Mobile From East to West




Benjamin Joffe, CEO | Plus Eight Star | Jeju, Korea, 2009.09
Agenda


0.   Introduction
1.   “The West”
2.   Japan
3.   China
5.   Discussion
0.
Introduction
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
Innovation Arbitrage
What we do
– Worked with mobile SNS in Japan in 2003
   • With avatars, virtual goods and GPS!


– Advise leading companie...
Our clients

EUROPE                   USA




                  ASIA
30 events | 107 speakers | 3,000+ members | 1,500+ companies
3D Facebook Game   Team
1. The West
Digital Population



   Country         USA       China      Japan      Korea
  Population     300 mln   1,300 mln   130 ...
IT Infrastructure
           100%

                                                    Avg. 7 Mbps
           80%

       ...
Social games
       &
iPhone games
From University Café
  to Sand Hill Road
THE iPhone
• Sales
     – 5.2M in 2Q09
     – 22M iPhone users (+16M Touch)

• Applications
     – 65,000 applications
   ...
Global Market
• Mobile Services Market in 2008
     – Total                          8.6 billion USD
     – Mobile games  ...
Games
Images
Gambling
LBS
Social Networking
Mobile payment
Enterprise
The iPhone Effect
• Application stores
     – App stores are not new


• Touch screen
     – Touch screen is not new


• D...
Realities


• Mobile broadband >> iPhone

• Free apps are cannibalizing revenues
     – And driving iPhone sales.




Sour...
2. Japan
3G penetration in Japan
        >90%
Beyond Voice & Beyond Telecom




     3G          Mobile TV       NFC




Flat-rate Data   Data ARPU   Non-SMS Share
In addition
• Business models
  – Micro-payments since 1999 (“i-mode”)
  – “App store” since 2001

• Content
  – Mobile mu...
48 million
i-mode users




                Applications!
               (January 2001)
  87.7%
 3G users
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%
Flat-rate data: 2004
What happened since?
Mobile Market

• Mobile content
  – 4.3 billion USD in FY07
  – 40 USD / user / year


• Mobile commerce
  – 7.3 billion U...
Before & After 3G
                                                 2004       2007
                      1,186
           ...
90% of digital music
sold in Japan is mobile
Digital music revenues in Japan




                      Source: Infinity Venture Partners, 2008
Mobile Gaming Market
         =
Online Gaming Market
Japan Game Market




   [1 billion JPY = 10 million USD]
Mobile Social Networks
 make A LOT of profit
Some ads


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




   $200 mln $60 mln
Profit margin (E)



  40%    63%
Average Revenue From Users (E)



          75%   75%
Market Capitalization
      (March 2009)




   $1.4 bln   $1.2 bln
Other Services
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 = Free
Galapagos Syndrome




• No foreign mobile brand is strong in Japan
• Too complex to survive abroad?
• But Ideas are valid
3. China
Key market figures

     • Mobile and Internet users growing fast

          800
          700                       Mobil...
High Growth Potential


                     60
Penetration rate %




                     50                      Mobile...
Three operators
• China Mobile: the mobile leader
   – GSM + TD-SCDMA
• China Unicom: the balanced operator
   – GSM + WCD...
Huge market, but low ARPU
                      ARPU (RMB)
                    1 USD = 6.8 RMB
                  10 RMB = ...
3G started this year



             WCDMA                TD-SCDMA               CDMA 2000


              0.1 mln        ...
China Mobile’s Service Strategy




 Fetion - IM   12580 – Voice Search   Mobile Newspapers       12530 - Mobile Music



...
China Mobile’s Service Strategy
37M active users                             >15M USD/month
                       20M req...
Popular Services
           Overview
Gaming     • From single player game to MMO.
           • Emerging sector
Music      ...
Tencent / QQ case
                                                        Mobile QQ client
• Tencent                      ...
PC-Mobile Connection

IM + QQ Show
(avatar service)
available on PC
  and mobile
Tencent / QQ case




Mobile search: Soso    Mobile browsing   Mobile music   Mobile QQ mini player




Mobile Qzone (SNS)...
Learn from the best!



    “Inside Tencent” Report
          2009 Edition
Detailed Analysis, 20 Interviews, 280+ pages
Handset Market size
                           Nokia           38.9%
• 160 million mobiles
                               ...
Handset Market size: MTK
                           Nokia           38.9%
• 160 million mobiles
  sold in 2008            ...
“We make anything you can imagine”



                                    Cigarette case shaped
Barbie dressing case phone...
More Creativity With MTK
 366 days stand-by, dual-                                  Dark light for money
SIM, super powerf...
Market Impact

• Foreign brands threatened by MTK phones
  – Feature phones for <2,000 RMB (300 USD).
  – Nokia’s China sa...
From Shanzhaiji to Shanzhai culture

                                    iPhone
                             Manufacturer:...
iPhone




• iPhone 3G: 8GB
• iPhone 3GS: 16GB, 32GB   4Q2009
oPhone: Android Phones for China Mobile




DELL    Dopod   Philips   LG   Lenovo   Hisense
4. Conclusion
1.
3G + Flat-rate
2.
   New usages
New business models
3.
Innovation Arbitrage
             THAT’S WHAT WE DO
Discussion
Contacts

www.plus8star.com

benjamin@plus8star.com
                                       +81 | Japan
benjamin0123       ...
Mobile From East to West
Mobile From East to West
Mobile From East to West
Mobile From East to West
Mobile From East to West
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Mobile From East to West

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Overview of iPhone, Japan, China for a mobile workshop at Daum, one of Korea's leading web portals, in association with the LIFT conference.

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Transcript of "Mobile From East to West"

  1. 1. Mobile From East to West Benjamin Joffe, CEO | Plus Eight Star | Jeju, Korea, 2009.09
  2. 2. Agenda 0. Introduction 1. “The West” 2. Japan 3. China 5. Discussion
  3. 3. 0. Introduction
  4. 4. Benjamin Joffe ベンジャミン 벤자민 本杰明
  5. 5. 4 years 1 year 4 years
  6. 6. www.plus8star.com
  7. 7. Cross-Market Consulting Telecom & Internet Innovation China | Japan | South Korea
  8. 8. Innovation Arbitrage
  9. 9. What we do – Worked with mobile SNS in Japan in 2003 • With avatars, virtual goods and GPS! – Advise leading companies worldwide • Microsoft, Adidas (E-commerce / Digital strategy) • IMVU (US | 3D chat / Virtual World) • MIH (China/S.Africa | Largest shareholder of Tencent) – Published reports • Inside Cyworld • Inside Tencent (Clients include Harvard Business School) • Inside Taoabao (Upcoming)
  10. 10. Our clients EUROPE USA ASIA
  11. 11. 30 events | 107 speakers | 3,000+ members | 1,500+ companies
  12. 12. 3D Facebook Game Team
  13. 13. 1. The West
  14. 14. Digital Population Country USA China Japan Korea Population 300 mln 1,300 mln 130 mln 50 mln Internet users 225 mln 340 mln 100 mln 35 mln Mobile users 260 mln 650 mln 100 mln 45 mln 1/5 1,680 mln 1/2 Total 475 mln 1/3 785 mln
  15. 15. IT Infrastructure 100% Avg. 7 Mbps 80% Avg. 15 Mbps 60% 3G users 40% C hi n 20% a Avg. 4 Mbps www.plus8star.com 0% 0% 20% 40% 60% 80% % of Internet connections measured above 5Mbps (Source: Akamai, 4Q08)
  16. 16. Social games & iPhone games
  17. 17. From University Café to Sand Hill Road
  18. 18. THE iPhone • Sales – 5.2M in 2Q09 – 22M iPhone users (+16M Touch) • Applications – 65,000 applications – 1.5B application downloads • Myths? Source & Recommended Read: Strand Consult - The Moment of Truth, a Portrait of the iPhone
  19. 19. Global Market • Mobile Services Market in 2008 – Total 8.6 billion USD – Mobile games 3 billion USD – Apple 150 million USD! (=1.7%) • Handset Market – Total 250 million / quarter – Apple 5.2 million (=2%) Source & Recommended Read: Strand Consult - The Moment of Truth, a Portrait of the iPhone
  20. 20. Games Images Gambling LBS Social Networking Mobile payment Enterprise
  21. 21. The iPhone Effect • Application stores – App stores are not new • Touch screen – Touch screen is not new • Developers make money? – Not so sure Source & Recommended Read: Strand Consult - The Moment of Truth, a Portrait of the iPhone
  22. 22. Realities • Mobile broadband >> iPhone • Free apps are cannibalizing revenues – And driving iPhone sales. Source & Recommended Read: Strand Consult - The Moment of Truth, a Portrait of the iPhone
  23. 23. 2. Japan
  24. 24. 3G penetration in Japan >90%
  25. 25. Beyond Voice & Beyond Telecom 3G Mobile TV NFC Flat-rate Data Data ARPU Non-SMS Share
  26. 26. In addition • Business models – Micro-payments since 1999 (“i-mode”) – “App store” since 2001 • Content – Mobile music, mobile ads, mobile commerce… – Financial services by mobile carriers • LTE at 300Mbps starts next year!
  27. 27. 48 million i-mode users Applications! (January 2001) 87.7% 3G users
  28. 28. Unlimited Unlimited 30 USD 10-40 USD
  29. 29. KDDI’s Double Flat Fee (introduced in May 2005) 40 USD 10 USD 1.5 MB 6.5 MB~
  30. 30. Flat-rate data users X? 76%
  31. 31. Flat-rate data: 2004 What happened since?
  32. 32. Mobile Market • Mobile content – 4.3 billion USD in FY07 – 40 USD / user / year • Mobile commerce – 7.3 billion USD – 70 USD / user / year
  33. 33. Before & After 3G 2004 2007 1,186 1,200 1,140 1,091 www.plus8star.com 1,000 862 800 Million USD 600 568 500 419 400 204 225 229231 185 200 108 0 0
  34. 34. 90% of digital music sold in Japan is mobile
  35. 35. Digital music revenues in Japan Source: Infinity Venture Partners, 2008
  36. 36. Mobile Gaming Market = Online Gaming Market
  37. 37. Japan Game Market [1 billion JPY = 10 million USD]
  38. 38. Mobile Social Networks make A LOT of profit
  39. 39. Some ads SNS + Free games + Homepage Virtual goods
  40. 40. Revenues 2008 (E) $200 mln $60 mln
  41. 41. Profit margin (E) 40% 63%
  42. 42. Average Revenue From Users (E) 75% 75%
  43. 43. Market Capitalization (March 2009) $1.4 bln $1.2 bln
  44. 44. Other Services
  45. 45. Mobile books
  46. 46. Digital books: Internet vs. Mobile Flat-fee data plans are introduced Source: Infinity Venture Partners, 2008
  47. 47. Several best-selling novels in Japan in 2007 were written on mobile phones
  48. 48. One full bookshelf for mobile novels at Kinokuniya, Japan’s largest bookstores chain!
  49. 49. The two volumes of this book “Koi zora” (“Loving sky”) sold…
  50. 50. “Koi zora” sold over 2 million copies (10 USD / book)
  51. 51. Even on TV!
  52. 52. Mobile TV penetration in Japan and Korea is over 40%
  53. 53. Business model = Free
  54. 54. Galapagos Syndrome • No foreign mobile brand is strong in Japan • Too complex to survive abroad? • But Ideas are valid
  55. 55. 3. China
  56. 56. Key market figures • Mobile and Internet users growing fast 800 700 Mobile users | 673 million 600 million 500 400 Internet users | 338 million 300 Fixed-line subs | 320 million 200 100 Broadband subs | 90 million 0 Sources: MIITT, CNNIC, +8*
  57. 57. High Growth Potential 60 Penetration rate % 50 Mobile | 50% 40 30 Internet | 25% 20 Fixed-line | 24% 10 0 Sources: MIITT, CNNIC, +8*
  58. 58. Three operators • China Mobile: the mobile leader – GSM + TD-SCDMA • China Unicom: the balanced operator – GSM + WCDMA • China Telecom: the broadband leader – CDMA1X + CDMA2000 Mobile Fixed-line Broadband Sources: +8*
  59. 59. Huge market, but low ARPU ARPU (RMB) 1 USD = 6.8 RMB 10 RMB = 1,750 KRW 80 75 70 63.6 60 50 41.7 40 30 20 10 0 China Unicom China Mobile China Telecom Sources: Company Reports, 1H2009
  60. 60. 3G started this year WCDMA TD-SCDMA CDMA 2000 0.1 mln 1 mln 1.1 mln • Started late • Largely expected by the • Better subsidies than • Waiting for iPhone in Q4 government China Unicom • Big issues on handsets • Better handset quality than China Mobile
  61. 61. China Mobile’s Service Strategy Fetion - IM 12580 – Voice Search Mobile Newspapers 12530 - Mobile Music Mobile Game Streaming Mobile TV 139 - Mailbox PIM - Telephone Book Backup Source: China Mobile
  62. 62. China Mobile’s Service Strategy 37M active users >15M USD/month 20M requests / 1M songs 147M registered #1 newspaper in month 85M members Growing fast China! (23M users) Fetion - IM 12580 – Voice Search Mobile Newspapers 12530 - Mobile Music Mobile Game Streaming Mobile TV 139 - Mailbox PIM - Telephone Book Backup 4M active users 6M USD / month 20M registered Source: China Mobile
  63. 63. Popular Services Overview Gaming • From single player game to MMO. • Emerging sector Music • Mature market thanks to Ring Back Tone business • Strong revenue maker LBS • GPS getting popular • Mobile LBS early stage Portal • Getting mature (content and user base) • Web companies and pure mobile players Browsing • Getting mature (user experience, user base) SNS • Getting mature (user experience, user base) • Both pure mobile SNS player and mobile extension of PC-based SNS TV • Emerging market • Both broadcasting and streaming • Lack of business model • Interesting technologies enabling streaming on 2.5G
  64. 64. Tencent / QQ case Mobile QQ client • Tencent integrates various services – #1 online community in China, Chat room leveraging IM Game – 400 mln active accounts WAP Portal – 1 bln USD revenue in 2008 • Mobile extension of QQ: Info: finance, Music book, news player 20% of revenue – WAP, mobile client, SMS – PC-Mobile synchronization E-mail Movie – Good multimedia experience in 2.5G network Qzone (SNS)
  65. 65. PC-Mobile Connection IM + QQ Show (avatar service) available on PC and mobile
  66. 66. Tencent / QQ case Mobile search: Soso Mobile browsing Mobile music Mobile QQ mini player Mobile Qzone (SNS) Mobile email Mobile game Mobile video
  67. 67. Learn from the best! “Inside Tencent” Report 2009 Edition Detailed Analysis, 20 Interviews, 280+ pages
  68. 68. Handset Market size Nokia 38.9% • 160 million mobiles Top 3 for years sold in 2008 Samsung 18.6% 66% of the market – Another 50 mln Motorola 8.8% phones sold in grey K-Touch 8.1% market (not Lenovo 3.9% accounted for) Sony-Ericsson 3% Jinli 2.5% LG 2.3% Konka 2.2% Amoi 2.1% Bird 1.5% Changhong 1% Haier 0.9% Others 6.3%
  69. 69. Handset Market size: MTK Nokia 38.9% • 160 million mobiles sold in 2008 Samsung 18.6% – Another 50 mln Motorola 8.8% phones sold in grey K-Touch 8.1% market (not Lenovo 3.9% accounted for) Sony-Ericsson 3% • Note: MTK phones Jinli 2.5% – All domestic makers LG 2.3% have migrated to Konka 2.2% MTK Amoi 2.1% Bird 1.5% Changhong 1% Haier 0.9% Others 6.3% Sources: Analysys International, ZOL
  70. 70. “We make anything you can imagine” Cigarette case shaped Barbie dressing case phone PSP shaped, popular games preinstalled Car shaped Solar power Watch phone Super lens attachable rechargeable handset
  71. 71. More Creativity With MTK 366 days stand-by, dual- Dark light for money SIM, super powerful battery authentication Big thunder phone Spider-Man design
  72. 72. Market Impact • Foreign brands threatened by MTK phones – Feature phones for <2,000 RMB (300 USD). – Nokia’s China sales down 30% in 2008. • Key results – 90% of China’s mobile phone chipset market. – 160 million chipsets shipped in 2007. – 95% orders from China customers.
  73. 73. From Shanzhaiji to Shanzhai culture iPhone Manufacturer: Apple One SIM card Price: >4,000 RMB iOrange: Fake iPhone Manufacturer: iOrange Made on MTK platform Dual-SIM card Price: 900 RMB
  74. 74. iPhone • iPhone 3G: 8GB • iPhone 3GS: 16GB, 32GB 4Q2009
  75. 75. oPhone: Android Phones for China Mobile DELL Dopod Philips LG Lenovo Hisense
  76. 76. 4. Conclusion
  77. 77. 1. 3G + Flat-rate
  78. 78. 2. New usages New business models
  79. 79. 3. Innovation Arbitrage THAT’S WHAT WE DO
  80. 80. Discussion
  81. 81. Contacts www.plus8star.com benjamin@plus8star.com +81 | Japan benjamin0123 +82 | Korea http://twitter.com/plus8star +86 | China Telecom & Internet www.linkedin.com/in/benjaminjoffe + Added Value www.slideshare.net/plus8star * High quality
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