■Company Overview of BB Systems ＜4447＞

3. Business environment

First, let's take an overview of the cloud service market targeted by the secure cloud system business, which is the company's main business. According to the Ministry of Internal Affairs and Communications's Reiwa 6 Information and Communications White Paper, the domestic public cloud service market continues to grow, and sales are expected to be approximately 3.1 trillion yen (up 25.8% from the previous year) in 2023. Against the backdrop of IT industry trends such as the transition from an on-premise environment focusing on cost performance and convenience to the cloud, it can be seen that it is a business field where market size expansion can be expected in the future.

Also, similarly, in the Reiwa 6 Information and Communication White Paper, there is a description of estimated values for the same market until 2028 that markets around the world may continue to grow, and expansion to about 6.5 trillion yen is expected within Japan. Note, the same estimate relates to the public cloud service market, and although it does not directly overlap with the private cloud market that the company excels at, the probability that the cloud field will continue to grow due to future advances in information and communication technology and the evolution of various IT-related services, etc., not only around the world but also within Japan, is extremely high, and we believe that the cloud service market is basically a good growth market.

Thus, as the importance of the cloud in business is increasing, the need for stable operation of services, that is, infrastructure construction that pays attention to security, is unavoidably increasing at the same time. Therefore, we will also check the status of cyber attacks (cybersecurity). In the “NICTER Observation Report 2023” compiled by the National Institute of Information and Communications Technology (NICT), “total number of observation packets per year per IP address” is considered as an index representing the activity of cyber attack-related activities on the Internet. Looking at this number, about 0.57 million packets were observed in 2017, but in 2023 it was about 2.26 million packets, or about 3.9 times the number, so it is obvious at a glance how active cyber attacks have become in a few years. Even in comparison between 2023 and 2022, it expanded drastically, with a 23.3% increase from the previous year. In fact, many listed companies and government offices have been targeted by cyber attacks, and a lot of damage has been reported. Regarding ransomware, 52% of the 197 damage cases in 2023 were small and medium-sized enterprises, and the manufacturing industry accounted for 34% of the 197 damage cases in 2023 according to the “Situation of Threats Surrounding Cyberspace” announced by the National Police Agency in 2024/3. The company's main customer, the small and medium manufacturing industry, is in a situation where it is easy to be targeted. Other than that, most ransomware infection routes were via devices, etc. used for telework etc. at about 81% (115 valid responses). Since these affected companies correspond to the company's target customer base, it can be seen that there are many opportunities to acquire demand. Recently, damage caused by Nowhere ransomware steals data without encryption has also been reported (National Police Agency), and demand for security measures is expected to continue.

In addition to cyber attacks, the business environment surrounding the company, which has deep knowledge and abundant experience at a practical level of resilience against system failures caused by natural disasters and accidents, etc., and the strengthening of the system itself, that is, “resilience,” has been improving in recent years. Furthermore, based on this situation, the company began providing Emotet countermeasures and cyber resilience building services in 2022.

Finally, I would like to briefly touch on the metaverse market, which will be the target market for the company's business in the medium to long term. It is more prominent in the US, but it is clear that huge amounts of investment funds have already flowed into metaverse-related areas even domestically. There are times when social interest is rapidly increasing recently, and each research company estimates the market size, but it suggests that no matter which one you look at, it will grow into a super huge market. According to the Reiwa 6 edition of the Information and Communication White Paper, it is predicted that the global metaverse market, which was 46.1 billion dollars in 2022, will expand to 507.8 billion dollars in 2030, and the Japanese metaverse market is also predicted to expand from 79.3 billion yen in fiscal 2021 to 2 trillion 5.9 billion yen in fiscal 2027. Note, regarding the use of the metaverse, according to the Reiwa 6 Information and Communication White Paper, 50% or more indicated their intention to use it as a communication tool from sample survey results from 1,030 people, and in an enterprise survey of 515 companies, the status of introduction in applications such as product development and manufacturing is less than 10%, which is far from 60% in the US, so there is plenty of room for market expansion.

■Business description

The core is to convert the system to a private cloud

1. Secure cloud system business

The secure cloud system business, which is the company's main business, provides total support from digital work promotion to DX realization with cloud technology in a nutshell. Specifically, clouds used within a single enterprise/organization are called “private clouds,” and businesses are being developed with “private cloud conversion of systems” as the core. Speaking of corporate names, from various options such as Citrix, Broadcom (formerly VMware), DELL, Microsoft, etc., we include hardware products such as security, storage, servers, etc., and various software products, and are not limited to designing, constructing, and maintaining optimal cloud infrastructure proposals that are a prerequisite for realizing corporate DX, but also including resilience. Also, in recent years, there have been many cases in large companies, and what is strongly viewed as a problem is “cyber attack.” Resilience from system failures caused by attacks such as ransomware and unauthorized access, etc., and the strengthening of the system itself, that is, having deep knowledge and abundant experience on a practical level of “resilience,” can be cited as one of the characteristics of the same business. Since it does not directly develop and provide cybersecurity countermeasure products in BtoC, its personality as a cybersecurity countermeasure expert is somewhat difficult to understand, but it is an advantage of the company, which is an independent SIer, that it can make optimal proposals for customers based on consistency with core systems etc. from a wide variety of options. In 2023, the company was newly added as a partner of Cybereason, which is a global manufacturer of cybersecurity, and its character is getting stronger.

Furthermore, the company is developing business with medium-sized enterprises with sales of 100 to 50 billion yen as the main target, and inquiries in the public (local governments, various organizations, etc.) domain have also increased in recent years. The business consists of 3 divisions: “platforms” that virtualize servers and build strong security environments; “products” that specialize in virtualized environments and commercialize and sell functions that meet needs generated from the field; and “customizers” that perform scratch development (handmade development) to satisfy unique functions desired by customers (about 90% are “platforms”).

(Author: FISCO Analyst Tomokazu Murase)