Tune in for a WWJ exclusive year-end interview with IDC Japan Communication Research Division’s Senior Analyst Michito (Mitch) Kimura. In this video program, Kimura, a veteran IDC analyst, casts his eyes on the ups and downs over the last year in the world of wireless and takes a look at prospects for 2004. He details the strategy at Japan’s three carriers, NTT DoCoMo, KDDI, and Vodafone, and offers his view on the prospects for Japan’s ever-surging content business. Kimura-san also gave us his perspective on the continued evolution of 3G, handset replacement cycles, and – a favorite topic of ours – Japan’s first packet pricing war. Full Program Run-time 22:20
Kimura, in his famously reticent and understated way made some interesting points. Mitch is well known in the industry for going somewhat against the grain, sometimes even disagreeing with the official IDC line on things. Here are some of the key points he picked up:
— Packet pricing war is possible. Isn’t it already happening? Yes, to a degree. KDDI’s announcement of flat packet fees for data really put the cat among the pigeons. Vodafone responded with Happy Packet. But DoCoMo, with its 40+ million subscribers, hasn’t budged. The official line by Tachikawa is that DoCoMo doesn’t want to join what could be a zero sum game for the company, especially when packet fees for FOMA have recently hit the 10,000 yen barrier. (By comparison, Vodafone said in December that its ARPU continues to slide. In December, ARPU for Vodafone was 6,710 yen, the lowest ARPU for 17 months. Over the last year and a half, the company’s ARPU has slid on average about $5 per subscriber each month. Outch!). However, DoCoMo, which is sitting on the wall, may be in for a fall, and add more packet price cuts if it is seen to be expensive and this is seen to be hurting uptake.
— Kimura also surprised us a little with his 10 million FOMA target for 2004 (year ending March 2005). DoCoMo’s uber-Stalinesque ability to rewrite its targets is a constant source of mirth and wonder. (Remember, suddenly, last November, the initial FOMA service did turn out to be a trial after-all, despite the company saying at the time it was a full service. Calling the initial rollout a trail service allowed the company to massage its subscriber growth statistics.) Well, Tachikawa has gone and done it again, predicting that half of the company’s subscribers, or about 25 million (there is a story in that too!) will be 3G FOMA in just a few short years. DoCoMo’s last-year rewrite of the FOMA plan puts this year as the JUMP year in its HOP-SKIP-JUMP FOMA subscriber uptake scenario. Kimura thinks that this year, FOMA will have to pass the 10 million mark if the 50% ratio is to become a reality in 2006/7 or at all.
— Kimura sees no stop in Japan’s furiously innovative contents business, which he feels could grow an astonishing 25% to 400 billion yen. That’s music to the ears, literally!
— Pessimism on handset sales. Back in 1999, the author remembers all the rosy estimates of global handset sales reaching 500 million yesterday. Just about every analyst company made a complete dog’s breakfast of just about every electronics and semiconductor prediction after 2000. The Internet bubble was so pervasive that nobody could see the wood for the trees. Now, again, the world is supposed to be entering a huge expansion in critical device sales. But Kimura thinks that handset sales in Japan could actually DROP sales 5-10% to 44-45 million. Even Japan can’t compress replacement cycles much smaller than 18 months, he thinks. We have got a lot of time for Kimura’s opinion.
Look for problems with all the rosy camera phone shipment estimates out there. As we mentioned last month, while there may not be an impending camera module shortage, there is a components mix imbalance. If parts do get difficult to buy and knit together, Nokia, Motorola and the others will have trouble meeting price points. He’s not sure that camera phones will be a must-have, except among fast adopters, and will people over-seas really want to pay $400+ for phone with a camera. We’ll see.
– The Editors