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It may look as though WWJ has been devoting too much editorial space to FeliCa coverage lately, but the fact is: FeliCa continues to be hot news. On Thursday last week, No. 3 carrier Vodafone announced they, too, had signed up to deploy Sony’s contactless payment technology on Big Red cellys, likely by fall this year. But I wonder if all Japanese consumers will be equally happy to store their hard-earned cash on a losable, spamable, stealable cell phone?
For Vodafone, deploying a major new technology and consumer service in the span of two quarters is light-speed fast and speaks to Vodafone’s desire (desperation?) to make sure their handsets are as competitive as DoCoMo’s. Making sure they’ve got a small payment system onboard their fleet is fast becoming a sine qua non in Japan’s highly competitive market.
While I am enthusiastic about the consumer benefits and overall improvement to the mobile services envelope that FeliCa’s short-range contactless IC chips bring to cell phones, I remain at least a little suspicious that not all Japanese mobile users will accept FeliCa’s alleged benefits without a fight.
A few weeks ago, we reported that DoCoMo’s new 700i-series handsets appear to be little more than current-generation FOMA models without FeliCa — previously touted by various senior DoCoMo folks as ‘standard’ on all new phones. Could they be worried about consumer backlash against FeliCa — that not all users will be happy to carry around an electronic wad of cash on their losable, spamable, stealable cell phone? (See “DoCoMo 700i 3G Series: We Smell Fear”.)
After our story, Philip Sugai, mobile marketing professor at Niigata’s International University of Japan, wrote from the 3-meters-deep, snowbound campus (a 19-year record) that he agreed consumer backlash may be a problem.
Sugai says he questions the incremental value that consumers will supposedly receive from using such phones. “First, it appears that consumers must pay extra for the luxury of using one, so there is no added value for the consumer regarding device price. Second, IC chips in mobile phones do not make the phones an actual wallet, they simply add a stored value capability to the phones,” he wrote.
“But what I [find tough to accept] is the added value of having such stored value capabilities in a phone rather than safe and sound in a wallet. As consumers still must carry a wallet with them, [and] as the network infrastructure of FeliCa-enabled merchants is still quite small, again — the added value for consumers seems weak at best.”
“Making your phone a target for theft is another big negative for consumers. The 700i-series may in fact be a clear signal that the concept of a saifu mobile (mobile e-wallet) in Japan is still a little early.”
Sugai agrees, however, that the concept could work given robust network infrastructure and proper security measures resident on the handset and within this network itself. “The possibilities for this type of technology are still high. The question is whether consumers will truly see such value, or whether this will be another great idea that’s failed in practice.”
And Sugai’s not alone. Nick Outram, principle consultant at Sopra Group UK, worries whether the mobile industry in Japan and other countries is too driven by flashy new technologies. “I think one of the main reasons why mobile products fail is that the industry is far too driven by the equipment vendors and not enough by the ‘needs and wants’ of mobile users. One only has to look at the success of simple devices like the iPod to see that when a product hits the right spot it can be a huge success — even if it is something that has essentially been around for a long time.”
So, while FeliCa is cool, and the recent agreement with Japan Rail to turn phones into train passes is probably a necessary next step in spreading consumer usage, it is still too early to conclude that mobile cash will inevitably reach 100% of phone users — despite all the FeliCa-related ink you’ve seen on this and other sites.
Still, though, it is pretty cool technology.
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 been 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!