Q&A with top management | From the president to investors

Responses to questions below are as of the month posted. The situation may have changed, due to various factors including economic conditions and the competitive landscape within the industry, depending on the time of viewing.

December, 2010

Has the rush demand for flat-screen TV sets influenced your sales in November?
In November, there was the demand for TV sets, but did not increase total sales significantly compared with electronics retail stores. On the other hand, the sales of PCs remained unchanged from the previous year, and were not influenced by the sales of TV sets.
How do you prevent the violation of the Anti-Monopoly Act (improper use of the superior position)?
As part of internal control, our company organized a "risk management team" composed of mainly the managers of management sections, to clarify risks inside and outside our company, evaluate risk level based on its influence and emergency level, and take preventive measures according to risk level.
The risk of the violation is considered low in our company, but we will intensify internal control for the compliance with the law.
Do you plan to open new stores in further western region in Japan, after opening Fuji Store?
On December 3, we opened "PC DEPOT Fuji Store (directly managed)" in Fuji City, Shizuoka Prefecture. Our directly managed stores are located and concentrated in the Kanto region, including Shizuoka Prefecture. In other areas, franchised stores are operated.

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November, 2010

Does the diffusion of smartphones have positive effects on PC DEPOT?
We will sell more smartphones. Some functions of smartphones are the same as PCs, and so the demand for PCs may decrease temporarily.
However, differing from conventional mobile phones, the functions of smartphones are enhanced when used with PCs, and the purposes of usage will increase, so it will become more convenient for customers. Accordingly, as smartphones are diffused, the demand for PCs will increase from a long-term viewpoint.
What is the purpose in staring the service of copying data from videotapes to DVDs?
This service was commenced as one of the services regarding "digitization" offered at PC Clinic. This service is used by customers who are worried about the deterioration of videotapes but feel bothersome or have no time to digitize them. We plan to increase our services regarding "digitization".

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October, 2010

Do you handle newly-released smartphones and tablet PCs?
We handle them.
Our company has a policy for handling products that can be connected to the Internet. At present, we strengthen their product lines centered on TV sets, smartphones and tablet PCs. We also plan to handle Internet TV sets, such as Google TV recently released in the U.S., and electronic books.
Please tell me what motivated you to develop your original model: the Android flat-screen TV "OZZIO Stylevision.
TV sets that can be connected to the Internet have been already released, but there are few customers who actually connected the TV set to the Internet. On the other hand, an increasing number of people access the Internet with their PCs while watching TV. In this circumstance, we thought that a product that enables us to watch TV and access the Internet easily at the same time would be demanded, although this idea is similar to that for Google TV. Then, we developed this product.
Is there a possibility that PC DEPOT will be opened in department stores?
Most of department stores are located in the vicinity of stations, and so there is no possibility. For details, please see the answer to "Is PC DEPOT considering opening stores in front of train stations?" in Nov. 2009.

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September, 2010

Is the 3-month extension of the period of the “eco point” system beneficial for PC DEPOT?
There are many uncertainties. We have started handling TV sets, which are eco point products, but its scale is still small. We think the extension of the period of the "eco point" system produces adverse effects in our competitive environment relatively.
Are your TV sets sold well?
The number of customers who know that TV sets are sold at our stores is still small. TV sets are purchased by mainly loyal customers.
Yen appreciation is lingering. Does this affect PC DEPOT?
There are no direct influences. For details, please see our answer to "What sort of impact does recent yen appreciation have on PC DEPOT?" in Feb. 2009.

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August, 2010

Are there any seasonal demands for the products of PC DEPOT due to the searing summer?
The demands for a small proportion of products grow due to the searing summer like daily necessities. PCs are precision machines, which are vulnerable to heat, and so the demand for repair tends to increase according to the usage environment.
I often hear "cloud" computing recently. Is this related to PC DEPOT?
The demand in general households is still little, and so it does not matter. If it is popularized among general households, the demands for related services will grow.
Do you handle the TV products of all Japanese manufacturers?
Our company mainly handles the products of the four leading manufacturers: Sony, Toshiba, Sharp, and Panasonic.

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July, 2010

If your competitor shifts from point services to discounting, will it affect your sales?
Our company has not adopted any point systems. If our competitors discount their products, it will affect our sales for better or worse.

(* Please see the answer in Feb. 2009 to "Why doesn't PC DEPOT have a point system?"
The monthly report for June indicates that the sales at existing directly operated stores increased from the previous year. What do you think the reasons are?
In June, the sales of hardware products, especially PCs, increased from the previous year. Possible factors are the increase in the unit price of PCs, due to the release of Windows 7 and new CPU-mounted PCs, and the Eco-Point System in the previous year produced adverse effects on sales.
Do you handle iPhone4?
Almost all of our stores, except some stores, handle it. Under the policy of selling a variety of Internet-connectable products and new genres of TV sets, smartphones, and tablet PCs, we handle an increasing number of smartphones, including Xperia.

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June, 2010

Do you handle three-dimensional PCs?
Our company makes efforts to procure a variety of new products, including three-dimensional related products. Leading makers in Japan announced the release of three-dimensional PCs, and three-dimensional related peripheral devices have been released.
We will handle them proactively.
I would like to know your policy for selling original brand TV sets.
We develop products with the aim of handling affordable high-quality products that can satisfy customers' needs. New products are to be released in early July.
As Internet functions of TV sets increase, we expect that customers’ needs regarding TV will be diversified. We will continue product development and sale so as to cope with them.
Is your TV sale corner to be increased?
On June 12, TV sale corner was opened in 2 stores in Chiba Prefecture. We will install TV sale corner in more stores, considering customers' needs.

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May, 2010

What is the purpose of placing a corner for selling TV sets?
As three-dimensional related products for PCs and TV have been released, an increasing number of customers demand the network connecting a TV set and a PCs. Since TV sets are major products that can be connected to the Internet like PCs, we will start handling TV sets on a full-scale basis.
From now on, we plan to offer the network connection service for TV sets, PCs, and game consoles, etc. In June, two large stores will start this service, and this business will be expanded according to business conditions.
Have you changed your policies for opening stores in fiscal 2010?
Our policy for opening stores is to establish large stores whose acreage is over 1,500 square meters in the suburbs.
In fiscal 2010, we plan to open 5 stores, and in April, we have already opened Ichihara Inter Store whose acreage is 2,600 square meters. We will also scrap old facilities and build new efficient ones.
Does the popularity of iPad and smartphones affect the demand for PCs?
Smartphones have similar functions to PCs, but it seems that many users use them separately according to places and purposes. In addition, we believe that the increase in the number of devices that can be connected to the Internet, such as smartphones and Internet-functional TV sets, will expand the demand for PCs.Accordingly, we will handle both products.
Are there any effects of the World Cup?
It can be expected that the demand for some recording items, such as hard disks and blu-ray disks, will grow, but we think there will be no direct effects of the World Cup.

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April, 2010

Will PC DEPOT's business be affected by the increasing number of large-scale electronics retail stores located in front of stations in the city?
PC DEPOT is expanding our business by opening stores in the suburbs, so we believe that there won't be a large affect. However, in no small part, we will be affected by a decrease in the number of customers visiting our stores in the city.

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March, 2010

The government recently launched a housing version of its eco-point system; will this also have a negative impact on PC DEPOT?
We expect neither a positive nor negative impact.
What is the aim of resuming store openings of directly-managed PC Clinics?
We believe it is imperative that we increase the number of PC Clinic stores going forward, and in order to flexibly do so, we have decided to pursue expansion of the network via two formats: directly-managed stores and franchise stores. We plan to open a directly-managed store on a trial basis in fiscal 2010, and will manage the store in earnest thereafter.
Why did PC DEPOT, a PC specialty retailer, launch an emergency flash notice distribution service regarding earthquakes?
We launched this free service for our maintenance service members. The basic principle behind our corporate social responsibility (CSR) thinking is "elimination of the digital divide in communities." The Internet enables the receipt of sophisticated flash notices regarding earthquakes. By providing this convenience to customers, we aim to help them benefit from the digital society in their own homes.

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February, 2010

Do you handle smartphones and the iPad?
Because new data handset products are frequently launched when new technologies are developed, we plan to aggressively expand our lineup of new portable data handsets to make proposals to customers for connecting to networks.
Is there any positive benefit to PC DEPOT from the rise in overseas tourists visiting Japan?
We believe the impact is extremely small since our stores are located in the suburbs.
Gross profits from product sales declined in the third quarter of FY2009, but do you expect an improvement going forward?
Gross profits from product sales fell due to a confluence of factors. First, we saw waning volume benefits as the surge in demand for mini-notebook PCs cycled out. Also, we slashed prices and launched bargain sales ahead of schedule to counteract the decline in customers caused by competition with volume electronics retailers (whose products are eligible for points under the "eco-point" system the government introduced to help stimulate the economy) and cross-industry retailers.
The outlook is harsh as the sales environment remains shrouded in uncertainty, but we will strive to maintain firm unit sales of PCs, and strengthen sales of related peripheral equipment, to improve gross profits.

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January, 2010

Will you see an impact to earnings from the spreading computer virus Gumblar?
First, we see a very low risk that the PCs of our maintenance service members will be infected because their PCs are protected by anti-virus software.
Second, we plan to continue expanding our menu of PC safety services at PC Clinics because we believe the spread of Gumblar will raise customers' awareness of the importance of PC safety.
What is your outlook for the business environment surrounding PC DEPOT?
We expect things to be as severe as they were in 2009 because we do not believe the outlook for the economy and consumption warrant optimism. We are concerned that the extension of the "eco-point" system will continue to exert a negative impact on the PC industry.
However, we plan to continue our policy of opening large stores and improving the safety of PCs, data, and the Internet in local communities. We aim, in 2010 as well, to respond to local customers' cries of "Help!" by expanding sales of PC and network solutions services via our store network.

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