With former J-Phone’s 3G rollout stalled and, it seems, little left in the goodies barrel to counter DoCoMo’s sleek summer-six 2G 505i rollout, and swelling 3G subscriber figures from both its rivals here in Japan, J-Phone needed to distract press attention from the company’s terrible summer. Last week, Darryl E. Green just did that. There was a strong sense of DeJaVu at WWJ when Green, eschewing fowl or game, pulled the NEC ‘tellycelly’ out of his corporate top hat at October 1’s inaugural Vodafone KK press conference. Remember Sha-mail? How fleet-footed J-Phone sidestepped DoCoMo and stole the hearts, or at least the images, of 10 million teenagers with cool keitai camera phones? It looks like the rebranded J-Phone-cum-Vodafone KK combo is going to leapfrog DoCoMo and KDDI again with Japan’s first TV-Phone this December. And, beyond that, Vodafone KK has a lot more up its wide sleeves with six new 3G phones, new business billing plans and bargain rates to fight back.
Latest figures for September out today show just how much of a tough job Green faces to turn Vodafone KK’s slumping subscriber, ARPU and market share around. Especially when it looks as if the confusing array of handsets and technologies the company is touting will take until October NEXT year to settle down into a standardized set of 3G handsets that customers in Japan can get used to.
Before going into Vodafone’s countermeasures, it has to be pointed out that the company’s had a bad quarter.
One of the foundations underpinning WWJ is watching the innovations introduced by Japan to deal with Japan’s critical wireless problem since the late 90s: dealing with a mature market. But according to the Telecommunications Carriers Association yesterday, subscriptions to cell phone services in Japan totaled 78,594,700 in September, up 9.0 percent from a year earlier and 0.5 percent from the previous month. Of the September total, DoCoMo Inc had 45,042,000 subscriptions nationwide, up from 44,862,000 for August, while Au service saw subscriptions grow to 15,262,500 from 15,084,200. While there’s life, Jim, as we know it in squeezing new subs here in Japan, many media didn’t even mention Vodafone KK.
And in September, Vodafone’s 3G service proved itself of limited local appeal, adding only 7,900 subscribers to bring the Vodafone (Not quite?) Global Standard up to 83,000 subscribers since launch in December 2002. This seems to echo the desultory first-year performance of FOMA service, except that FOMA just passed the million-subscriber mark last month. While the 7,900 increase equals the worst figures of the darkest months of FOMA over last December and this January, DoCoMo finally struck back with the new models it had been promising since the previous autumn. The F2051 and N2051 didn’t die after an hour of use, and you don’t need extra stitching in your pocket to carry them. With the network buildout adding national meaning for FOMA, subscriber figures nearly doubled to 330,000 in March over February. Then a batch of new phones (P2101V, dual mode N2701, F2101 and N2102) plus 97 percent coverage took the service to breaking the half million barrier this June and the 1 million subscriber mark this October. And the latest offerings approach 2G handset comfort zones weighing in at a “sleek 109g” and with a “beefed up” battery standby time of 310 hours, according to a sexy and muscular DoCoMo press release.
Against this combination of beauty and brawn, Vodaphone has to sort out some handset, marketing and image confusion issues. When it comes to answering the “does it go?” question, the company has, ahem, a lot to answer for. In fact, the confusion spreads to Vodafone KK itself, which counts subscribers by sales of USIM cards, so 7,900 is a best guess.
At the moment, if Mrs. Suzuki goes to a Vodafone shop and wants know which does what and where, she might hear that NEC’s V-N701 is a dual mode W-CDMA/GSM, while the Sanyo V-SA701 does the W but not the G, while the Nokia 6650 does GSM, GPRS and W-CDMA, while the Motorola V66 does GSM only. G, that’s where? Ah So Desu Ka?
She might be forgiven for popping over to Au and picking up a phone that’s automatically (nearly) 3G and works in “a lot of countries.” (Great when shopping in Korea, where they already have tellycellies anyway). And millions of Mrs. Suzukis HAVE popped across the street to KDDI; three weeks ago KDDI topped 10 million CDMA2000 1x subscribers.
Vodafone KK has been launched off the back of three terrible months, with the company gaining 74,800, 50,200 and 26,300 subscribers in July, August and September. Forget DoCoMo, let’s compare it to Au, with whom Vodafone KK appears to have lost its battle, perhaps temporarily, for second place: Au got 210,000; 199,900 and 178,300 in the same period. We’d like to note that Vodafone’s September increase was half that of one pessimistic estimate we’d read. The same report predicts that Vodafone will glean fewer than 500,000 3G subscribers by the end of next March. ARPU’s on the slide too, with figures March-June dropping 7,270: 7,050: 7,040 and 6,850 yen respectively. The company likes to point out that 71 percent of its customers are Sha-mail users and 87 percent are J-SKY (now V-Live) subscribers, but the figures suggest fewer pictures and downloads for the while.
Those watching our video program will know that Green dodged the 3G subscriber question eloquently in Japanese, after conceding that Vodafone would have “difficulty” hitting the one million mark soon. It’s a familiar story, but it does appear that 3G growth will stall without a clear set of flagship handsets and services over next year, and until then the service is, to but it bluntly, dead over the airwaves.
So what does Green have up his sleeve?
Firstly as a stopgap for 2G, there are the two new high-def. Mitsubishi Electric V301D and Sharp V401SH handsets, the first with a bright and shiny screen and the second with a megapixel camera. Better, however, the company has the cool triband Sanyo we wrote about recently coming soon, and something probably even cooler by Sharp in November to, as DoCoMo might put it, “beef up” the 3G lineup.
Secondly, Green made it clear that 3G is a work in progress.
Indeed. J-Phone’s August promise to launch Vodafone Live on 3G was sabotaged, Green admitted, by a last-minute software bug. And a series of baseband chipset problems are one of the causes of the lack of new handy hardware, not the muddle of integrating J-Phone into the Vodafone group, he said.
Back to 3G again; while DoCoMo base stations the last 3 percent of its network, Green pointed out that J-Phone/ Vodafone will have built out 10,000 base stations by the end of this year and will be close to the vital high-90s percent population coverage, that means consumers can actually use the phones with confidence. Most importantly, Green said Vodafone will roll out a super 6 model lineup before next October that should become the flagship set of keitais, they believe and we think that will start to make sense out of the Global Standard moniker the company has attached to its 3G service.
The subtext to Green’s press conference was assuring the media that once the big old Vodafone jalopy gets into gear with a sorted out display cabinet of wares, it’s going to be thundering down the international wireless highway. While doing this, it’s taking on board the lessons provided by J-Phone to bring more than just NEC into the international market.
Take the tellycelly. One button and you can cut the sound, do your email, take that call and get on with what you need to do before returning to that all important golf tourney. Packet rates are going to drop through the earth’s core to enable this and Green is already talking about signing up paid subscriptions for the “minority sports” business news, specialized content, interactivity and we guess keitai-based online shopping that’s a coming for the mutual benefit of all involved.
Look at the opposition, meanwhile, here in Japan. FOMA costs 70-odd yen for 10 seconds of global video conferencing and we’ve heard nothing about a tv-tuner, while KDDI’s prototype we saw in July resembled a clunky brick, not a pocket rocket.
Aside from the new phones, Green’s core message was that after a difficult summer, Vodafone is going to follow on from J-Phone and become an easy to understand brand that’s cheap and cheerful and standardized. We get the feeling that Vodafone really will kick out next year because once the distractions of rebranding are cleared, the group shows signs that it will really get to grips with its customers’ needs.
Green, to his further credit, also spared the media the usual corporate guff about synergies with J-Phone, although he did point out that when it was thought it would take weeks to paint the J-Phone shops Vodafone red, the task was done in days. On the other hand, while you can hardly be anywhere in central Tokyo and the moment and not be exposed to some form of Vodafone advertising, alarm bells were ringing around browsers over the summer with rumors that email address portability wasn’t possible. Green was left to specifically confirm this, as well as noting that packet data bargains are being applied across the board.
Back to the Future again. When it comes to phones, Vodafone will be able to match the pulling power of DoCoMo with Japanese makers and draw the best out of them and Nokia, Ericsson, Siemens and Motorola in the international markets. When it comes to integrating services, WAP and Vodafone Live will be integrated. For browsers, the company is working on an Explorer update. When it comes to business applications, Vodafone’s Wireless Office plans promise, according to Green, to bridge the gap between the phone and the PC as well as billing systems that won’t bother the boss.
As for those pesky packet rates, Vodafone’s new hip and happy prices plans in general and Green’s comments in particular, as with KDDI, make it Sharp LCD crystal clear that Vodafone is going to slash and burn. DoCoMo’s Tachikawa indicated in September that he’s not going to get into a data price war.
Viva le competition.
— Paul Kallender