Mobile Services in Japan Yoji Ishihara, Innovation Norway Tokyo Market Report related to wireless future and Mobile Monday Norway

1. Mobile Services in Japan
Yoji Ishihara, Innovation Norway Tokyo
March 30, 2009

2. Why 3G iPhone Headed Towards Failure in
Japan?
3G iPhone was
lunched on July 11,
2008
Projected to sell
one million units in
Japan
Only sold 200,000
units at the most
Softbank has
already adjusted 3G
iPhone pricing plans
lower in an attempt
to boost sales

4. Nokia pullout from Japanese market

5. Galapagos Syndrome ?
The Japanese cellphone market
developed in a quite unique way,
just like unique animals in
Galapagos Islands.
Is Japan so isolated that you have nothing to learn
from Japan?
In Japan, you may find what will happen in the future.

6. Japanese Operators at a glance
1% 4%
18%
49%
28%
Subscribers: 110,643,200 (as of Jan 2009)
Source: Telecommunications Carriers Association
MVNO: 33 operators (as of Sep 2008)

7. Mobile Phone Manufacturers
42.22 million units in 2008
Decrease by 18.1%
23.2%
Sharp (<10 mil in Japan)
27.9%
Nokia (>430 mil global)
Sharp
Panasonic
NEC
Fujitsu
Toshiba
Others
16.3%
9.0%
10.5%
13.0%
Source: IDC Japan

8. Quick Adaptation
120.0
Unit: million
100.0
Internet
80.0
Access to
subscribers: 86%
60.0
Internet
40.0
started
20.0
0.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
120.0
3G phone
100.0
3G service users: 89%
80.0
started
60.0
40.0
20.0
Source: TCA
0.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Internet Access and 3G are standard features

9. Faster and Faster…
Currently 3.5G (download speed: 2.4 – 7.2Mbps)
While almost all other countries keep 2G networks running
Japan will end all 2G mobile networks around Dec 2009
From 2010, Super-3G (3.9G)
What do you want to do with the fast down/upload speed?

10. More data communication
ARPU
Unit: USD/month
30%
50
45
25%
40
35
20%
30
25 15%
20
10%
15
10
5%
5
0 0%
Japan US UK Germany Russia China Brazil India
verbal communication data communication DC ratio Source: Weekly Diamond,
Nov 25, 2006
Data communication for what ?

11. Mobile Business Market is Expanding
Unit: million NOK
60,000
50,000
36,155
40,000
28,120
30,000
20,370
12,965
20,000
8,545
5,965 21,165
18,305
10,000 15,750
13,015
10,665
8,965
0
2002 2003 2004 2005 2006 2007
Source: MIC
mobile contents mobile commerce
NOK = JPY 20
What services are mobile contents and mobile commerce?

12. Mobile Contents Markets
Unit: million NOK
25,000
20,000
5,610
4,180
1,135
15,000 2,880
910
1,240
1,105
790
1,180
2,460
4,240
1,125 3,740
2,945
2,290
10,000
2,050 945 2,060
2,810
770 1,350 1,005 3,795
5,370
1,005
5,000
5,835
5,505 5,240
4,785 4,215
2,795
0
2002 2003 2004 2005 2006 2007
polyphonic music games electronic fortune wallpaper others
Source: MIC
ringing tones download books -telling
NOK = JPY 20
Music and games are popular contents

13. e-book

14. Mobile Commerce Market
Unit: million NOK
40,000
auction, stock
markets, horse
races, boat races,
35,000
motorbike races,
6,155
bicycle races
30,000
5,565
25,000
13,540
20,000
4,430 9,640 tickets, traveling,
airplanes,
railways
15,000
2,205 8,230
10,000
16,460
1,190 5,915
12,915
200
4,650
5,000 7,710
4,045
4,845
2,705
1,720
0
2002 2003 2004 2005 2006 2007
Source: MIC
sell over services transaction
the Internet NOK = JPY 20
Buy wherever, whenever convenient with your mobile phone

15. High-end market
What features ?

16. Standard Features
Web browsing Mobile wallet (FeliCa)
Mails Public transportation pass
Personal info manager 1 seg TV
Music download Decoration mail
Book download
Camera
Audio/video recorder/player
QR code reader
GPS navigation
Video phone
Games
Infrared communication

17. GPS/Location Based Service

18. Security Navi
If a child pulls the security
buzzer or turn off his/her
mobile phone:
The camera automatically takes
a photo.
A call is automatically placed to a
family member's phone.
The photo and a URL for tracking
the child's movement is sent to a
family member's phone.
Your child's movements can be
tracked with a phone or
computer using maps that are
updated approximately every five
minutes (minute-by-minute
location marks with your child's
whereabouts are displayed on
the map).

19. Push Talk
Allows a group of up to five people to talk to each other at
once.
This service is convenient for group members to find each
other when meeting up and to easily convey messages.

20. QR Code
• QR codes are ubiquitous in Japan
and link mobile phones to
information in daily life
• Matrix code developed by DENSO
(1994) to manage car parts
• Most popular type of 2
dimensional code in Japan
• Killer application for camera
phones
• Do not have to be in boring black
and white

21. Osaifu Keitai (Wallet Phone)
Mobile phones equipped with a
transmitting card (FeliCa),
which can be used as
electronic money, credit cards,
electronic tickets, membership
cards, airline tickets, and more.
Osaifu Keitai allows you to
check your credit balance,
point totals and purchase
history on the mobile phone
screen
Osaifu Keitai uses Internet
network to add e-money credit,
download tickets, or pay for
products/services.

22. Decoration Mail
Allows the user to decorate mails
by changing their background
and/or font color
and by attaching to them images
and even animations,
on top of the melodies.

23. 1seg Broadcast Service
Digital terrestrial TV to mobile
phones (mobile TV) started in
Japan on April 1, 2006
More than 40 million phones
with digital TV have been
shipped
Broadcast/telecom convergence
- Purchase items on the spot
using links on datacast while
watching TV shopping
programs
- therefore opens a new
mobile commerce sector
with many new
opportunities.
Source: Euro Technology Japan

24. 3D Games
Program size: up to 1MBytes
SD binding support: to store
Game data up to 20MBytes with
encryption
OpenGL ES (API for full-function
2D and 3D graphics): to use
graphic processing unit for high
quality 3D graphics

25. LISMO
LISMO is an online music service provided by au. This system
provides the following functions.
• Listen to music on a mobile phone and/or a personal
computer.
• Download and share music on a mobile phone and/or a
personal computer.
• Copy music from a CD to a mobile phone.
• Share play lists with other LISMO users.
• Use downloaded music as a ringtone
• Backup address book data etc. to a personal computer

26. Run & Walk
・“au Smart Sports”, a sports
support service that allows
users to check their running or
jogging courses or calories
consumed, etc., using their au
mobile phone.
Your running/jogging records
are saved
Favorite running/jogging
courses can be downloaded

27. Music instrument
11 different music instruments
Touch screen
Motion sensor

28. More features (1/3)
Solar Panel Mobile Phone – just like satellite
au Voyage

29. More features (2/3)
Separate Mobile Phone
10-key and display
communicate by Bluetooth
Talk on the phone while
checking e-mails
Release in 2 years?

30. Projector Mobile Phone
Release in 3 years?

31. Why 3G iPhone Headed Towards Failure in
Japan?
3G iPhone was
lunched on July 11,
2008
Projected to sell
one million units in
Japan
Only sold 200,000
units at the most
Softbank has
already adjusted 3G
iPhone pricing plans
lower in an attempt
to boost sales

32. iPhone’s features are not new in Japan
You can't sell the phone by marketing it as a 3G when all phones in
Japan are 3G.
You can't sell the phone by marketing music, photos, and Internet
access, GPS services because almost *ALL* Japanese phones have
this as a standard feature.
The lack of features found in most Japanese cell phones appear to
be holding back the iPhone from succeeding in Japan
• No Wallet phone services
• No 1seg TV
• No decoration mails
Unlike the US where cell phone use was typically limited to text
messages and voice calls, the ability to access the internet and
listen to music using a cell phone was not a new feature for the
Japanese market.
Where is Japan heading for?

33. From Communication Infrastructure
to Lifestyle Infrastructure

34. Life with mobile phone
What you need in your
daily life is just your
mobile phone.

35. How economic crisis affect Japanese
companies?
150%
100%
50%
0%
1Q 2Q 3Q
-50%
-100%
Mobile phones are insperarable from people’s daily lives even if there is
an economic crisis

36. The young have i-pod. Some may have iPhone.
What about the elderly?
Zojirushi is offering a way to monitor the elderly.
(MVNO)
Aimed at the elderly who live alone, the i-Pot not
only boils water (for tea or soup) but it also records
the times when that elderly person pushes the button
to dispense the water.
A wireless communication device at the bottom of the
i-pot sends a signal to a server.
You can see recent records of i-pot usage on a Web
site.
In addition, twice a day the server e-mails the most
recent three usage times to a designated recipient.
JPY5250 deposit, JPY3090 a month for e-mail and
Internet service