Message from the President

Image : Message from the President

I would like to take this opportunity to express my gratitude for our shareholders and investors for their continued support.

In the fiscal year ended December 31, 2021, the Japanese economy showed signs of picking up as the challenges posed by COVID-19 gradually eased. Economic and social activities have continued while all possible measures are taken to prevent the spread of the virus. We expect the economy to recover further due to the effects of various government policies and improvement in overseas economies. However, we must remain vigilant to the downside risks to the economy due to COVID-19, supply constraints, and soaring raw material prices. We must also keep a close watch on the effects of volatility in the financial and capital markets.

In the markets served by Cyberlinks Group (the “Group”), digital transformation (“DX”) and digitalization are rapidly advancing, driven by changes in social structures such as population decline and the need to respond to the spread of COVID-19. With the continuing threat of the epidemic, the food retail industry plays a vital role in supporting people’s lives, but in the medium to long term, it will be susceptible to market contraction due to a shrinking population. In addition, competition with other business categories, such as convenience stores, drugstores, and online retailers, is intensifying against a backdrop of diversifying lifestyles, including an increase in the number of dual-earner and single-person households. Furthermore, we are facing a labor shortage and an associated rise in labor costs. To overcome these challenges, it is essential for this industry to advance efforts to improve productivity, such as streamlining store operations through the promotion of DX and optimizing supply chains through collaboration with wholesalers and manufacturers.

In September 2021, the Japanese government launched the Digital Agency to make up for the country’s lag in digitalization, which became evident in its response to COVID-19. The Digital Agency is called upon to help realize a safe, secure, and convenient digital society by promoting not only the speeding up of administrative procedures through the digitization of various applications, but also the dissemination and utilization of the My Number Card as a digital infrastructure for society as a whole.

Business practices are also changing across all industries, triggered by such factors as the increased adoption of telecommuting associated with the spread of COVID-19. In particular, the need for “trust services,” a data distribution infrastructure that enables various paper- and face-to-face-based exchanges in cyberspace, is dramatically increasing. We believe that simple and reliable trust services will rapidly become the norm in the future.

In the cell phone sales market, the Japanese government has urged a shift to plans that separate handset prices from communication charges, prompting new players to enter the market while existing carriers have introduced low-cost plans with large data caps, including NTT Docomo’s “ahamo.” In addition, resellers operating Docomo shops are now free to set handset prices at their own discretion, and OCN Mobile One, a low-cost plan offered by NTT Communications Corporation, became available from October 2021. In these ways, the market environment is changing drastically, and we must pay close attention to the shifting roles of resellers. On the other hand, we also anticipate business opportunities to emerge, such as new demand associated with the launch of 5G services and replacement demand for handsets in preparation for the scheduled termination of 3G services in March 2026.

Against this backdrop, on February 12, 2021, the Group announced its medium-term management plan “Transformation 2025,” which runs from FY2021 to FY2025. Under the brand concept “LINK Smart: Moving into the Era of Hands-Free Connectivity,” we have been actively proposing safe, secure, low-cost, high-quality, and highly functional cloud services based on the “shared cloud” (i.e., a shared infrastructure for cloud services).

With regard to economic trends, the spread of COVID-19 has led to major lifestyle changes, and the development of innovative business models utilizing new digital technologies has rapidly accelerated across all industries. In the future, each company will need to speed up its digital transformation (DX) to maintain or enhance its competitiveness.

The information services industry continues to grow with the steady spread of cloud services, while at the same time commencing the full-scale usage of AI. With deep learning technology at its core, which is currently the mainstream, AI is characterized by learning from vast amounts of data to improve the accuracy of decisions. Accordingly, AI has a high affinity with cloud services that handle large amounts of data, and cloud services that incorporate AI have the potential to contribute more than ever to improving user productivity. We believe that as AI is utilized more actively in the future, cloud services will become even more convenient, and their widespread use will accelerate.

In this business environment, the Group has formulated the medium-term management plan “Transformation 2025” to achieve further growth. Under the brand concept “LINK Smart: Moving into the Era of Hands-Free Connectivity,” we will enhance and actively develop safe, secure, low-cost, and high-quality cloud services based on the “shared cloud” and aim to achieve further growth of the Group.

We will continue to strive for further business expansion and continuous improvement of corporate value to meet the expectations of our shareholders and investors. We humbly ask for your continued support as we move forward.

March 2022
Cyberlinks Co., Ltd.

President Tsuneo Murakami