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Asia’s Best of Breed | Mobile Ecosystems, SNS & More
Benjamin Joffe, CEO | Plus Eight Star | eComm - 2009.03
Benjamin Joffe
 ベンジャミン
   벤자민
   本杰明
4 years

          1 year
                   4 years
www.plus8star.com
Cross-Market Consulting
Telecom & Internet Innovation
     China | Japan | South Korea
26 events | 98 speakers | 3,296 members | 1,440 companies
I am going to talk about

           iPhone
          Facebook
             Asia
             SMS
     Mobile ecosystems
 ...
Social games
       &
iPhone games
0.
Irrelevant or Copycat?
Internet               Mobile
1.3 billion            3.3 billion




       (Asia = US + Europe)
                         ...
General assumption #1

                         great
Everything from USA is
General assumption #2

                          weird
Everything from Asia is
General assumption #2

                           weird
Everything from Asia is
          (and sometimes funny)
Japanese like texting on mobile




                      Because they have small fingers



Anonymous manager at a teleco...
Asians like avatars




Because they read mangas and watch animes



                Anonymous manager at an Internet comp...
Chinese like ring-back tones




                      Because they go to karaoke a lot



Anonymous manager at a foreign ...
Wired

“Why the Japanese hate the iPhone”
           26 February 2009
Misquoted Experts
     (who happen to read English AND Wired)


• “I read on and found I was quoted for
  something I have...
“Japanese quot;hatequot; for iPhone
     all a big mistake”
        28 February 2009
General assumption #3

               copycats
Asia is just
When was it invented?
Europe
Gutemberg | ~1450

     Korea
  Metal | ~1230

     China
 Wooden | ~1040
Who came first?
Where do you get inspiration from?
1.
Introduction
3G penetration in Japan and
   South Korea is >70%
Japan stopped selling 2G
         in 2007
100%


           80%

                                           USA
           60%
3G users




           40%

        ...
Broadband?




                  Broadband
  Broadband
                  100 Mbps
from 200 Kbps
Broadband?




Walking man     F22 Raptor
  5 km/h        2,500 km/h
10 Mbps   100 Mbps
Korea will have
                            1Gbps by 2012



The Messenger probe travelled at about 25,750 km/h as it pass...
Unlimited   Unlimited
 30 USD     10-40 USD
KDDI’s Double Flat Fee
     (introduced in May 2005)

                 40 USD




10 USD


  1.5 MB      6.5 MB~
Flat-rate data users



X?               76%
We are simply “en route”



52Kbps     128Kbps   500Kbps
 500Kbps    1Mbps     2Mbps
 2Mbps      4Mbps     8Mbps
8Mbps    ...
2.
vs.
Data revenues 2008



 Subscribers 70 mln     50 mln
Data ARPU %   25%        40%
Data income $10 bln    $15 bln
 SMS shar...
SMS = Candles




Brighter    Last longer    Smell good
IP = Electricity
3.
vs.
Mobile ecosystems
Technical specs
  Content selection
 Content distribution
    Pricing system
   Payment system

User Experience
iPhone vs. i-mode

Ecosystem   iPhone         NTT DoCoMo
Users       10 million?    55 million
Content     20,000 apps?   ...
48 million
i-mode users




                Applications!
               (January 2001)
  87.7%
 3G users
4.
Mobile ecosystem
Mobile Ecosystem
                                                                      TOTAL
Million USD
                 ...
Content
40 USD / user / year

    Commerce
70 USD / user / year
Mobile Content
Million USD                                                                        TOTAL
                  ...
Flat-rate data: 2004
What happened since?
Awesome

        Irrelevant?               Great          ?!      Good       So-so      ?

   Million USD
                ...
Million USD
                                  2004       2007
        1,186
                                              ...
90% of digital music
sold in Japan is mobile
Digital music revenues in Japan




                      Source: Infinity Venture Partners, 2008
Million USD
                                  2004       2007
        1,186
                                              ...
Registered users




175 mln   856 mln   20 mln            8 mln
                             12 mln
Registered users



                                   MOBILE
             SOME                  ONLY!
             MOBILE...
Some ads


                SNS
                 +
            Free games
                 +
Homepage   Virtual goods
Revenues 2008 (E)




                     1 BILLION DOLLAR
                   COMPANY YOU NEVER
                        H...
Profit margin (E)



- X?   70%          40%              40%    63%

                 ~500 MILLION DOLLAR
             AF...
Average Revenue From Users (E)
               ARFU

?10%   87%        80%             75%   75%

             BETTER THAN ...
Market Capitalization
              (March 2009)




3-15 bln?   15 bln         1.4 bln               1.2 bln

           ...
5.
If I have enough time
Mobile books
Digital books: Internet vs. Mobile




           Flat-fee data plans
             are introduced




                    ...
Several best-selling novels in Japan in
2007 were written on mobile phones
One full bookshelf
for mobile novels at
Kinokuniya, Japan’s
largest bookstores
chain!
The two volumes of
this book “Koi zora”
(“Loving sky”) sold…
“Koi zora” sold over 2 million copies
          (10 USD / book)
Even on TV!
Mobile TV penetration in Japan and
        Korea is over 40%
Business model
still to be figured out
BJ
?
BJ = Broadcasting Jockey
1.5 million Private Channels
“BJ Managers” for content monitoring
Don’t forget to turn off your webcam…
Conclusion
1.
3G + Flat-rate
2.
   New usages
New business models
3.
Innovation Arbitrage

           THAT’S WHAT WE DO.
About +8*
There are more ideas
outside your country
          than inside
                   Tom Kelley
                    CEO, IDE...
“Innovation Arbitrage”
• About us
   – +8* | Plus Eight Star is the leading cross-market and cross-cultural consultancy in...
Selected References
•   Adidas | E-commerce strategy for China, Japan & Korea

•   Bouygues Telecom | Cases studies of lea...
Social Contribution
• Mobile Monday
   – Founder of the Mobile Monday forum in Beijing since 2006 (3,000+
     members, 23...
Contact Us

www.plus8star.com

benjamin@plus8star.com
                                       +81 | Japan
benjamin0123     ...
Asia's Best of Breed
Asia's Best of Breed
Asia's Best of Breed
Asia's Best of Breed
Asia's Best of Breed
Asia's Best of Breed
Asia's Best of Breed
Asia's Best of Breed
Asia's Best of Breed
Asia's Best of Breed
Asia's Best of Breed
Asia's Best of Breed
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Asia's Best of Breed

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Presentation at eComm in San Francisco in March 2009 about Asian mobile ecosystem, especially Japan, and comparisons with Apple's iPhone and Facebook. Some extra like mobile SNS, mobile novels and various other considerations of interest.

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  1. 1. Asia’s Best of Breed | Mobile Ecosystems, SNS & More Benjamin Joffe, CEO | Plus Eight Star | eComm - 2009.03
  2. 2. Benjamin Joffe ベンジャミン 벤자민 本杰明
  3. 3. 4 years 1 year 4 years
  4. 4. www.plus8star.com
  5. 5. Cross-Market Consulting Telecom & Internet Innovation China | Japan | South Korea
  6. 6. 26 events | 98 speakers | 3,296 members | 1,440 companies
  7. 7. I am going to talk about iPhone Facebook Asia SMS Mobile ecosystems Mobile music Mobile social networks for 20 minutes
  8. 8. Social games & iPhone games
  9. 9. 0. Irrelevant or Copycat?
  10. 10. Internet Mobile 1.3 billion 3.3 billion (Asia = US + Europe) Source: Morgan Stanley, 2007
  11. 11. General assumption #1 great Everything from USA is
  12. 12. General assumption #2 weird Everything from Asia is
  13. 13. General assumption #2 weird Everything from Asia is (and sometimes funny)
  14. 14. Japanese like texting on mobile Because they have small fingers Anonymous manager at a telecom company in 2000
  15. 15. Asians like avatars Because they read mangas and watch animes Anonymous manager at an Internet company in 2005
  16. 16. Chinese like ring-back tones Because they go to karaoke a lot Anonymous manager at a foreign media company in 2006
  17. 17. Wired “Why the Japanese hate the iPhone” 26 February 2009
  18. 18. Misquoted Experts (who happen to read English AND Wired) • “I read on and found I was quoted for something I haven't told the author at all.” • “I have never said quot;And carrying around an iPhone in Japan could make you look pretty lame.quot; I think most Japanese think iPhone is the coolest item. At least I have and love iPhone.”
  19. 19. “Japanese quot;hatequot; for iPhone all a big mistake” 28 February 2009
  20. 20. General assumption #3 copycats Asia is just
  21. 21. When was it invented?
  22. 22. Europe Gutemberg | ~1450 Korea Metal | ~1230 China Wooden | ~1040
  23. 23. Who came first?
  24. 24. Where do you get inspiration from?
  25. 25. 1. Introduction
  26. 26. 3G penetration in Japan and South Korea is >70%
  27. 27. Japan stopped selling 2G in 2007
  28. 28. 100% 80% USA 60% 3G users 40% Japa Chin 20% n a 0% 0% 20% 40% 60% 80% % of Internet connections measured above 5Mbps (Source: Akamai, 1H2008)
  29. 29. Broadband? Broadband Broadband 100 Mbps from 200 Kbps
  30. 30. Broadband? Walking man F22 Raptor 5 km/h 2,500 km/h
  31. 31. 10 Mbps 100 Mbps
  32. 32. Korea will have 1Gbps by 2012 The Messenger probe travelled at about 25,750 km/h as it passed over Mercury
  33. 33. Unlimited Unlimited 30 USD 10-40 USD
  34. 34. KDDI’s Double Flat Fee (introduced in May 2005) 40 USD 10 USD 1.5 MB 6.5 MB~
  35. 35. Flat-rate data users X? 76%
  36. 36. We are simply “en route” 52Kbps 128Kbps 500Kbps 500Kbps 1Mbps 2Mbps 2Mbps 4Mbps 8Mbps 8Mbps 16Mbps 30Mbps 30Mbps 50Mbps 100Mbps 100Mbps 200Mbps 500Mbps 500Mbps 1Gbps 2Gbps 2Gbps 4Gbps 8Gbps
  37. 37. 2. vs.
  38. 38. Data revenues 2008 Subscribers 70 mln 50 mln Data ARPU % 25% 40% Data income $10 bln $15 bln SMS share 50% 5% Data/subs 140 USD 300 USD
  39. 39. SMS = Candles Brighter Last longer Smell good
  40. 40. IP = Electricity
  41. 41. 3. vs.
  42. 42. Mobile ecosystems
  43. 43. Technical specs Content selection Content distribution Pricing system Payment system User Experience
  44. 44. iPhone vs. i-mode Ecosystem iPhone NTT DoCoMo Users 10 million? 55 million Content 20,000 apps? XXX publishers Rev share 30% 10% Mystery % Data 100%
  45. 45. 48 million i-mode users Applications! (January 2001) 87.7% 3G users
  46. 46. 4. Mobile ecosystem
  47. 47. Mobile Ecosystem TOTAL Million USD 11.6 billion USD 12,000 Commerce > 10,000 Content 4,301 8,000 3,720 6,000 3,200 4,000 2,645 7,347 5,714 2,167 1,822 2,000 4,139 2,634 1,736 1,212 0 2002 2003 2004 2005 2006 2007 Commerce Content Source: Japan Mobile Content Forum, 2008
  48. 48. Content 40 USD / user / year Commerce 70 USD / user / year
  49. 49. Mobile Content Million USD TOTAL 4.3 billion USD Full songs > 5,000 Ring tones 4,000 1,140 849 231 3,000 585 252 240 500 862 2,000 229 760 598 465 417 192 419 571 156 204 274 771 28 1,091 204 1,000 1 1,186 1,119 1,065 972 856 568 0 2002 2003 2004 2005 2006 2007 Ring tones Full songs Mobile games Mobile books Fortune telling Screensavers Others Source: Japan Mobile Content Forum, 2008
  50. 50. Flat-rate data: 2004 What happened since?
  51. 51. Awesome Irrelevant? Great ?! Good So-so ? Million USD 2004 2007 1,186 1,140 1,200 1,091 1,000 862 800 568 600 500 419 400 229231 225 204 185 200 108 0 0
  52. 52. Million USD 2004 2007 1,186 1,140 1,200 1,091 1,000 862 800 568 600 500 419 400 229231 225 204 185 200 108 0 0
  53. 53. 90% of digital music sold in Japan is mobile
  54. 54. Digital music revenues in Japan Source: Infinity Venture Partners, 2008
  55. 55. Million USD 2004 2007 1,186 1,140 1,200 1,091 1,000 862 800 568 600 500 419 400 229231 225 204 185 200 108 0 0
  56. 56. Registered users 175 mln 856 mln 20 mln 8 mln 12 mln
  57. 57. Registered users MOBILE SOME ONLY! MOBILE 175 mln 856 mln 20 mln 8 mln 12 mln
  58. 58. Some ads SNS + Free games + Homepage Virtual goods
  59. 59. Revenues 2008 (E) 1 BILLION DOLLAR COMPANY YOU NEVER HEARD OF? 350 mln 1 bln! 200 mln 60 mln 200 mln
  60. 60. Profit margin (E) - X? 70% 40% 40% 63% ~500 MILLION DOLLAR AFTER TAX = 1 MYSPACE A YEAR BASED ON CASH FLOW?
  61. 61. Average Revenue From Users (E) ARFU ?10% 87% 80% 75% 75% BETTER THAN DRUG DEALING
  62. 62. Market Capitalization (March 2009) 3-15 bln? 15 bln 1.4 bln 1.2 bln REAL MARKET CAPS BASED ON STOCK PRICE
  63. 63. 5. If I have enough time
  64. 64. Mobile books
  65. 65. Digital books: Internet vs. Mobile Flat-fee data plans are introduced Source: Infinity Venture Partners, 2008
  66. 66. Several best-selling novels in Japan in 2007 were written on mobile phones
  67. 67. One full bookshelf for mobile novels at Kinokuniya, Japan’s largest bookstores chain!
  68. 68. The two volumes of this book “Koi zora” (“Loving sky”) sold…
  69. 69. “Koi zora” sold over 2 million copies (10 USD / book)
  70. 70. Even on TV!
  71. 71. Mobile TV penetration in Japan and Korea is over 40%
  72. 72. Business model still to be figured out
  73. 73. BJ ?
  74. 74. BJ = Broadcasting Jockey
  75. 75. 1.5 million Private Channels “BJ Managers” for content monitoring
  76. 76. Don’t forget to turn off your webcam…
  77. 77. Conclusion
  78. 78. 1. 3G + Flat-rate
  79. 79. 2. New usages New business models
  80. 80. 3. Innovation Arbitrage THAT’S WHAT WE DO.
  81. 81. About +8*
  82. 82. There are more ideas outside your country than inside Tom Kelley CEO, IDEO The 10 faces of Innovation
  83. 83. “Innovation Arbitrage” • About us – +8* | Plus Eight Star is the leading cross-market and cross-cultural consultancy in Asia. – We provide local expertise & global perspective on mobile and Internet innovation from China, Japan and South Korea to add value to and accelerate the development of our clients’ businesses. • Our services – Analysis of proven best practices and business models from Asia – Other services: executive study trips, market entry strategy, M&A advisory, partners identification, negotiation support. • Founder & CEO: Benjamin Joffe – 9 years experience with mobile & Internet in Asia – Selected among “China’s Top 100 mobile industry influencers” in 2007 – Regular speaker at events on mobile and Internet in Asia – Fluent in English, Japanese, French with working knowledge of Mandarin, Korean and Spanish
  84. 84. Selected References • Adidas | E-commerce strategy for China, Japan & Korea • Bouygues Telecom | Cases studies of leading Asian Web 2.0 services and virtual worlds • Deutsche Telekom / T-Online | Benchmark of Korean mobile & Internet convergence strategies • Hemisphere | Analysis of mobile marketing best practices in Japan and South Korea (Hemisphere is a leading digital advertising agency), analysis of leading social platforms (SNS, virtual worlds, online games). • Microsoft | Analysis of Japan’s key players and market catalysts for mobile commerce market positioning in China • DeNA | Case studies of the best practices of leading social networks in China and South Korea (DeNA operates Mobile Game Town, Japan’s leading mobile SNS service) • China Mobile | Benchmark of Korean leading online communities • Sands Capital Management | Evaluation of China’s investment opportunities in social networks in China
  85. 85. Social Contribution • Mobile Monday – Founder of the Mobile Monday forum in Beijing since 2006 (3,000+ members, 23 events, over 80 presentations). • Media – Monthly column on Asian innovation for Asian Business Leaders (one of the leading Chinese business magazines), numerous interviews in international media. • Events – Regular keynote speaker and moderator at Internet, Telecom, Media and Investment events e.g. ITU Asia, Asia Venture Capital Forum, China Mobility International Summit, O’Reilly’s Graphing Social Patterns, Red Herring Asia, Media 08 Conference, Wireless Developer Forum, Open Web Asia, XMediaLab, Mobile Monday Global Summit, etc.)
  86. 86. Contact Us www.plus8star.com benjamin@plus8star.com +81 | Japan benjamin0123 +82 | Korea +86 | China http://twitter.com/plus8star Telecom & Internet www.linkedin.com/in/benjaminjoffe + Added Value www.slideshare.net/plus8star * High quality
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