In early 1999, Japan’s top mobile-phone company, NTT DoCoMo, received cheers from customers and analysts alike for introducing its i-mode mobile Internet service. The service, which claims 37 million subscribers and lets them check stock quotes, sports, news and other information over their cell phones, was hailed as the greatest invention in Japan since the Walkman.
Berman warns, however, that with a typical handset cost of 37,000 yen in the latest quarter, “it will require about 23 months to cover [the] cost for upgrade customers.” He goes on to state that this creates a difficult situation for KDDI, wherein there’s lots of room for concern for the cost of the 2G-to-3G upgrade cycle. Remember, too, that KDDI has committed to launching a 1X EV-DO upgrade in late 2003. Will it have to commit to another two-year cycle to convert subscribers to the new system? If so, the expense half of their balance sheet may get a little out of control no matter how strong the revenue side remains.
KDDI Corp. reported group net profit of 30.87 billion yen for the fiscal third quarter, while boosting its full-year-earnings forecast by five billion yen, citing healthy consumer demand for its flagship “au” mobile-phone service, lower marketing costs, and restructuring. For the quarter ended Dec. 31, KDDI posted sales of 695.08 billion yen and operating profit of 56.80 billion yen.
The level of roaming in particular is a new feature for the market, and they face a sales challenge in figuring out how to sell this to a high-end business crowd – radically unlike J-Phone’s traditional youth target. But I think that today, almost 4 years after the invention of i-mode, provision of wireless Internet is an absolute requirement for success in the Japan market, and the absence of J-Sky access – both Web and mail – with some ill-defined “later in 2003” target is a major weakness.
“Camera phone penetration is increasing. With the newest handsets – particularly in DoCoMo’s case – the packet downloads have just surged. So you’ve got much higher packet usage – two to three times higher now on the camera phones,” says CSFB sr. telecoms analyst Mark Berman. Watch our 2003 kick-off program as we pick the brain of one of Tokyo’s most respected industry watchers on what to expect in ’03. DoCoMo, KDDI, J-Phone, ARPU, data trends, and multimedia: these are a few of our favorite things!
Keisuke-san says his 2-1/2-year-old daughter is already interested in communicating visually on both mobile phone and on the set-top video system that he has in his SOHO office. “She sometimes says to me,’Dad, let’s do videoconferencing.’ I do not think that she understands the literal meaning of the words but she is kind of getting used to stand or sit in front of a monitor that shows a person talking on the other end of a live video call. She looks [like she’s] just enjoying it.”
Overall, I’m underwhelmed. Handset quality and clunkiness versus feature mix are widely considered to be major factors in the fizzling of FOMA to date. I think J-Phone will have to market like heck to convince people these are any better than current (great-quality) 2G models, and if DoCoMo launches better 3G models (as they are expected to do very soon), J-Phone could be in trouble.
Experts see 2003 shaping up to be a banner year. For starters, DoCoMo, KDDI and J-Phone will all be coming out with refined 2G equipment. They’ll also be rolling out new 3G systems, expanding rich-media services and launching camera-enabled, programmable handsets that can serve as “e-wallet” and “e-ticket” mobile-commerce terminals.
KDDI’s 3G network is a success (3,293,300 subscribers as of Oct. 31) because the network is great, there is nationwide coverage (due to backwards compatibility), and the handsets are **really** terrific – not because W-CDMA is bad. I thoroughly enjoyed reading “Asia’s 3G edge in mobile-phone market” on the Straits Times’ site yesterday; it may be this week’s news of most lasting significance. The authors state this regions’ advanced handsets – with color displays, data capabilities, and long battery life – give Asian makers like Sharp, NEC, Panasonic, and Samsung a clear technological advantage over rivals in Europe and the US.
You can watch streaming video on cellys in Japan, and it isn’t often that tech providers flip back the cover to show how it works. In October, NTT DoCoMo launched their V-Live service on 3G, powered by Fujitsu and US-based NMS Communications. We show the details behind the magic, then drop in on Gartner Japan to get the skinny on the business of mobile streaming. The provision of live or archived video and audio streams to mobile phones using the third-generation IMT-2000 network standard has yet to gain wide usage. Nonetheless, in October, NTT DoCoMo, Inc. strengthened its multimedia content offerings by expanding services provided under its “M-Stage” brand name. It’s still early days, but this stuff really works!
