Mobile Services in Japan

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

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

Nokia pullout from Japanese market

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.

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)

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

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

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?

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 ?

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?

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

e-book

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

High-end market What features ?

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

GPS/Location Based Service

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).

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.

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

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.

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.

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

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

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

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

Music instrument 11 different music instruments Touch screen Motion sensor

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

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?

Projector Mobile Phone Release in 3 years?

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

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?

From Communication Infrastructure to Lifestyle Infrastructure

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

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

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

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Mobile Services in Japan

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