NTT DoCoMo's FeliCa Mobile Wallet Launch
NTT DoCoMo's FeliCa Mobile Wallet Launch

NTT DoCoMo's FeliCa Mobile Wallet Launch

NTT DoCoMo's FeliCa Mobile Wallet Launch

The Mobile Wallet is nearly in our pockets. In what promises to be just the first ripple in a wave of material promoting FeliCa, Takeshi Natsuno, managing director of DoCoMo’s i-mode Planning Department, today took the covers off the first four FeliCa handsets that will be coming into stores this July. Regular Wireless Watchers will know we have been tracking this story over the last 6 months starting with the trial-launch video program Here.

With three highly cranked PDC 506iC-series models from Sony Ericsson, Panasonic, and Sharp (and only one FOMA 900iC model, initially from Fujitsu), 39 mobile service providers providing m-money, 9,000 participating shops using our old favorite, the Edy e-money system, and Japan Railways East promising to introduce FeliCa ticketing in 2005, DoCoMo and Sony certainly seem to have made an energetic start in building the infrastructure and alliances that are needed to make the service credible with consumers.

However, Natsuno’s performance today also naturally left many questions unanswered — both because he didn’t allow enough time for intelligent journalists to ask the necessary questions and because he made less than convincing arguments about the vital questions surrounding FeliCa’s revenue model which include, thinks WWJ, security.

Let’s get some important themes and facts in right now. In four weeks, and we hope we are not falling for Natsuno-san-inspired hype here, the initial launch of FeliCa seems to genuinely promise the beginning of the mobile phone as an e-wallet, personal ID, and ticketing and commuter pass system.

The infrastructure includes many of the big chain shops — include stores handling Mobile Edy at all their branches in Japan.

Convenience Stores:

  • AM/PM: 14,000 stores
  • Pronto Corp.: 110 stores
  • Honda: 2,600

Stores handling Mobile Edy in some branches:

  • Sunkus: 513
  • McDonald’s: 20
  • Nihon Rental Car Co., Ltd.: 51

Internet payment-via-Mobile-Edy-accepting firms include:

  • Fuji Television
  • Cybird
  • Softbank Mobile
  • SKY PerfecTV!

That’s an impressive line-up for starters. With AM/PM and Sunkus onboard, two of Japan’s leading convenience store chains, FeliCa will be available right in front of the young consumer; it’s well know by marketers that Japanese kids do most of their snack and magazine shopping at konbinis. Those marketers have not failed to notice that many of those youth also tote keitai. With the white-hot popular chemist chain Matsumoto Kiyoshi coming onboard soon, the new FeliCa emblem will be right in the face of millions of Japanese youth over the next year.

In canned PR from AM/PM, the store chain pointed out that the pepped-up Mobile Edy function — just place your 900iC on the plate like you do with your Edy card, thank you very much — allows for transactions to take place 25 percent faster (Not 24.9 percent or 29 percent? — Ed.) than using cash — and saves the store giving out change.

Unlike with the Edy card, FeliCa users will automatically be able to read on-screen transaction details and remaining balance. Cool.

Another extremely user-friendly feature about the way Sony and DoCoMo have fielded the FeliCa platform is the ease of charging your account. You simply click on a menu and type in your designated bank account number and transfer the digital balance onto the phone’s chip; no more finding a machine and fiddling around stuffing cash into it to digitize your loot. Excellent!

For specs on the generally excellent new phones, take a look at this PDF from DoCoMo.

You’ll see some nice innovations, but more importantly, note the standby and usage times. Great!

Natsuno also assured the audience that FeliCa enabled handsets — which of course will be all new handsets from now on in — will be sold at a minimal premium.

And now for the juicy bit: If ever there was proof that FeliCa is being bought by important people, both ANA and, as we mentioned, JR East have climbed aboard. JR will allow FeliCa ticketing starting from a still-undisclosed month next year, which could be quite important for seat reservations and purchases on Japan’s Shinkansen (Bullet Train) services. With ANA (All Nippon Air), you can now reserve flight tickets via i-mode; ANA will now additionally allow FeliCa ticketing and boarding-pass issue.

Hmmm… “FeliCa Takes Off!” or “Take off with FeliCa!” We’re writing the headlines before someone pays a huge advertising agency a million bucks for the same ideas!

If you include membership card schemes from major electronic discount chains such as Bic Camera, ticking services from cinema chains such as Toho and Pia magazine, amusement applications from Sammy and Sega, Internet shopping payment schemes from Sony Finance and — last but definitely not least — credit card functionality with JCB, then DoCoMo would appear to have most of the bases covered. There are however, some very important issues that Natsuno-san was not clear about today.

Of course the crucial question is: what happens when you lose your phone, as many of us will (or have)? Natsuno was anything but convincing with his answer. Upon discovering that your Mobile Wallet is no longer at hand, you can simply dial your own number and let it ring a pre-arranged number of times to lock it. While we were confused by this. We won’t dwell on the obvious gaping questions this raises.

One immediate question that might be worth asking is: Will or should mobile Wallets be insurable? The more smart and wireless data– including invaluable peronal and ID information– loaded into the Keitai, the more desirable phones may become for sophisticated thieves.

So far, DoCoMo’s attitude is that mobile phone makers are providing the solutions for this element of security. One answer is, of course, the print-pad solution, which has been around for some time. Natsuno-san also suggested that damage can be limited by setting limits on the credit you upload via the onboard Edy i-appli. How comforting if you have a $300 limit, lose your $400 phone and the $300 in the hour it takes you to notice your phone has gone walkies and shut it off.

Natsuno also assured the gathering of some 500 journalists and media at the Imperial Hotel in Tokyo that there is strong security to protect data, although he declined to provide any outline. We’ll remain open-minded on that.

It also looks as if DoCoMo hasn’t quite seamlessly hooked everything together. Natsuno said people upgrading Mobile Wallets (that means buying new phones and contracts in the old fashioned sense, boys and girls) will have to go to the i-mode site and reconfigure all their settings. Number portability? Fohrgeddabaud it!

Show us the Money

The second huge question is how does DoCoMo earn money on Mobile Wallet? Here, Natsuno-san’s comments were intriguing. First, FeliCa, he says, lends DoCoMo a strategic lead on competitors. Through last year, admitted Natsuno, KDDI/au solidly beat DoCoMo in net adds with its flat-rate data service (dubbed WIN) and attractive phones; is FeliCa DoCoMo’s counter-attack?

Perhaps that makes sense, but Natsuno’s answer was also instinctively defensive, giving media a window into the darker, deeper currents of worry that may be circulating around DoCoMo’s management. FeliCa will lower churn (which is already at a low 1.7 percent per month; DoCoMo may lose 5 million subscribers a year, but they gain 6 million new subscribers) FeliCa, so it goes, because it is available from next month ahead of other carriers, will boost DoCoMo’s customer retention. “Customer retention is as important as gaining customers,” said Natsuno-san.

Convinced? Neither were we. Other carriers (that would be KDDI/au) are behind, says Natsuno.

Another factor will be the expected explosion of data traffic. And flat rates? A big dirty secret behind KDDI/au’s success has been the all-you-can-eat packet flat-rate charge. We don’t quite see the connection between hundreds of thousands of users beginning to use some Mobile Wallet applications over the next year or so and surging revenues for DoCoMo. Then, of course, there is licensing the FeliCa chips to other companies and developing corporate solutions…

These are our initial reactions with FeliCa; w
e’ll be following up with more analysis over the coming weeks and months.

— Paul Kallender-Umezu