other words, NTT bears on its shoulders the foundation of the societal system.

Making cars based on software first a reality and building the future of cars linked to the societal system of communities and doing so on a corporate scale is the complete redesign required to transform Toyota from being a company that makes cars to being a mobility company, that is to say, a company that provides all types of services related to mobility.

When it comes to corporate groups undergoing complete redesigns, NTT is a pioneer. NTT has already decoupled hardware from software at a corporate scale. At first, telephone circuits used analog communications, and I hear switching of signals was done by switching equipment that used mechanical connections. Later, along with the digitalization of communication, such switching equipment was replaced by routers, and software came to be used to control communications. Furthermore, the cellphone led to a society in which people could connect anywhere regardless of where they were. And then communications went beyond the simple function of telephone calls to become a platform for giving birth to new data services and businesses.

NTT implemented a complete redesign to transform the hardware-based business structure of its entire corporate group into one based on software. It constructed platforms for telecommunications and information processing, such as NTT Communications and NTT Data. Furthermore, it established a company responsible for its software operations and as an integrated information telecommunications company engaged in a broad spectrum of activities, including the provision of data services and solutions.

NTT has endeavored to accelerate innovation. Currently, NTT is leading the world in verification trials and in advanced research related to the creation of communities of the future, such as through efforts related to smart cities, its IOWN concept and others.

For Toyota to respond to the 2 changes I mentioned, the change in how software is positioned and the change in the role of the automobile and completely redesign itself into a mobility company, our alliance with NTT is essential and, in a way, kind of inevitable. And I think we will continue to search for additional friends. At the base of our alliance is having an open mind. Wanting to make the future brighter together with many friends is an aspiration shared by both our companies.

Finally, I would like to talk about my own thoughts which are at the foundation of this alliance. Please have a look at this graph. If we look at expenditure per household during the 30 years of the Heisei era, we will see that while total expenditures did not increase, spending on transportation and telecommunications increased from 10% 30 years ago to 15%. Although in a survey of family budgets, transportation and telecommunications somehow handily fall into the same category compared to the Japanese automobile market, which peaked during the period covered, spending on telecommunications greatly increased. This means that people consider telecommunications to be more essential for them than automobiles. In other words, telecommunications leads to people's happiness. I believe it was once the automobile that was responsible for fulfilling that role.

Looking at this graph made me keenly feel that automobiles have to give it another earnest effort and that if automobiles are a key Japanese industry and a growth industry, then they must become more of a presence that brings people happiness.

Please have a look at this cone-shaped figure. This is taken from a book published by Toyota Motor Company in 1955, entitled Toyota. In it, together with the label, What is Toyota? appeared this cone-shaped figure. At the top is The Last Wishes of Sakichi Toyoda, which refers to the Toyoda Precepts. Among those precepts is the spirit of being contributive to the development and welfare of the country.

From the time of successfully undergoing a complete redesign from a loom manufacturer to an automobile manufacturer and continuing all the way to the present, at the foundation of Toyota is a strong desire to contribute to the prosperity of society and one's country. Creating the society of the future requires much energy. In this period of profound transformation in which it's difficult to see what lies ahead and where there are no right answers, I believe it is important that private enterprises with a will to do something for one's own country rouses itself to action armed with the technological capabilities and talented human resources for creating the future.

NTT and Toyota both have the spirit of lifting Japan. If we can embroil many friends and together are able to build a platform that can support a prosperous life for people, not only would we be able to be useful to society, we'd also contribute to raising the presence of Japan in the world. That is my belief.

And along with The Last Wishes of Sakichi Toyoda, there's also The Dreams of the Previous President and The Manufacturing of a Domestically Produced Car for the Masses. A long time ago, cars were once unattainable objects. Toyota has made efforts to make cars become objects that anyone can own and drive. The same can be said for the telephone. Following the days long ago when it wasn't even guaranteed that each home would have its own telephone, today, whether it be in economically established countries or in countries that are up and coming, we have arrived at an age in which it's a matter of fact that each person has his or her own smartphone or other device.

Behind the words Car for the Masses is a desire to achieve mass production, meaning a desire to deliver happiness to all people. Both Toyota and NTT are global companies rooted in Japan. So when I say all people, that means being active around the world. And people are positioned right in the center of the future that both companies envision. People with smiles on their faces, people connected, that is the society of the future for which we are aiming.

When I met President Sawada for the first time, I could keenly sense his sincere personality, his caring for people. And I genuinely felt this is a person on whom I know I can depend. Toyota's roots are found in delivering happiness to all people. I believe that is why we are taking this opportunity to form an alliance with NTT, and I believe that having an alliance with NTT also means that Japan will be able to be useful to the world.

I humbly request your support for the future that we are striving to achieve. Thank you very much.

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Unidentified Company Representative, [5]
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Next, we'd like to go into a Q&A session. We'll be preparing the stage for the Q&A, so please wait a few minutes.

So now we'd like to start the Q&A session. So both presidents, please take the podium. We will first take questions from the hall and then questions from people who are telling online. (Operator Instructions) And please wait for the microphone before you begin to speak. So please raise your hand if you have a question and wait for the microphone.

Now we would like to start.

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Questions and Answers
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Unidentified Company Representative, [1]
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So the person at the very front, by the middle of the front row.

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Naoki Ogawa;Shimbun Newspaper;Director, [2]
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Ogawa Naoki from Shimbun Newspaper. A question directed to both of you -- both questions direct to both of you. My first question. Earlier in your explanation, you mentioned that you really want to -- really contribute to Japan -- Japan to lead the world for the global communities. So smart city project, when you take a look at this from the perspective of our perspective, I think in U.S. and China, already various entities are already involved in this smart city type of program. So what is the significance of this alliance? You want -- you know that you want to take on this initiative on behalf of Japan. But as you try to -- this partnership, this Japan Inc. partnership that is geared toward the global community, can you talk about the significance of this alliance? I want to ask both of you to respond to this first question, please.

And also at the time, if I may, if we go to smart city, in this smart city project, what will be the strength that both companies can bring? How do you intend to make this viable? I would appreciate your response.

My second question is about -- I think you have expanded as far as capital alliance as well. Generally, cross-shareholding, I think the people doesn't want cross-shareholding type of structure. Can you talk about the long-term nature of this initiative? JPY 200 billion will be invested by each. What is the significance of both companies investing JPY 200 billion into other -- the other company? Again, to both of you, please.

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Jun Sawada, Nippon Telegraph and Telephone Corporation - President, CEO & Representative Director [3]
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Thank you. Sawada here. Let me respond to your question first. Thank you for your question. So the significance of the meaning of this alliance, as far as NTT side is concerned, be it smart city or be it smart world, this is the structures and the scope of our involvement. So B2B2X model, the business model based on B2B2X model, we want to support the growth of our partners in the context of a B2B2X model. That is our thinking. So we've involved the diverse initiatives up until now.

In particular, and this relates to your second question about the meaning of this capital alliance, the fact that we're able to partner with Toyota, this represents the core of our activity. So in the case of smart world and the smart city, if we want to create smart cities and a smart world, we'll be able to promote this based on this partnership. And at the same time, as a result, we'll be able to improve the capacity of the regions and as well capacity of the country of Japan. That is how I believe the situation is.

But what about the strength? As far as NTT is concerned, we are involved in a content coordination with the software capacity to allow -- to play -- allow us to play our coordination function plus the ability for the orchestration as well. And on a global basis, we have the sales force and they also keep capacity on the global level. So that is a global strength.

Now domestically in Japan, in various regions throughout Japan, we have infrastructure through all corners of Japan. In the case of Toyota, there are many strengths on your side. Mobility, for example, you already have progress with autonomous drive and also you're involved in connected car initiatives. So globally, I think Toyota is ahead of the curve. And being able to partner with such a company really is quite significant for us. So that's my response to your first question. Thank you.

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Akio Toyoda, Toyota Motor Corporation - CEO, Chief Branding Officer, President & Representative Director [4]
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Thank you very much. Two years ago, when I said Toyota will be transformed from a car manufacturer to a mobility company that I would lead the transformation, and I made the statement of this 2 years ago, I think now I'm finally able to explain what I mean because for an automotive manufacturer, we transport people and goods. That used to be the role of a car manufacturer, that is to move people and goods. And that's why we have endeavored to make the car available to all people.

But now in this world of diversification, to provide the freedom of transportation to all people, the word move in English has another meaning, that is to move people's hearts. And in order to move people's hearts, we need to be able to provide things that can run and turn and stop, but also can connect information as well. And that connecting portion has become so very important. And that is why we want to -- we believe that NTT is a company that can best leverage the cars which are incorporated into the societal system. And they have the informations platform and the foundations for supporting society to infrastructure security and health care. And we have been working together in the past. I believe that now the time is right for us to make this into reality.

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Jun Sawada, Nippon Telegraph and Telephone Corporation - President, CEO & Representative Director [5]
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The second question, this capital business alliance will be something of a long nature -- long-term nature. So both sides will be creating foundation for the Smart City Platform. And we want to make sure that, that platform can be delivered to the global community at large. And this entails software. But also, it has to be connected and linked to hardware side as well. If that is the case, then Toyota will manufacture hardware, and it will also be reflected in the global community. This is synergy. So this will be of a long-term nature, and we want to be involved in such a trial. That is the foundation of our exercise.

And as a result, the reason that we want the business capital alliance is that we want to partner over the long term. We wanted to demonstrate the long-term nature of this partnership. At the same time, as far as we're concerned, for example, since we're going to be investing in this initiative, we have to consider the enterprise value. So our partner, Toyota -- together with our partner, Toyota, both companies can advance and also improve our respective enterprise values. That is why we have decided on this respective investment.

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Akio Toyoda, Toyota Motor Corporation - CEO, Chief Branding Officer, President & Representative Director [6]
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The mutual investment this time is aimed at working with NTT to create the future. That is the aim of this investment. We share the same values. And as a partner that aims to develop society, we want to be able to establish a long-term and continuous cooperative relationship. And to do that, rather than unilateral investment, I think that we should become equal investors as partners and learn from each other and enhance each other's competitiveness. And therein lies the significance of this collaboration alliance. As President Sawada said, I think that this will surely become a plus or positive for the -- enhancing the corporate values of both companies.

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Unidentified Company Representative, [7]
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Moving on to the next question. The person at the very left, the second row from the front.

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Hiromi Osada;Chunichi Newspaper;Journalist, [8]
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Osada from Chunichi Newspaper. I'm sorry for wearing my mask. I have a question to both presidents. Earlier, President Sawada said, when he talked about NTT's vision, that the people are at the center. And President Toyoda also said that at the center of the future is people and that people are the center of your automated driving initiative. You're saying this all along. But for both companies, you place people at the center of things and you strongly emphasize this message. What is the significance of this? Of course, people are at the center of the society, so your vision should be human-centric. But why is it that you need to emphasize the centricity of people so strongly in this initiative?

Second question about the Woven City of Toyota. You have chosen NTT publicly as your first partner in actually implementing the Woven City. And President Toyoda just said that you want to promote this in an open mind. And would you also have other companies participating in this smart city initiative? And if you have any prospects on this, if you could share that with us.

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Jun Sawada, Nippon Telegraph and Telephone Corporation - President, CEO & Representative Director [9]
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Thank you. I'd like to respond to your first question. Thank you for your questions. So placing people at the center, originally, our company had already said -- had set such a vision, especially in the context of smart-city-related discussions. Around the world, I think there's image that involves hardware. I think it really is from the copper wire type of centric view. But that is not the case. So we consider social science and social system. If we want to create something that is better for the people, then it's important that we should place people at the center of the smart city vision. And Mr. Akio Toyoda shares such a view. We have shared views on this matter. So that is our recognition.

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Akio Toyoda, Toyota Motor Corporation - CEO, Chief Branding Officer, President & Representative Director [10]
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Regarding the Woven City, I have not done my homework researching about other smart cities, but the Woven City, which is advocated by Toyota, one of its main characteristics is what we call the standard unit, the introduction of what we call the standard unit. And the standard unit means, well, we have created an automated electrified vehicle called the e-Palette. Now telecommunications is switching from analog to digital, and more and more information is now being carried on a vehicle.

And for the automobile to be responsible for all infrastructure and also ensure safe and secure transportation, would that be possible? And would it become affordable to the level that you can provide mobility access to everyone? I think that we -- when we think about that question, we need infrastructure to take on part of that responsibility. Therefore, within a 1 block of 100 to -- 150 by 150 meters, we have decided to develop 3 types of streets: one is for pedestrians only, one is a street for automated driving and the third street is a mix of pedestrians and personal mobility, and the delivery of goods takes a totally different route.

So we introduced this standard unit sort of concept. And this standard unit is, of course, the basis of the Toyota Production System, or TPS. As I said in my earlier presentation, we want to deliver happiness to as many people as possible. That is the aim of our company. And the utilization of data, ensuring the data of NTT from the verification testing, we really saw eye to eye on whose data that should lead us. We should take ownership of data. And so we will be gathering data based on real life, making an aim to make people's lives more enjoyable and more enriching. When it comes to data, it's for the people in the city, right? And of course, what takes us access on a city? The data. I think we should share the data. We cannot lock in the data. That, we are of the same mind.

Yes, Toyota Motor Corporation and NTT are partners in this endeavor. But if it were just Toyota alone, NTT would not have moved. Toyota could not -- or NTT would not have been persuaded. Toyota is always endeavoring to make better cars, and behind us is actually a group of companies that share the same vision. And I think the NTT had its eyes -- sight on that group. And I think that NTT was able to see very openly into things other than just cars. Now the world of telecommunications -- well, when KDDI was formed as the second carrier and, of course, we're a shareholder of KDDI, but NTT and KDDI, these 2 companies actually were divided over FOMA and CDMA, these 2 formats. And they were competing with each other over FOMA versus CDMA. And during that competition, the communication charges became affordable. The prices came down because of this competition. However, with the advent of digitalization and now with the onset of the 5G era, now we are seeing technological development in autonomous vehicles reach the implementation stage, which means that even within telecommunications, data collection and data will be the area which can lead to both competition and collaboration.

So in that sense, the fact that we can work together with NTT toward a future-looking initiative, I think we can open the door to the participation of many different players, both in telecommunications and mobility. And so that each, when developing future values, can identify areas for competition and areas for collaboration or cooperation. And when these 2 companies get together, I think that we will be able to create a group which has no colors and is free of such colors or biases. And I think that is the significance of this alliance and that when people with the shared values get together, then we will be able to together create happiness for all.

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Unidentified Company Representative, [11]
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Now then we would like to entertain questions from people who are participating online.

(Operator Instructions) Mr. or Ms. [Sabatani], please turn your camera on before you ask your question.

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Unidentified Participant, [12]
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[Sabatani] from Sankei Shimbun Newspaper.

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Unidentified Company Representative, [13]
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Thank you for your question.

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Unidentified Participant, [14]
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Can you hear my voice, sirs?

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Unidentified Company Representative, [15]
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Yes, we can hear you.

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Unidentified Participant, [16]
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I have a question to Mr. Sawada of NTT. Well, you want to create a better future with a very large number of partners. That's what you mentioned. And going forward, you want to globally cascade the auto business. If that's the case, then you might have to consider other non-Toyota-related automakers and also house electronics manufacturers. I think you'll have to partner with the members of different industries down the road. So did this partnership that cuts across different industries, what is your position in NTT about the future partnerships that cuts across different industries?

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Jun Sawada, Nippon Telegraph and Telephone Corporation - President, CEO & Representative Director [17]
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Thank you for your question. As was mentioned by Mr. Akio Toyoda, we are also quite open-minded about partnerships. In reality, already, we are partnering and collaborating with many different companies as we speak. And in the smart city arena, that is already the case. And in this mobility space, that is also the case. So that being the case, smart city-related partnership between NTT and Toyota is at the core. But this alliance is not exclusive, so we want to be very open-minded.

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Unidentified Company Representative, [18]
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We would like to close the questions from the -- from online now.

Now going back to the hall, the second row from the front to the very left, second person from the right.

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Unidentified Participant, [19]
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[Kushima] from Yomiuri Newspaper. I'm sorry for asking a question with a mask. I have 2 questions. First question, mobility, smart city, I think these are areas where the huge U.S. companies like GAFA are putting a lot of investment into. So do you intend to counter these huge companies with the joint capital of both companies?

And the next question is to President Sawada. Of course, in the smart city initiative, you'll be using 5G to the fullest. But toward the achievement of 6G, the Susono City in Shizuoka would become a test bed for you to promote the development or verification and testing of 6G technology going forward.

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Jun Sawada, Nippon Telegraph and Telephone Corporation - President, CEO & Representative Director [20]
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Thank you. Let me first respond. Your first question about the relationship with the American GAFA, naturally, we are open-minded. And if GAFA wants to partner with us or collaborate with us, I'm sure Mr. Toyoda and myself, we would consider this. But when you take a look at the structure, I think we have -- in many respects, we will have to compete with GAFA. We'll have to counter GAFA. What we deliver, we hope that extensively, people around the world will utilize this initiative and that these nations will become stronger. So that is -- so that being the case, we are mindful of the possible competition against GAFA.

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Akio Toyoda, Toyota Motor Corporation - CEO, Chief Branding Officer, President & Representative Director [21]
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NTT is like the country itself from my perspective. They represent our country, and we are a hick town, small automotive company. But viewed globally, I think we are both global companies that is fighting in the world. So for these 2 companies to join hands and maintain an open mind in promoting this initiative so that we can send out the message that Japan is still a strong competitor in the world, I think it's what we're aiming for. And I think I also speak for President Sawada in emphasizing the need to place people at the center and also to make sure that the data is used in such a way that would make the people who offer the data happier and enrich their lives.

And of course, there are many different values, many different ways of thinking about this kind of initiative. But I think that is the notion that really closed the distance between the 2 companies. And so although we may open up this alliance further to a coalition, I think that is the point that we will continue to emphasize. To get a response in such a manner, they will respond, but the GAFA is not facing such -- is not based on such a model. I hope I respond to your first question.

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Unidentified Participant, [22]
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Now second question -- the second question relates to IOWN. In other words, what about beyond 5G? What about the new technology? To the extent possible, we hope that actually -- for example, in Woven City, we were able to do tests, demos and research in that context.

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Jun Sawada, Nippon Telegraph and Telephone Corporation - President, CEO & Representative Director [23]
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So in the IOWN global platform, Toyota is now turning towards participation. So new type of research hopefully can be pursued jointly between the 2 parties.

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Unidentified Participant, [24]
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On a related question, I think that when it comes to research and development budget, they can expend about JPY 3 trillion or so in smart city. So Japanese companies may be lagging behind when it comes to R&D capabilities. So where are you going to focus that money?

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Akio Toyoda, Toyota Motor Corporation - CEO, Chief Branding Officer, President & Representative Director [25]
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If I may, when it comes to R&D expense, to be quite candid with you, I think the measurements in the [R6] varies from country to country. In the case of the U.S. players like GAFA, they do this in the context of possible acquisitions as well. So that element is part of that discussion in the United States. When it comes to actual experimental expense, we are especially dedicated to experimental expansion, but we do not include service-related development costs. So if we include that, then the amount will be as high as JPY 500 billion or JPY 600 billion. Now as we go down the road, because of various concepts, we need to give this matter some thought. So we're not yet at a stage where we can respond to what will happen to the country R&D.

From last year -- well, for the past 2 years, Toyota Motor Company has been making a succession of key related investment. And with technology companies such as GAFA, we are also deepening our alliance. And why are they choosing Toyota? That's because we live in a real world. That is we have hardware and the durability, parts availability and repairability of our hardware is what made these companies choose Toyota. So NTT and Toyota, both of us have been working in the real physical world, and we wanted to align ourselves to the reality of the world. And we will continue to change our business in order to align ourselves with changes in society. NTT is, of course, leading this already. And so I do hope that because you are Japanese media, I ask you to please cheer us on, cheer us on very gently so that we can achieve such goals.

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Unidentified Company Representative, [26]
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Since it's time, we would like to close the Q&A session since it's time. The 2 presidents will be leaving the podium now.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

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