Our 5th Birthday!
This week marked a major milestone for WWJ! In one form or another, I’ve been writing this email newsletter for five years — and what a five year term it’s been!
I spent a couple hours last night looking over past WWJ newsletters, and was struck by how much Japan’s mobile scene has changed. In 2001, when I started writing a weekly mobile-focused newsletter for J@pan Inc, i-mode had just celebrated its second birthday, KDDI had yet to roll out CDMA 1X services and the No. 3 competitor in the market was known as “J-Phone.”
Today, DoCoMo is far in the lead with their 3G FOMA service and music and TV are the new hot trends; i-mode itself has become almost dasai (uncool). KDDI have created one of the mightiest and most unified mobile platforms on Earth, with GPS-based blogging, shopping and PC Internet integration drawing huge usage. The company formerly known as J-Phone is about to become the company formerly known as Vodafone as Masayoshi Son attacks 3G mobile with the same successful discount focus with which he attacked NTT and home broadband.
Here are a few more ‘those were the days’ tidbits via the WWJ Newsletter below:
In March 2001, DoCoMo had 36.2 mn 2G subscribers (no 3G) of which 21.7 mn (59.9%) had i-mode-capable phones. Last month, Big D reported 28.6 mn 2G users (falling rapidly) and 22 mn 3G users (rising sharply), with a total of 45.9 mn i-mode users (90.7%). In five years, they’ve not only launched 3G but already converted almost half the user base. If Vodafone weren’t so busy pulling out of the market, I bet they’d be red with envy.
In March 2001, 2G i-mode still offered 9.6 kbps data (the upgrade to 28.8 kbps came in spring 2002). They had just launched i-Appli Java content services providing a maximum 10 KB (later, 30 KB) application download — and some developers weren’t happy about the way the boys at Sanno Park channeled the necessary development specifications to favoured content partners first. Now, on 3G FOMA, Java apps are 100 KB, Flash downloads are set, I seem to recall, at about 100 KB and the network routinely provides pretty close to the advertised 384 kbps downloads.
On 5 March 2001, DoCoMo said there were about 1,480 official i-mode sites including 59 i-appli-compatible sites along with another 40,053 independent sites; Today, there are 5,937 official sites serving FOMA users and 5,020 serving 2G (“Mova”) users. There are tens of thousands of unofficial sites serving both.
On 23 March 2001 (same date as the first WWJ newsletter!), J-Phone announced 3D character content to be offered by Bandai using HI Corp.’s rendering engine; the company made lots more noise about 3D content that year, but usage never caught on. 3D content has since been over taken by Vodafone’s super-size Java apps (250 KB) and Flash-based animations. In April 2001, J-Phone had 10 mn 2G users; last month, Vodafone had 12.4 mn 2G users and 2.7 mn 3G users.
J-Phone and KDDI also launched Java services in mid-2001, both set at 30 KB downloads to compete with DoCoMo’s paltry 10 KB.
By the summer of 2001, the rebranding of J-Phone to Vodafone was well underway with a multi-billion yen marketing campaign. Today, I suspect Softbank is now planning a multi-billion yen campaign to rebrand Vodafone to BB Mobile (or something similar).
In May 2001, KDDI announced the first Bluetooth handset in Japan, Casio’s C413S. Bluetooth has never really caught on in Japan — for mobile or any other usage.
In October, DoCoMo opened their FOMA 3G service; the handsets were awful.
In November 2001, KDDI released the first EZnavi GPS handsets and the first EZmovie streaming content-capable models.
Throughout 2001, all three carriers announced numerous anti-spam mail measures. In the past 12 months, all three carriers have announced numerous anti-spam mail measures. WWJ bravely predicts that in the rest of 2006 and into 2007, all three carriers will continue announcing numerous anti-spam mail measures.
Finally, the other players — Tu-Ka (2G PDC), DDI Pocket (PHS) and a couple other minor PHS operators — mucked about on the fringes, offering super-cheap monochrome handsets and copy-cat data services. Today, most of these brands are gone. Willcom (a JV between Kyocera and a US equity firm) has taken over the PHS system and is doing rather well, while Tu-Ka has been absorbed into KDDI who is actively converting the user base to CDMA. DoCoMo also runs a PHS system, but has stopped accepting new subscribers.
Where will WWJ go in 2006?
Well, basically, we’ll cover wherever the market goes, and that includes some incredible transformations about to or already taking place.
As we enter our sixth year, look for:
- Softbank, eAccess and IP Mobile are set to enter the market in fiscal 2006 with W-CDMA voice & data and, in the case of IP Mobile, data-only TD-CDMA services. Not all three will survive. IP Mobile will probably eke out a living if they can keep infrastructure costs down and win over a majority of the current PHS data card users to 3G’s faster speeds and better coverage.Either Softbank or eAccess will, I think, eventually be forced out (or at least down) but it’s unclear which. Both have strengths and both can offer hugely attractive flat-rate bundles of services including mobile data, mobile voice, home data (broadband), home voice (IP telephony) and WiFi access thrown in — probably — for free. Terminal costs and content will be crucial; hence the advantages in bringing in cheap but good Korean phones.
- Considering Softbank’s Yahoo already has a very strong market presence in search, auctions, ads and TV Bank — and has signed a major deal (in December) with OhMyNews (a popular citizen blogging forum from Korea) to launch a similar service in Japan — and already sends out 5 million Yahoo BB bills per month; now Son can send out another 15 million invoices to (soon to be former) Vodafone customers. The opportunities for synergy, bundling and cross-promotion are is huge.
- Number portability and the new market entrants are about to ignite a cut-throat price war from which only the strongest will emerge. I should mention that without email portability, this may not have the same effect as in other markets that have already gone through mnp.
- There will be more market realignment. Softbank’s Son now owns, in effect, two 3G licenses: the one Softbank was awarded last year for 1.7GHz as well as the one that Vodafone now has for 2 GHz. What will he do with these? First, there’s been a lot of chatter proposing that the government may not allow him to keep both. If he does score the two, look for the MVNO scene in Japan to explode. Vodafone’s network has the capacity to resell bandwidth and before pulling the ‘eject’ handle, Vodafone KK was already in behind-the-scenes talks with a range of popular consumer brands to offer MVNO rights. There’s no reason why Son won’t just pick this up where Big Red left off. Also, would a partnership with Willcom, the PHS carrier, make sense? Maybe, in the future, as PHS becomes less attractive (it’s limit is 128 kbps), Willcom could be the brand partner of choice for Softbank for the 1.7 GHz license.
- Current and new technologies including FeliCa e-wallets, digital TV (to start on 1 April) and streaming music and video combined with unprecedented market segmentation into high-end super-sophisticated 3G users and low-end, generic and import terminal users will undoubtedly strain revenues. But in all this confusion, opportunity abounds.
It’s been a helluva ride since March 2001 and, if anything, the future is shaping up for five more years of mobile mayhem in Japan. Please accept our sincere thanks for your passionate and thoughtful patronage over the years of the WWJ site, the WWJ newsletter and — more recently — the Mobile Monday networking community.
Let’s see how things look in another five years!
— Daniel Scuka