Is 3G a DOG or a                      DEMON?
 Learning from 7 years of 3G spin in Asia




      Benjamin Joffe, CEO | +8*...
Introduction
3G penetration in Japan and Korea
 is over 70%; it is <0.1% in China
100%


           80%

                                           USA
           60%
3G users




           40%

        ...
#2 economy, #1 mobile society

#1 mobile & Internet population

#1 digital society
Japan stopped selling 2G
        in 2007
DOG   or   DEMON
       ?
Demons?
TD: 2001 all over again?




                  =?
TD-SCDMA Phone    W-CDMA (r.99) Phone
 Motorola, 2008     Panasonic, 2001
Video phone
Mobile payment
Contactless
(and networkless)
Mobile TV
Terrestrial or
Satellite Broadcast
Learning #1

Most talked-about services
      don’t need 3G
We are sorry for telecom operators
who made the mistake of 3G,
but it’s not our fault!




                               ...
For operators, 3G is essentially a
                    waste of money.


                       Unfortunately, there is no...
Alternate definition
Games
3G Girls
   Gambling
Games
3G Girls
   Gambling
Mobile Content
Carriers
content
Official content




         Carriers
         content
Mobile content




        Official content




                 Carriers
                 content
PC content

             Mobile content




                     Official content




                              Carrie...
PC content

                    Mobile content




                            Official content




                      ...
Dogs?
Mobile music
More music is sold “online” than
 “offline” in China and Korea
Ringback tones were created in
        Korea in 2001

They reached 30% penetration in
        less than 2 years
90% of digital music
sold in Japan is mobile
Digital music revenues in Japan




                     Source: Infinity Venture Partners, 2008
KDDI Mobile Music




  1 song = 3 USD
KDDI Mobile Music




10% content fee = 0.3 USD
KDDI Mobile Music | Direct Effect




        100 million songs
     Total = 300 million USD
      KDDI = 30 million USD
KDDI Mobile Music | Indirect Effect
                  #1
Monthly growth index
 1.50
New subs share /
Market share         ...
KDDI Mobile Music | Indirect Effect
              #1




        x2 new subscribers
  KDDI = +400 million USD / YEAR
KDDI Mobile Music | Indirect Effect
              #2




         Data ARPU boost
  KDDI = +800 million USD / YEAR
TOTAL

Content Providers = 270 million USD

    KDDI Content Fee = 30 million USD
     KDDI New Subs = 400 million USD
   ...
Learning #1



Content Providers Market Services
        & Educate Users
Learning #2



Indirect Benefits >> Direct Benefits
Learning #3



Ecosystem Growing
or
KDDI’s Double Flat Fee
         (May 2005)

               40 USD




10 USD


  1.5 MB    6.5 MB~
Mobile TV
Koreans now spend more time on
  the Internet than watching TV
Mobile TV penetration in Japan
   and Korea is over 30%
37 million mobile TV phones were
   sold by June 2008 in Japan




     Mobile TV started in May 2006
In Japan over 70% of new handsets
      are mobile TV-enabled
Mobile advertising
The mobile ad market in Japan was
  over 700 million USD in 2007
Have you seen this before?
QR code in a train station
                         with directions to a hotel




QR code on a web page


               ...
TV ad
                                 for a show’s website
   Train ad       Magazine ad
for job portal   for cosmetics

...
Blyk?




(Guess what Blyk benchmarked?)
Beyond mobile advertising
Mobile Commerce
Moba-Oku (DeNA)
 Mobile Auctions


              1. Take pic
              2. Select category
              3. Enter info
...
Over 6 billion USD in 2007
                 Size of M-commerce market by year
                             (billion USD)
1...
Japan’s m-commerce
            =
   2x mobile content
            =
10x mobile advertising
            =
  China’s e-comme...
Mobile books
Several best-selling novels in Japan
  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 Sora”
(“Loving sky – story
of a love without
gentleness”) sold…
“Koi Sora” sold over 2 million
  volumes (8 EUR / book)
Even on TV!
Digital books: Internet vs. Mobile




           Flat-fee data plans
             are introduced




                    ...
Mobile Social Networks
“Social Networking
 Is Not a Business”
 (but it might be soon)

MIT Technology Review
  July/August 2008
Build communities
                  with matching games
  Attract user
with free games
                                   ...
Starting date



2004   1997   1999   2004   2006
Registered users




60 mln   500 mln   20 mln   14 mln   10 mln
Country’s Internet users




60 mln    500 mln   20 mln   14 mln    n.a.
200 mln   220 mln   35 mln   90 mln   90 mln
Starting date (mobile)



2007    2000   2004   2006   2006
Mobile users (est.)




3 mln   50 mln   6 mln   10 mln   10 mln
Country’s mobile users




 3 mln    50 mln    6 mln    10 mln    10 mln
255 mln   580 mln   45 mln   100 mln   100 mln
Revenues 2007 (USD)




150 mln   520 mln ~200 mln 100 mln 150 mln
Profit 2007 (USD)




(50 mln)   225 mln ~100 mln   35 mln   ~60 mln
Average Revenue From Users



~0%   87%   80%   5%   50%
Impression unit price

                                           PC




                                           Mobile...
2008 Trends
Mobile Service Trends: Japan




                            Mobile TV service “One Seg”
    Twist screen
                ...
Mobile Service Trends: Korea
   Mobile TV       Mobile web browsing service




Video phone call         Mobile widget
Conclusion
Mobile lifestyle
infrastructure
All Media Converge to
       Mobile
3G
       +
Flat-fee data
For content, media and advertising:
  New service & revenue models
For mobile carriers:
indirect effects of innovations
Thanks!
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 Work
• Mobile Monday
   – Founder of the Mobile Monday forum in Beijing since 2006 (3,000+
     members, 23 events,...
Contact Us

www.plus8star.com

benjamin@plus8star.com

benjamin0123                           +81 | Japan

               ...
Is 3G a Dog or a Demon - Hints from 7 years of 3G Hype in Asia
Is 3G a Dog or a Demon - Hints from 7 years of 3G Hype in Asia
Is 3G a Dog or a Demon - Hints from 7 years of 3G Hype in Asia
Is 3G a Dog or a Demon - Hints from 7 years of 3G Hype in Asia
Is 3G a Dog or a Demon - Hints from 7 years of 3G Hype in Asia
Is 3G a Dog or a Demon - Hints from 7 years of 3G Hype in Asia
Is 3G a Dog or a Demon - Hints from 7 years of 3G Hype in Asia
Is 3G a Dog or a Demon - Hints from 7 years of 3G Hype in Asia
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Is 3G a Dog or a Demon - Hints from 7 Years of 3G Hype in Asia. Presentation for keynote at Mobility World Congress in Beijing (Nov 2008).

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Is 3G a Dog or a Demon - Hints from 7 years of 3G Hype in Asia

  1. 1. Is 3G a DOG or a DEMON? Learning from 7 years of 3G spin in Asia Benjamin Joffe, CEO | +8* | www.plus8star.com Mobility World Congress | Beijing | November 2008
  2. 2. Introduction
  3. 3. 3G penetration in Japan and Korea is over 70%; it is <0.1% in China
  4. 4. 100% 80% USA 60% 3G users 40% Chin Japa 20% a n 0% 0% 20% 40% 60% 80% % of Internet connections measured above 5Mbps (Source: Akamai)
  5. 5. #2 economy, #1 mobile society #1 mobile & Internet population #1 digital society
  6. 6. Japan stopped selling 2G in 2007
  7. 7. DOG or DEMON ?
  8. 8. Demons?
  9. 9. TD: 2001 all over again? =? TD-SCDMA Phone W-CDMA (r.99) Phone Motorola, 2008 Panasonic, 2001
  10. 10. Video phone
  11. 11. Mobile payment
  12. 12. Contactless (and networkless)
  13. 13. Mobile TV
  14. 14. Terrestrial or Satellite Broadcast
  15. 15. Learning #1 Most talked-about services don’t need 3G
  16. 16. We are sorry for telecom operators who made the mistake of 3G, but it’s not our fault! Martin Varsavsky CEO, FON (world’s largest WiFi network operator)
  17. 17. For operators, 3G is essentially a waste of money. Unfortunately, there is no coming back Top executive at one of the most innovative European Telecom operators (Very familiar with Asian markets)
  18. 18. Alternate definition
  19. 19. Games 3G Girls Gambling
  20. 20. Games 3G Girls Gambling
  21. 21. Mobile Content
  22. 22. Carriers content
  23. 23. Official content Carriers content
  24. 24. Mobile content Official content Carriers content
  25. 25. PC content Mobile content Official content Carriers content
  26. 26. PC content Mobile content Official content Carriers content Blue ocean of offline world “lifestyle infrastructure”
  27. 27. Dogs?
  28. 28. Mobile music
  29. 29. More music is sold “online” than “offline” in China and Korea
  30. 30. Ringback tones were created in Korea in 2001 They reached 30% penetration in less than 2 years
  31. 31. 90% of digital music sold in Japan is mobile
  32. 32. Digital music revenues in Japan Source: Infinity Venture Partners, 2008
  33. 33. KDDI Mobile Music 1 song = 3 USD
  34. 34. KDDI Mobile Music 10% content fee = 0.3 USD
  35. 35. KDDI Mobile Music | Direct Effect 100 million songs Total = 300 million USD KDDI = 30 million USD
  36. 36. KDDI Mobile Music | Indirect Effect #1 Monthly growth index 1.50 New subs share / Market share Ring songs December 2002 Full Song Downloads November 2004 1.00 0.50 0.00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 May-01 May-02 May-03 May-04 May-05 May-06 Aug-01 Feb-02 Aug-02 Feb-03 Aug-03 Feb-04 Aug-04 Feb-05 Aug-05 Feb-06 Aug-06 -0.50 Source: Telecommunications Carriers Association, 2007
  37. 37. KDDI Mobile Music | Indirect Effect #1 x2 new subscribers KDDI = +400 million USD / YEAR
  38. 38. KDDI Mobile Music | Indirect Effect #2 Data ARPU boost KDDI = +800 million USD / YEAR
  39. 39. TOTAL Content Providers = 270 million USD KDDI Content Fee = 30 million USD KDDI New Subs = 400 million USD KDDI ARPU Boost = 800 million USD TOTAL KDDI = 1.2 billion USD / YEAR
  40. 40. Learning #1 Content Providers Market Services & Educate Users
  41. 41. Learning #2 Indirect Benefits >> Direct Benefits
  42. 42. Learning #3 Ecosystem Growing
  43. 43. or
  44. 44. KDDI’s Double Flat Fee (May 2005) 40 USD 10 USD 1.5 MB 6.5 MB~
  45. 45. Mobile TV
  46. 46. Koreans now spend more time on the Internet than watching TV
  47. 47. Mobile TV penetration in Japan and Korea is over 30%
  48. 48. 37 million mobile TV phones were sold by June 2008 in Japan Mobile TV started in May 2006
  49. 49. In Japan over 70% of new handsets are mobile TV-enabled
  50. 50. Mobile advertising
  51. 51. The mobile ad market in Japan was over 700 million USD in 2007
  52. 52. Have you seen this before?
  53. 53. QR code in a train station with directions to a hotel QR code on a web page QR code printed on chocolate
  54. 54. TV ad for a show’s website Train ad Magazine ad for job portal for cosmetics Newspaper ad for health product
  55. 55. Blyk? (Guess what Blyk benchmarked?)
  56. 56. Beyond mobile advertising Mobile Commerce
  57. 57. Moba-Oku (DeNA) Mobile Auctions 1. Take pic 2. Select category 3. Enter info 4. Check 5. Done!
  58. 58. Over 6 billion USD in 2007 Size of M-commerce market by year (billion USD) 14 12 10 8 6 10.6 12.3 4 9 6 7.4 5.6 2 2.6 4.1 1.7 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 (F) (F) (F) (F)
  59. 59. Japan’s m-commerce = 2x mobile content = 10x mobile advertising = China’s e-commerce
  60. 60. Mobile books
  61. 61. Several best-selling novels in Japan were written on mobile phones
  62. 62. One full bookshelf for mobile novels at Kinokuniya, Japan’s largest bookstores chain!
  63. 63. The two volumes of this book “Koi Sora” (“Loving sky – story of a love without gentleness”) sold…
  64. 64. “Koi Sora” sold over 2 million volumes (8 EUR / book)
  65. 65. Even on TV!
  66. 66. Digital books: Internet vs. Mobile Flat-fee data plans are introduced Source: Infinity Venture Partners, 2008
  67. 67. Mobile Social Networks
  68. 68. “Social Networking Is Not a Business” (but it might be soon) MIT Technology Review July/August 2008
  69. 69. Build communities with matching games Attract user with free games Chat Avatars BBS Journal Clubs Get new users with Word-of-mouth
  70. 70. Starting date 2004 1997 1999 2004 2006
  71. 71. Registered users 60 mln 500 mln 20 mln 14 mln 10 mln
  72. 72. Country’s Internet users 60 mln 500 mln 20 mln 14 mln n.a. 200 mln 220 mln 35 mln 90 mln 90 mln
  73. 73. Starting date (mobile) 2007 2000 2004 2006 2006
  74. 74. Mobile users (est.) 3 mln 50 mln 6 mln 10 mln 10 mln
  75. 75. Country’s mobile users 3 mln 50 mln 6 mln 10 mln 10 mln 255 mln 580 mln 45 mln 100 mln 100 mln
  76. 76. Revenues 2007 (USD) 150 mln 520 mln ~200 mln 100 mln 150 mln
  77. 77. Profit 2007 (USD) (50 mln) 225 mln ~100 mln 35 mln ~60 mln
  78. 78. Average Revenue From Users ~0% 87% 80% 5% 50%
  79. 79. Impression unit price PC Mobile April 2005 April 2006 April 2007 May 2008
  80. 80. 2008 Trends
  81. 81. Mobile Service Trends: Japan Mobile TV service “One Seg” Twist screen with data menu overlay Decorated and animated mobile Internet browsing (left) messaging
  82. 82. Mobile Service Trends: Korea Mobile TV Mobile web browsing service Video phone call Mobile widget
  83. 83. Conclusion
  84. 84. Mobile lifestyle infrastructure
  85. 85. All Media Converge to Mobile
  86. 86. 3G + Flat-fee data
  87. 87. For content, media and advertising: New service & revenue models
  88. 88. For mobile carriers: indirect effects of innovations
  89. 89. Thanks!
  90. 90. About +8*
  91. 91. There are more ideas outside your country than inside Tom Kelley CEO, IDEO The 10 faces of Innovation
  92. 92. “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
  93. 93. 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
  94. 94. Social Work • 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.)
  95. 95. Contact Us www.plus8star.com benjamin@plus8star.com benjamin0123 +81 | Japan +82 | Korea http://twitter.com/plus8star +86 | China Telecom & Internet www.linkedin.com/in/benjaminjoffe + Added Value * High quality www.slideshare.net/plus8star

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