The Acrodea Group is engaged in middleware and media business operations under the following corporate philosophy: To supply middleware globally for the operation of smooth user interfaces (UI) intuitive to the user, and thus to promote deeper and more fulfilling human communications around the world.
The advances in data communication devices—such as mobile phones, television sets, and automotive navigation systems that enhance our modern lifestyle—are remarkable. The sophistication and diversification provided by recent features, however, although nothing short of astonishing, are imposing increasing complexity on the operations of these devices. Reflecting on this situation, the Acrodea Group feels the need to emphasize operability by granting the preferences and manner of use sought by numerous types of users, so that contact with such devices is straightforward and undemanding.
Necessity induces the evolution of technology, and the data communication devices in our lives have accordingly supplied us with one new service after another. Precisely because we must now contend with the all-in-one utility of these devices, the Acrodea Group believes it is necessary to think seriously about how to advance the ease of use for services where people and machines intersect and how to actually introduce truly needed services. Consequently, we are envisioning a society where the end user (who is also the end client) can interact readily with electronic devices without feeling any stress—without concern for functions residing deep inside and out of view.

Consulting, Contract Development, and Proprietary Product Development (Licensing) constitute the three segments of the Middleware Business.

Consulting

This business segment supports software conceptualization, design, and distribution for client mobile carriers, handset manufacturers, and middleware vendors on a consulting basis. The consulting business provides a conduit to identify client requirements, and a means to improve product development.

Contract Development

This business segment is engaged in the development and distribution of software principally for mobile phones on a contract basis from mobile carriers, handset manufacturers, and middleware vendors. The contract work mainly involves prototyping of Acrodea products and actual product implementation to mobile phones after license sales that tie into the development business for proprietary products.

Proprietary Product Development (Licensing)

This business segment conducts research and development of technologies that form the foundation of software for compact embedded devices, such as mobile phones, and licensed sales of Acrodea middleware to carriers and manufacturers. Acrodea considers this segment to be of paramount importance as the principal revenue stream.
Our proprietary products constitute a portfolio of 14, including VIVID UI, as of March 31, 2008.

The Middleware Business generates the main revenues of the Acrodea Group, whose principal business is licensed distribution of proprietarily developed middleware. In the process of finalizing licensed distribution, Acrodea may provide consulting services to client carriers and manufacturers, prototyping work on a contract development basis, and, in response to customer needs for specific terminals, implementing, customizing, and maintaining middleware that constitutes a range of secondary contract work.
The Media Business leverages business development off of the Middleware Business, and operates mobile websites for our principal product VIVID UI. The division generates advertising revenues from the websites. In addition, through development support to other businesses and content providers of UI content, the division obtains a share of revenues from content download charges.
In this way, the business operations and departments of the Acrodea Group are mutually linked to the core of licensed middleware distribution, and are not independent business arms. For part of the proprietary product development, furthermore, Acrodea invites companies who can expect synergies in such development and sales expansion to participate as joint development partners. Partners bear a portion of the development cost, and share the income according to the proportion of development cost shouldered. Through this joint development model for our products, we can alleviate the business risks associated with development and distribution, and also increase the lineup in our attractive portfolio. Finally, some of our product is distributed through agencies, to whom agency commissions accrue.

The following diagram illustrates the descriptions provided above.