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In September, a group of IT professionals visited Japan to roll up their sleeves and find out who are pushing what enterprise applications here. With FeliCa debuting in trial form a few weeks from now, we were interested in hearing their views about Japan’s ready-built business apps. infrastructure. You may be surprised by their findings. Independent consultant (and WWJ subscriber) Donal O’Shea was part of the group that included representatives of a major French airline, an Australian steel company and a UK-based package delivery company, together with Douglas Neal and Piet Opperman of CSC Research Services and Sebastien Bacholet of Cigref. They met with Qualcomm, HP, IBM, NTT DoCoMo, Alcatel/Fujitsu, Telecom France, Nissan, and Hitachi, and toured the Yokohama Reasearch Park. Wow, Big Big Itinerary… In a nutshell, concludes O’Shea, “carriers have never understood the enterprise…”
For most attendees, the objective was to see what Business Applications have been implemented around the mobile phone. By Business Applications, they meant they were hunting for apps that improve enterprise productivity rather those that are consumer facing.
Indeed, a recent investigation turned up over 500 case study models for mobile applications in the United States and Europe, typical applications being delivery tracking or distribution management; simple accessing of corporate data (order status, invoice tracking, inventory) by field personnel; job tracking in a manufacturing plant or campus; spare part ordering and more general Field Force Automation apps.
Specifically, O’Shea and company were looking for the sorts of apps that are beginning to emerge outside Japan. The examples are growing and include account information, contacts, opportunity management, activity & time management, lead management, sales reporting, forecasting tools, etc….apps that are all well understood and served by vendors such as Siebel and salesforce.com.
However, our IT hunter-gatherers didn’t, to their surprise, actually find many.
“In the consumer area we were, of course, staggered by the quality of the handsets and the pervasiveness of the mobile business—Akihabara, phone shops, displays, people using their keitai all over the place,” says O’Shea. In Korea, they were surprised to find that the handsets were smaller—though that is beginning to change as the clamshell designs are becoming more like 504/5s, he says. “Usage is quite similar to Japan and the CDMA2000 1X EV DO is very impressive”.
“In the enterprise productivity area, almost nothing has been done in either Japan or Korea,”he noted.
While the group did dig out some Sales Force Automation applications, the news seemed quite depressing, O’Shea reports. Of the companies found implementing enterprise applications, only Sony, Nissan and a few others had plans worth investigating.
He similarly reported that the group had expected more of DoCoMo, since Big D has been claiming success in the business marketplace for the last three years. Those of us who were there at the time will also remember DoCoMo have a habit of saying everything that they do is done for love of the business customer. Indeed, i-mode itself was originally marketed for bizzaps (although DoCoMo soon changed their story).
So O’Shea and friends trooped off to Sanno Park Tower (home of FOMA’s new whizzo tiny-tiny basestations) where Big D is rumored to have its business solutions center.
There, DoCoMo told O’Shea they were now beginning to focus on the business market. On a previous trip, J-Phone (now Vodafone K.K. ) had told them that their bizzapp strategy would be kicking into gear this autumn. Turning to KDDI, “The KDDI bandwidth and pricing seems ideally suited for the enterprise, but… It would be very interesting to have them produce ten case studies,” says O’Shea.
“My suspicion is that they couldn’t or that the examples would be feeble,” he says.
(P.S. Sprint would claim that they are successful in the business market here in the US and they aren’t! he adds.)
This is the first time we’ve heard someone calling DoCoMo feeble. We’ve heard other adjectives, but “feeble” is new to us. And this perked our interest. Again, we have noticed that the latest barrages of FOMA advertisements focus on client-client video telephony between friends, not any M-Stage conferencing. Gone are the days when a DoCoMo rep would make a pitch about how field workers could show pictures of the condition of the building site (“Look boss, it’s half-built!”) Or, perhaps, the cookery (“Look ma, it’s half baked!”)
But what about BREW? What about FeliCa? Are we at WWJ in danger believing that the cellie IS, after all, going to become more than just a talk-toy? Or are are the Japanese so hooked on teddy bear mail, Barbie, tarot, tatt, dating services and other games, that bizzapps will spoil the fun?
A quick flip through the DoCoMo i-mode menu guide (in plain old paper version, we can’t be bothered clicking through all the menus on an actual phone) devotes 170-odd pages of the types of services that made/makes i-mode cool. In fact DoCoMo has split service features into 26 categories beginning with i-appli search and ending with i-motion, running through weather/ news information, gourmet info, ringtones, Karaoke, etc. Mobile banking and Securities/ Credit Cards and Insurance Services occupy, however, a tiny part of the menu and, basically, you can’t really get any sort of banking service without a FOMA phone. And there, really is part of your answer to the whole issue. I-mode’s for fun, FOMA’s for business, and FOMA is just a tiny part of the market at the moment.
If you want feeble figures, take a look at this estimate: O’Shea came away believing the number of people using biz apps on the ground here in Japan may well be only about 100,000. But after more consultations, he believes a figure of 300,000 to be nearer the mark..
“Given 50 million mobile data users in Japan even that is a seriously tiny (0.6%) percentage,” he notes.
OK, back to Bright New BREW and Fun with FOMA.
“Yes,” says O’Shea. “BREW and Java are the key to enabling an enterprise to develop customized applications for use by their employees. FYI, today, some companies have expensive custom terminals and private radio networks to enable specific applications. With decent public infrastructure data speeds, these applications can be implemented much less expensively now.”
So what’s holding Japan back?
“We had extensive discussions as to why companies have not deployed mobile productivity apps,” he says, and the reasons he stated, we tend to agree with.
“Carriers have never understood the enterprise,” he says. “They have sold telecom equipment to the gentleman responsible for the PBX under the stairs and they are unable to break free of that mold.”
On top of this, two more factors have been holding back bizzaps in Japan; costs and culture. As those of you visiting our Telematics program will know, Japan’s drivers will not tolerate any form of premium on communications charges without demonstrably cool and useful content. In fact, they have driven Toyota round the bend trying to get G-Book configured in a way to get customers to pay for some sort of return on the considerable investment Toyota, Denso and Matsushita, just to name a few hardware vendors, have thrown into their Telematics play.
“On a previous trip,” says O’Shea, “I head from an insurance company that i-mode was too expensive and that rather than use it to transmit new customer data the agents preferred to travel to the office to upload the data!”
The second point about culture has to be experienced to be believed. Consequently, we believe it.
“The other argument is that the work patterns in Japan are such that people need to be seen in the office and improving productivity is counter-productive! This is an idea put forward by somebody in Tokyo, I don’t know how true it might be! The culture of Japanese business is that you don’t leave the office (go home) before your boss does. If that’s true why bother to speed up the filing of sales reports or to improve productivity in other ways? ” he says.
Not to make a meal of things, but he’s hit the nail on the head. Walk into any Japanese corporate office and witness a fair proportion of the staff reading the newspaper or hanging out in the smoking box for half the day. (I’ll save my beer drinking at the desk story by one of Japan’s senior Science and Technology space development bureaucrats for another day…)
We have a similar take on this. The Japanese corporate environment is laced with a layer of middle-management, typically guys in their 50s who have to be dragged kicking and screaming into anything resembling IT. Kallender notes that on his regular business trips to Nagoya, he has yet to see a 50-something salariman using a laptop or mobile phone, except to grunt excuses at the wife, while the Shinkansen’s carriages are meanwhile peppered with workers in their 20s and 30s tapping away merrily and taking calls, reading their emails on keitai etc. Unfortunately it’s the upper-middle management corps(e) that should be pushing the efficiencies, instead of, as Kallender notes, drinking beer and complaining about cuts in their after hours booze (sorry, entertainment) budgets.
But flat rates and lowering/ lowering/ lowered costs should now be able to justify building in more apps from next year, Vodafone has just announced MORE packet cuts (down to 0.06 yen a packet..!! .pdf here), and of course, Mr. Tachikawa isn’t going to get involved in a price war, no way!…
“An example of the kind of application I am thinking of would be the walk-about rent-a-car check in. Currently Hertz and Avis use expensive specialized terminals. You could put together that application today using a mobile phone with a Bluetooth printer taped to it!,” he notes.
“On reflection,” he adds, “we realized that while Japanese vendors such as Fujitsu and Hitachi were prominent in manufacturing excellent IT hardware, but Japan was never at the forefront in using IT.”
Solutions and, hey, let’s end on a bright note
O’Shea told us the only way he thinks that the needs of the enterprise for mobile data services will be met will be through the MVNO (Mobile Virtual Network Operator) model where a company purchases network capacity wholesale from a network operator and sells it to the enterprise IT organization, repackaged, repriced and bundled with consulting and customized applications.
“This model has been tried by Frank Sanda at Japan Communications (
“In the US and Europe the systems integrators such as CSC or Accenture would be obvious candidates to create and MVNO subsidiary, but so far we have seen no sign of that.”
But isn’t the recent tie-up between Sony and DoCoMo on FeliCa a sign that mobbies are moving to the next stage of usefulness?
As expected, SmartCard suppliers are not taking the Felicia Mobile threat lightly. Soon after DoCoMo and Sony confirmed the IC chip deal, NTT Communications announced that they are linking up with security (and retired salarimen janitor/ guard provider to a million buildings in greater Tokyo) company Secom Co. to launch the 1-megabite capable eLWISE card. The card allows users to enter buildings, PCs, corporate LANs, etc and uses a Secom security system and an Internet security technology developed by Secom subsidiary Secom Trustnet Co.
NTT Communications and Secom said they aim to sell 200,000 cards to 700 companies in three years and anticipate annual sales of 1.6 billion yen! But the real sign that eLWIDE might prove a painful prod in DoCoMo’s pockets is that its already been adopted for the national resident registry network system (private eyes are watching you, they’re watching your every move) with 1.6 million cards, and is finding new apps in electronic ticketing with Pia Corp., the company that produces Japan’s most popular leisure events scheduling mags.
“The FeliCa announcement could have a much more profound impact on society in the long run than even Sony suspects,” believes O’Shea.
“There are 4 billion unbanked people in the world. A large and growing number of them have mobiles…but that’s another story! At some point businesses will start to deploy productivity applications. All the ingredients are there: Technology, infrastructure, [and] need!” he concludes.
We’d like to thank Donal very much for taking the time to share his views with us. We did debate whether the glass for enterprise use was half-empty or half-full. The potential is there and after a poor start, things might finally take off. Looking at the FOMA domination of i-mode non-pleasure functionality, it’s clear that the FOMA/ FeliCA combi is going to be DoCoMo’s play on getting serious business apps loaded into keitai here, and equally clear that most of the prior talk on such developments by DoCoMo until this point has been mainly noise. Providing the apps do get developed and taken to the next level, it still remains to be seen if Japan’s stodgy (the polite word is conservative) middle management will be able to keep up.
— Paul Kallender
Some sage advise when entering new turf; Stop, Look and Listen.. it’s also good to secure a local guide. Japan is the cradle of mobile civilization – we have been dedicated to this space since 2001 – trust our archives here offer some useful material.
Domestic activities continue to set the pace, and sharp players are looking at global markets. We have hard-earned industry expertise and trusted network of contacts with access to advanced intell. and potential deal flow. Need a lift.. Ok, buckle-up!