Ponencia en Colombia 3.0

1. The Japanese Mobile Internet Market
Opportunities for international mobile content players
Colombia 3.0 – Oct. 26, 2012
Adrian Van Meerbeeck
VP, Strategy and Research, NTT DOCOMO USA

2. The Japanese Mobile Market
2

3. Overview of the Japanese Mobile Market: The Size
Revenues 2011
($ billions)
188
139
USA (big 4) Japan
Revenues 2011
($ billions)
70.2
63.2
53.0
33.7
20.6
Verizon W. AT&T W. Sprint/Nextel T-Mobile DOCOMO
• The Japanese Mobile market is one of the most important in the world.
• The Japanese are outspending the Americans by almost 80% (per capita).
Source: Public sources from each company 3

4. Overview of the Japanese Mobile Market: Subscribers
Number of Subscriptions (fiscal year)
70.00
60.00
50.00
40.00
30.00
20.00
10.00
-
2008 2009 2010 2011
DOCOMO 54.60 56.08 58.01 60.13
au 30.84 31.87 33.00 35.11
SoftBank Mobile 20.63 21.88 25.41 28.95
Market Share of Subscriptions (2011)
DOCOMO,
47%
• The main carriers in Japan are DOCOMO, au (KDDI) and Softbank Mobile.
• DOCOMO has by far the largest share of subscribers.
Source: Public sources from each company 4

5. Overview of the Japanese Mobile Market: Revenues
Revenues
(Yen billions)
5000.0
4000.0
3000.0
2000.0
1000.0
0.0
2010 2011
DOCOMO 4224.3 4240.0
au 2590.7 2727.0
SoftBank Mobile 1944.5 2144.8
Market Share: Revenue 2011
DOCOMO
47%
Source: Public sources from each company 5

6. Overview of the Japanese Mobile Market: ARPU
Aggregate ARPU (Yen)
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
2008 2009 2010 2011
DOCOMO 5,710 5,350 5,070 4,870
au 5,800 5,410 4,940 4,510
SoftBank Mobile 4,070 4,070 4,210 4,150
• Aggregate ARPU in Japan remains one of the highest in the world.
• In 2011 the average ARPU in Japan was close to 60 USD.
Source: Public sources from each company 6

7. Overview of the Japanese Mobile Market: ARPU (data)
Packet ARPU
(Yen)
3,000
2,500
2,000
1,500
1,000
500
-
2008 2009 2010 2011
DOCOMO 2,380 2,450 2,540 2,670
au 2,210 2,280 2,320 2,490
SoftBank Mobile 1,740 2,020 2,310 2,510
Data ARPU has continued to grow steadily – now represents over half of the
aggregate ARPU.
Source: Public sources from each company 7

8. Handset Sales in Japan
Handset Sales
(million units)
48.1
39.36 40.87
37.37
22.09
20.13 19.06
18.04
2008 2009 2010 2011
Total Sales (DOCOMO+au+SoftBank) DOCOMO
• The Japanese handset market had reached a mature phase several years ago
but the introduction of smartphones in the last couple of years seems to be
injecting some new vitality.
• 2011 saw a 20% increase in overall sales.
Source: Public sources from each company 8

9. Japan: Smartphone Shipments
Japan
Smartphone
Shipments
(million
units)
24.2
16.7
8.5
7.3
4.9
3.2
1.7
2.3
0.3
0.4
0.4
0.2
FY
2009
FY
2010
FY
2011
Android
iPhone
Other
Total
Sales of smartphones have grown ten-fold, from 2.3 million in 2009 to over 24
million in 2011.
Source: MM Research Institute Ltd Note: Japanese fiscal year is Apr 1 to Mar 31 9

10. Android vs. iPhone in Japan
Share of Shipments by OS
Android market share jumped from around 11% of the Japanese smartphone
market in FY 2009 to over 69% in FY 2011.
Source: MM Research Institute Ltd 10

11. Android vs. iPhone in Japan
Top Smartphone Platforms: Share (%) of Smartphone Subscribers
61.00% 61.40%
33.00% 34.20%
5.70%
3.90%
0.30% 0.50%
Android Apple Microsoft Other
3 Month Avg. Ending Nov. 2011 3 Month Avg. Ending Feb. 2012
Android is the dominant OS in Japan with over 60% of market share.
Source: comScore MobiLens 11

12. Japan: Data Contribution to Total Revenues
% of data service to total ARPU:
52.8%
* ARPU: Average Revenue Per Unit per month/subscriber
(FY2011/1Q)
50%
USA (Verizon Wireless)
Japan
37.1%
40% (FY2010/3Q)
Korea (KT)
32.5%
30% (FY2010/3Q)
Europe (Vodafone)
30.0%
(Launched Oct. 2001)
(FY2010/3Q)
20%
10%
(Launched Feb 1999)
0%
1999 2001 2003 2005 2007 2009 2011 (fiscal year)
Japan leads the world in terms of data contribution to total revenues due to early
introduction of i-mode and other advanced services.
12

13. Japan: Highest 3G adoption in the world
3G adoption in Japan/North America/Western Europe and Southeast Asia
(2003-2013)
Forecast
120%
日本
Japan
100%
アメリカ・カナダ
USA/Canada
80%
West Europe
西ヨーロッパ
60%
% of 3G Subs to Total User Base
40%
Southeast Asia
東南アジア
20%
0%
2005
2006
2007
2008
2009
2010
2012
2013
2003
2004
2011
* Southeast Asia: Malaysia, Thailand, Vietnam and the Philippines
Japan leads the world in the adoption of third-generation (3G) services
Source: Wireless Intelligence 13

14. Global Mobile Media: Revenues
Global 2012 Mobile Media Revenues ($ millions)
7,311 Advertiser Spend
Consumer Spend
82,805
2,898
327
26,121
16,026 726
2,837
Data plans / web Applications & Music Video
browsing Games Year-on-year Mobile Media Market Growth:
2011-2012
128.9%
Global Major Western Europe US
107.4%
85.4%
17.0%20.3%22.1% 13.4%14.1%15.5%
Total Market Consumer Spend Advertising Revenue
Global consumers are spending $ 26 billions in apps.
Source: Strategy Analytics Global Media Forecast 2012 14

15. Japan’s Mobile Business Market
Mobile Media Market: US vs. Japan
($ billions)
6.7
6.2
US Consumer Spending in Apps Japan Consumer Spending in
(2012) Mobile Content (2009)
Japanese Mobile Business Market
(Yen billions)
Mobile Content Market Mobile Commerce Market
969.10
868.90
732.90
564.10
407.40
259.30
483.50 552.50
366.60 427.20
260.30 315.00
2004 2005 2006 2007 2008 2009
• The Japanese Mobile Content is one of the largest in the world.
• It was worth $6.2 billion in 2009 – even before the introduction of smartphones.
Source: Ministry of Internal Affairs and Communication (Japan) & Strategy Analytics 15

16. Revenues: Increased Interest on Japan by Developers.
While the majority of apps are still made (and sold) in USA, Japan (¥) has
already caught up with the Eurozone market (three times as large as Japan in
subscriber base).
Source: AppBrain 16

17. NTT DOCOMO Inc.
17

18. NTT DOCOMO: Handset Sales
DOCOMO
Total
Handset
Sales
(million
units)
22.09
20.13
19.06
18.04
2008
2009
2010
2011
• In the last years the number of handsets sales at DOCOMO has fluctuated
between 18-22 million units - roughly half of the entire Japan sales.
• In 2011 there was a significant increase in sales helped by the introduction of
smartphones.
Source: NTT DOCOMO 18

19. NTT DOCOMO: Smartphones
Smartphones, Smartphones,
Smartphones, 40%, 55%,
13%,
2010, 2011, 2012,(forecast),
(2.52,million,Smartphones), ,(8.82,million,Smartphones), ,(13,million,Smartphones),
DOCOMO Smartphone Sales
(million units)
1.28
7.50
7.54 5.50
2.52
2010 2011 2012 (planned)
FOMA smartphones Xi smartphones
• Steady growth of smartphone sales since the introduction in 2010.
• In 2012, 55% of the entire handsets sold to DOCOMO customers will be
smartphones and almost 60% will be Xi (LTE) devices.
Source: NTT DOCOMO 19

20. DOCOMO Smartphones/Tablets Lineup
・ Released a total of 17 models of smartphones/tablets, overwhelming the offerings of the
competitors
・ 11 models are Xi LTE-enabled, and many are equipped with popular features, such as waterproof
casing, Osaifu-Keitai e-wallet, one-seg TV, infrared data exchange and other features
docomo
2012 Summer smartphones
docomo
tablet
Rak
Raku
Phone
ELUGA Live™ series
Raku Raku
REGZA P-08D smartphone F-12D
GALAXY S III AQUOS PHONE ARROWS X
ZETA PHONE
SC-06D F-10D
SH-09D T-02D Optimus Vu
AQUOS PHONE
XPERIA GX L-06D ELUGA power
sv
SO-04D (L-06D JOJO) P-07D
SH-10D
Released Jun. 28 Jun. 29 Jul. 20 Jul. 26
AQUOS PHONE st ANTEPRIMA Optimus it ELUGA V MEDIAS X
SH-07D F-09D L-05D P-06D N-07D
Xperia SX ARROWS Me
SO-05D F-11D
docomo
tablet
Released Jun. 7 Jun. 27 Jun. 30 Jul. 12 Jul. 13
20

21. DOCOMO: Xi Area Expansion Plans
・ Xi subscriptions grew steadily to 3.32 million as of Jun. 30, 2012
・ Making steady progress in coverage expansion, aiming to complete installation
of cumulative 21,000 Xi base stations by Mar. 31, 2013
Xi subscriptions
Over
Xi Coverage expansion plan
(Million subs)
10.00 million
10.00
1000 2010
2011
2012
2013
2014
Mar. 31, 2013: Mar. 31, 2015:
Dec.
Jun. 30, 2012: Approx. Approx.
Approx. 9,800 BTSs 21,000 BTSs 50,000 BTSs
8.000
80 Population coverage: Approx. 70%
Approx. 98%
１２月
Approx. 32%
Launched Xi LTE service
6.000
60
All
municipalities
4.000
40 3.32
Local cities
2.22
Major
2.000
20
1.14
cities
0.12
0.39
Prefectural
capital-size cities
0
１Ｑ ２Ｑ ３Ｑ ４Ｑ １Ｑ ４Ｑ MAX
75Mbps
112.5MBps
throughput
FY2011
FY2012
21

22. DOCOMO: Evolution of Smartphone Services
• The dmenu portal site provides a
wide range of apps and other
content from diverse providers, as
well as enriched versions of
DOCOMO’s popular i-mode™
content, optimized for easy-to-use
smartphone interfaces.
• The dmarket content store offers a
wealth of other content, including
movies, music, e-books and
Android™ applications
• DOCOMO’s smartphones also
have access to a variety of other
DOCOMO services, such as i-
concier™ for push-based
concierge-like personal assistance,
‘NOTTV’ a multimedia broadcasting
station for smartphones and many
more.
Source: NTT DOCOMO 22

23. DOCOMO: Enrichment of ‘dmarket’.
• VIDEO store and ANIME stores recording favorable increase in subscriptions and
transaction volume
• Plan to introduce multi-device support from August 2012
Growth of dmarket transactions
dmarket
(Billions of yen)
50
5.0
Unlimited access to over 5,000 video titles for a flat
monthly rate of 525
VIDEO Store
No. of subs topped 2.0 million on July 21, 2012
4.0
40
Distributes approx. 43,000 popular titles from various
publishers
BOOK Store
3.0
30
Acquired approx. 50,000 subs after “Music Store Selection”
launch in July 2012
Offering unlimited access to selected 50 programs from
MUSIC Store
approx. 1 million songs for 315/month.
2.0
20
Introduces selected applications that are fun and
convenient from Google Play
Apps & Review
1.0
10
Acquired approx. 40,000 subs after service launch in July
2012. Unlimited access to approx. 500 titles, 8,000
episodes of ANIME content for 420/month 0
ANIME Store
３Ｑ ４Ｑ １Ｑ
FY2011
FY2012
New stores to be added in the future
Gaming
・・・
Shopping
23

24. Cloud-based Services: ‘Shabette Concier’.
・ Received 3.00 million downloads and approx. 130 million accesses in about 5 months
after service launch.* Improved convenience with the addition of knowledge Q&A
function in June 2012
・ Aim to apply voice agent function to e-commerce services of “dmarket” in the future
* As of July 25, 2012
Voice command
Voice Intention
Handset operation/
recognition analysis
content display
engine
engine
Network cloud
Area guide
Recipe info
Map
by voice command
Content displayed
voice command
Phone
Scheduler
Mail
Train transfer
Weather
News
Operated by
Alarm
Camera
Timer
Tweets
Photo content
Video content
Music content
Apps
Gaming content
Memo
Music player
Book/comic
Knowledge New
Q&A
24

25. Cloud-based Services: ‘Mail Honyaku Concier’.
• Launched “Mail Hon’yaku Concier” text translation service in June 2012
• Received 100,000 downloads and approx. 1.50 million accesses in approx.
2 months after launch* *As of July 23, 2012
Mail Hon’yaku Concier
Create message in Japanese Confirm message in native language
Japanese English Korean Chinese
SNS
Mail
誕生日おめでとう
Machine translation
function
생일 축하합니다
생일 축하합니다
誕生日おめでと
う Network cloud
ございます
25

26. Cloud-based Services: ‘Translator Phone’.
・ Trial service of “Translator Phone” supporting translation between Japanese and
10 foreign languages in progress since June, aiming for full-commercial introduction in
autumn 2012
・ Recorded 220,000 accesses in approx. 2 months after launch* * As of July 23, 2012
Translator Phone
Network Cloud
Translation I am MAKI’s mother.
マキの母親です。
Thank you for taking
娘がお世話に
care of my daughter.
なっています。
Mother Host family
(Japanese) and Maki
Japanese Translator Phone Foreign
function language
【Supported languages】
Nov. 2011: English, Korean, Chinese
Jun. 2012: French, German, Italian, Spanish,
Portuguese, Thai, Indonesian
26

27. Cloud-based Services: ‘Photo Collection’.
・ “Photo Collection” service planned for launch in August 2012
・ Photographs taken by mobile devices are automatically sorted and stored in docomo
cloud using a wide variety of high-accuracy image recognition features
・ Can also be linked with external services such as Evernote, Eye-Fi, HighCam
Photo Collection
Free of charge
(Up to 5GB)
Automatic upload and
synchronization across
multiple devices
Automatic grouping using
face recognition feature
Photos of external services
can also be viewed
27

28. Cloud-based Services: Multi-device Support.
・ Plan to start supporting cloud-based multi-device access to address book/email in this winter
・ Offers users with greater convenience and peace of mind through constant storage of
latest data on the cloud
・ Aim for further service expansion through provision of supplementary services utilizing
profile data of address book
Multi-device access (address book)
Utilize for services/
business
sp-mode
mail
Smartphone
Photo sharing
service
Tablet
Multi-device access ( sp-mode mail)
Smartphone
Tablet
28

29. Smartphone Related Activities at DOCOMO USA
Developer Support Page
Smartphone Developer Support page.
Purpose: Create a one-stop information window in English for international developers who are
interested in the Japanese market.
Information included:
• Information about the Smartphone activities in Japan:
• Penetration of Android at DOCOMO and in Japan
• Android handsets introduced at DOCOMO
• Information about DOCOMO’s Smartphone related services
http://www.docomo-usa.com/en/developer/index.php
29