This document summarizes a business trip report about Japan's mobile internet market from a conference and company visits in November 2009. The key points covered are: 1) Japan has a highly developed mobile internet market with over 90% of subscribers using 3G networks and 84% of cell phone users being mobile internet users. 2) Mobile commerce is more developed than mobile content in Japan, with mobile commerce sales reaching $8.69 billion in 2008, mainly through purchases, payments and travel services. 3) Top mobile content categories are songs, games, and ring tones, though e-books and screensavers are growing rapidly. Carriers have played a dominant role in Japan's mobile market by investing in content

1. GWC Business Trip Report
Japan’s Mobile Internet
Market Overview
Mobidec2009 Conference & Company Visit
November 24th-27th,2009
www.thegreatwallclub.com

2. Brief Introduction
Japan's Mobile Internet Market Overview
Japan’s Leading Mobile Internet
Companies
Keywords

3. Brief Introduction
Japan's Mobile Internet Market Overview
Japan’s Leading Mobile Internet
Companies
Keywords

4. Company Name Introduction Name Postion
Mobile Internet Great Wall Club Host Wen Chu Secretary General
Mobile Internet Great Wall Club Host Bo Yiqun Vice Secretary General
CMCA Co-host Ni Jianzhong VP& Secretary General
CMCA Co-host Xiao Wei Vice Secretary General
CMCA Co-host Chen Shuo Vice Secretary General
CMCA Co-host Wang Fan Assistant to Secretary General
Aspire China Mobile Subsidiary Ye Bing CEO
3GPOP Mobile Entertainment Li Jinji CEO
Shenzhen Jiankun Electronics Mobile Component Distributor Zhu Zhengyu CEO
Talkweb Information System Mobile Internet Content Provider Song Zhixing Vice CTO
Talkweb Information System Mobile Internet Content Provider Long Bokang CTO
Sky Mobi Mobile Terminal Software Provider Song Tao CEO
Digu.com Mobile Micro Blogging Website Huang Xiaotao General Manager
PICA Mobile IM Service Wang Wei General Manager
C-platform.com Mobile Service Platform Tang Bo CEO
Sina China’s Largest Internet Portal Su Huixia Vice General Manager
Huawei Leading Telecom Solutions Provider He Shiwen Business Development Supervisor
NetQin Mobile Security Software Provider Zhou Yuan VP
Mobile Searching and Transaction
Taobao Asia’s Largest Online Marketplace Song Manyuan
Manager

5. November 24 Arriving in Tokyo (Night)
November 25 9th Mobildec2009 Conference
• Japan’s most influential annual mobile internet conference~800
people attended the conference.
• Networking Party at night (300 people).
November 25 Company Visit
• Gree | Japan’s largest SNS website, market value:
2.22 USD
• Zappallas | Japan’s largest mobile fortune-telling provider,
market value: 239 million USD
• NTT DoCoMo | Japan’s Largest Mobile Carrier
• Softbank | Japan’s Largest Internet Company and Third Largest
Mobile Carrier
November 27 Back to Beijing (Morning)

6. Brief Introduction
Japan's Mobile Internet Market Overview
Japan’s Leading Mobile Internet
Companies
Keywords

7.  Japanese carriers terminated all 2G services in 2007.
 3G penetration rate reaches 90%; 2G will soon be phased out.
 3.5G is gradually becoming the standard.
Chinese and Japanese Mobile Market Comparison
Million 2009.6 Penetration 2009.6 Penetration
Rate* Rate*
Subscriber Total 127 - 1320 -
Mobile User 109 86% 673 51%
Mobile Internet 91.6 84% ~200 30%
User
3G Subscriber 100 92% <10 ~1%
3.5GSubscriber 57.6 53% 0 0
Source: MCF (Japan), MIIT, GWC, 2009

8.  Beginning from 2004, Japan's mobile commerce sales exceeds that of content. In
2008, MC is about twice as much as CP.
Mobile
MC market
Commerce
(MC) 8.7 bln USD
Individual
Users 2008
Mobile
CP market
Content
4.8 bln USD
(CP)
Advertis Advertis Mobile Ad
ers ers market 620 2007
mln USD
Source: 总务省 (Japan), MCF (Japan)

9.  Mobile commerce sales reached Japan’s Mobile Commerce Market
8.69 billion USD in 2008.
Sales reached
 Mobile purchase, payment and 8.69 billion in
services (travel service especially) 2008
are among the most popular.
 64% users shop online through their
phones at least once a week.
 Top5 Mobile Commerce Websites
 Rakuten
 Yahoo!
 Amazon
 NISSEN
 au | KDDI’s mobile commerce service
Source: MIAC (Japan), 2008 Survey Pink: Payment Blue: services Orange: Purchase

10. 100 Million 2004 2005 2006 2007 2008 Trend Rank
USD
 Starting from 2004, Ring 11.67 10.48 8.43 5.59 4.73 ↓ 3
Japanese carriers tones
significantly lowered the Songs 2.01 5.62 7.59 10.74 11.9 ↑ 1
cost of using mobile - Part 1.99 4.63 5.22 5.68 4.83 ↓ -
internet, thus facilitating
- Whole 0.02 0.99 2.37 5.06 7.07 ↑ -
the development of mobile
content market. Games 4.12 5.89 7.48 8.48 8.69 ↑ 2
 Top5 Contents: Songs, Email 0.02 0.14 0.55 1.16 1.71 ↑ 8
Games, Ring tones E-book 0.03 0.16 0.69 2.21 3.95 ↑ 4
(Declining), e-books and
RBT 0.06 0.13 0.29 0.87 1.10 ↑ 9
screensavers.
 Songs, mobile emails, e- Fortune- 1.03 1.23 1.58 1.82 2.00 ↑ 7
telling
books and ringback tones
are among the fastest Screensav 2.25 2.36 2.48 2.27 2.29 ↑ 5
growing. er
 Though fortune-telling and Kisekae - - 0.03 0.23 0.64 ↑ -
screensavers are only a Weather/ - 0.51 0.63 0.73 0.78 ↑ 10
small portion of mobile News
commerce, they are quickly Traffic - 0.74 1.25 1.64 2.06 ↑ 6
gaining popularity.. Info
Source: MIAC (Japan) 2008 Survey Other - - - -
Total 26.03 31.5 36.6 42.72 48.35 ↑ -

11.  Japan has the world‘s fastest mobile broadband
 Average speed: 302kbps
 High ARPU; mobile data service makes up 30% of total services.Note：
 China mobile’s data service also makes up about 30% of its services, but text messages make up nearly 50% of its data
service. The same is ture with most carriers.
 Text messages make up less than 3% of Japan's mobile data service.
 Four factors that facilitate mobile content market growth: network, mobile tariff, terminal, content
 Network: Japan began to develop 3G in 2000. Now, 92% subscribers are using 3G, 53% are using 3.5G.
 Mobile Tariff: Mobile tariff has dropped considerably since 2004. Many monthly packages are available.
 Terminal: Most phones are carrier-branded. Users can get phones at much lower prices by signing contracts with
carriers.
 Content: Mobile searching enhances mobile content development.
 World’s leading mobile internet country
 NTT DoCoMo launched i-mode, its mobile internet service in 1999.
 84% Japanese cell phone users are mobile internet users too.
 On the whole, carriers dominate Japan's mobile industry.
 Carriers dominate cell phone market
 Carriers dominate mobile content market
 They invest in CP: KDDI, together with DeNA, founded a mobile commerce company. It is also investing in Gree to
develop SNS.

12. Evolution of Content Searching
 53% of Japanese mobile users are relying on Web Search
mobile searching to get the contents they PC Internet
Directories Engines
Content
want. Searching e.g. early Yahoo e.g. Google
 Japan’s mobile internet and traditional
internet are integrated.And users don’t Mobile Internet
Content
pay much mobile tariff. This provides a Japan’s Mobile Searching is
Searching going through the same process
favorable environment for mobile
searching to grow.
 Mobile searching fuels the develoment of Mobile Searching Eco-system
Mobile Better
mobile content market and mobile Search Content
Content
Innovatio Contents/
advertising market. It also significantly ing n Services
inceases carriers' revenue.
More
More More
Revenu
Contents Users
e
Inside the search box is a
 Mobile searching changes people’s lives
keyword indicating the
name of the company. In Japan, you can see search boxes and
keywords everywhere. You don't have to
memorize complicated links. Just search the
keywords using your phone. You will get the
content you need in no time.
Source: photo taken by GWC,
2009,11,26 Tokyo Subway

13.  Japan has the world’s two leading mobile Japan VS the West
SNS websites : DeNA, Gree
2008
 SNS offers great potential.
 4 out of the world‘s 5 listed SNS companies are Users Mostly PC Mostly Mobile
in Asia.
 Japan：Mixi, DeNA, Gree
users users
 China：Tencent Market Value 3* 2
 Europe：Xing (billion USD)
 Gree's success comes from its ability to User Total (million) ~200 15
seize new opportunities.
 Gree has 8% of Facebook's user number Revenue (million 350 139
but 40% of its revenue. USD)
 Despite worldwide popularity, Facebook
is running in the red. On the contrary, Profit Ratio Loss 32%
Gree's net profit ratio is 32%.
Business Model 90% Advertising(23%),
 For Gree, paid users make all the difference. Advertising Virtual Goods and
 Just like Facebook, many western Games
internet companies rely too heavily on Revenue from 10% 77%
advertising, which makes it hard to make User Fees
money.
Source: Gree, GWC
* Facebook estimated its own value to be 3.7 billion USD.

14.  All of them provide mobile, fixed-line, and internet services.
 NTT DoCoMo: +50% market share; leader in mobile payment
 au: ~30% market share; strong in music data service and LBS.
 SoftBank: ~20% market share; weakest of all; provides competitive plans;
actively seeks international cooperation; exclusive provider of iPhone；owner of
Japan’s largest internet website: Yahoo! Japan.
Mobile
3G
Subscriber Total Internet
Carrier Mobile Brand Rank Subscribers
(Million) Users
(Million)
(Million)
NTT
Group
#1 55.3 51.5 48.7
KDDI #2 31.3 31 26.5
Softbank #3 21.4 20.4 16.8
Source: Wireless Watch Japan, 2009, 10

15. Brief Introduction
Japan's Mobile Internet Market Overview
Japan’s Leading Mobile Internet
Companies
Keywords

16.  Introduction Gree Users 1500
 Founded in December, 2004
 Went public in December, 2008 (TYO:3632)
 Employees：114 as of November 2009
 Second largest mobile SNS platform after DeNA 9月
 Facts –September, 2009 (单位：亿PV)
Gree Traffic Info
移动
 15 million registered users
 ~20 billon PV
 40% users over the age of 30
Source: Gree, 2009.9

17.  2008 Financial situation
 Revenue：139M USD
 Including advertising revenue (23%), and user fees (77%)
 Profit：32%
 Market Value：2 billion USD (December 2008). GREE market value surpassed
that of Mixi in 1 year.
Japan’s Largest Mobile SNS Website
Gree DeNA Mixi
Code TYO:3632 TYO:2432 TYO:2121
Value 201 229 124
Source: Google Finance, 2009.12

18.  Social gaming platform based on SNS
 SNS  Website traffic  Advertising revenue Multiple sources of income fueled Gree’s success.
 Social game  User fees  Major Business
Income 23%
Advertisi
Ads ng
Revenue
Members
Mobile
Ad space Avatar
Website SNS Gaming
77%
Major
Business
Income
Social games
PV
User Fees
Increase
Advertising Major Business
Revenue Income  Games are free, but some game items are not.
Gree Source: Gree

19.  Investment from KDDI
 KDDI is not as powerful as DoCoMo. More often than not, it cooperates with other
companies to develop mobile contents and services. Another example: KDDI develops
mobile commerce in collaboration with DeNA.
 In November 2006, Gree received investment from KDDI. Since then, the number of its
registered users grew rapidly.
 Gree's success is the success of mobile internet
 Unlike Mixi, more than 98% trafic of Gree comes from cell phones.
 Japan‘s favorable mobie market environment ensured Gree’s success.
 Gree's business is diversified, while Mixi relies heavily on advertising.

20. Paid user percentage>40%,
 Introduction way higher that that of
 Founded in March 2000 traditional internet (5-
10%).Tencent's paid user Paying users
 Started fortune-telling business in April percentage is 8% 1.5M
2004 (considering only active
2.2 mln fortune-
 Went public in May 2005 (TYO:3700) users).
telling users
 Employees：171 as of April 2009
 Japan's largest mobile fortune-telling Free users
service provider 2.9 mln
 Facts –July 2009 20~34 Female Users
 5,154,000 active users, of them
2,223,000 are paid users
 Far more female users than male users
Male
 Average age of users: 29.1
 Runs 240 fortune-telling websites
Female
Source: Zappallas

21.  Financial Situation – 2008 Zappallas Revenue
 Revenue：103M USD
 Profit：26.3% Ad
 Market value：210M USD Mobile Commerce
 Business Model Paid content service
 Paid services: fortune-telling+ mobile email
 Mobile commerce
 Advertising
 Fortune-telling revenue makes up 40% of Japan‘s
mobile internet revenue.
According to i-mode, 5 of the top 10 fortune-telling Source : Zappallas
websites are run by Zappallas.

22.  Business Concept
 “Fortune-telling:the mobile content users never get tired of Service
grows steadily”
▪ Other contents that are as popular as fortune-telling
▪ Weather forcast and News
▪ In Japan, fortune-telling also appears frequently on TV and print media,
especially on women magazines.
 Fortune-telling enables Zappallas to understand customer behaviors and make
effective marketing strategies. Koki SATO
▪ Users are required to fill in their personal infromation such as location,
CEO, Zappallas
birthday, occupation and blood type.
▪ In order to get accurate results, users will provide accurate/commplete
information.
▪ Most users use the service everyday, enabling Zappallas to keep track of
their latest information.
▪ Even users who use the service only once will leave their information stored
in Zappallas servers.
 User DemographicsUnderstanding User Behaviors Effective Marketing
Strategies
 No one complains about the accuracy of fortune-telling, people do it for fun.

23.  High proportion of paid users
 More users are willing to pay because the services offered by Zappallas are
what they really need.
 Why run 240 fortune-telling websites at the same time?
 Different fortune-telling websites tell
different stories
 Users always get bored with one given Bloo
website d
 Zappallas connects different fortune- Type
Birth
telling websites Astro day
 Zappallas analyzes user behaviors and logy
recommends new fortune-telling
websites to them. Feng
 Users are unaware of the connection Shui
between these sites. Some of them
don't even know Zappallas.
Users

24.  55.2M mobile users as of
September 2009,incuding
51.3 FOMA (3G) users.
 The number of Mova (2G)
users is decreasing.
 The number of i-mode
(mobile internet business)
users reaches 48.7M.
Source: NTT DoCoMo

25. Increases
 Expand video-related services ARPU
 Launch LTE business
2009Q2 Key Statistics
 Provide personalized services
 Social services • Market share:
(banking/payment, Opens up new 50.3%
businesses • ARPU = 54 USD
healthcare,environmental (FOMA + mova)
protection, education, security) • MOU = 137 (FOMA
+ mova)
 Service integration • Churn rate =
Adopts 0.46%
 Mobiel terminal development open OS
 Overseas business expansion Utilizes all Source: NTT DoCoMo
 Investment and cooperation resources

26.  NTT DoCoMo's mobile internet
service, i-mode changes Japanese
people's life.
 i-mode went public in February
1999 and already has 48M users.
Currently, contents of more than
95,000 websites are made
accessible to the public.
 Most popular services
 According to PV: Weather/News,
Games and mobile commerce
 According to revenue: Songs,
Games, Comics
▪ Comics are especially popular among
female users
Source: NTT DoCoMo

27.  The carriers plays a central cordination
role and takes control of the total value
chain.
 Instead of being tranport pipes, carriers
controls the value chain, makes
decisions that impact the whole system.
 All cell phones have dedicated keys that
provide access to carriers' portals.
 Carriers make universal interface
specifications.
 Content providers and carriers share
operations risks and income. CP gets
90% the income, carriers get 10%.
Source : NTT DoCoMo

28.  i-appli
 i-mode's Java app store.
 i-area: Location Based Service
 Weather, traffic, shopping, navigation, etc.
 i-motion: Dynamic Video Content
 Copyrighted video content.
 i-motion mail
 Video mail service.
 i-shot: Digital Camera Capability
 One-click photo uploading and sharing.
 i-channel
 Relays real-time information on phone screens.

29.  Deco-mail is a service that allows the user to exchange simple HTML mail
between Deco-mail compatible handsets, or between Deco-mail
compatible handsets and the Internet.
 Japan’s mobile email features：
1. Animated pictures
2. Words of different fonts, sizes and colors
3. Photo attachment
4. Animated words
5. Personalized backgrounds

30.  Osaifu-Keitai evolves from the convergence of i-mode technology and
contactless card technology.
 NTT DoCoMo is the leader of mobile payment, mainly because it
acquired two financial institutions and invested in another two：
 In 2006, DoCoMo purchased 34% of Sumitomo Mitsui Financial
Group's (Japan's third largest bank) credit card department for
approximately 1 billion USD.
 In the same year, DoCoMo acquired Mizuho Bank, and then purchased
18% of UC Card for 1 billon yen.

31.  SoftBank targets mobile internet, it Mobile Subscriber Statistics ,Oct 2009(Million)
defines itself as "Mobile Internet
3G subscribers 20.4
Machine”.
2G subscribers 0.98
 In 2006, SoftBank teamed up with Yahoo.
From 2006-2009, its mobile internet Subscriber total 21.4
traffic grew by 160 times. Mobile internet
16.8
users
 In 2008, it became iPhone’s exclusive
provider in Japan.
 SoftBank is an “internet company”，
while au, DoCoMo define themselves as
“mobile carriers”.

32.  It‘s much easier to get mobile There were 450
Widgets by the
content through Widgets than end of August
browsers.Widget has a more 2009
promising future.
 In 2008,Vodafone, China Mobile
and Verizon founded JIL (Joint
Innovation Lab) which is devoted
to the development of mobile
widgets.
 More than 1 million mobile
widget phones have been sold by Source: SoftBank
August 2009.

33.  In collaboration with Yahoo!,SoftBank provides personalized information.
 Yahoo! is Japan‘s largest internet company.
 SoftBank’s Wi-Fi strategy
 SoftBank believes that future mobile networks, even LTE are not able
to keep pace with the rapid growth of mobile data, thus it is necessary
to provide mobile internet solutions based on fixed-line technologies.
 SoftBank unveiled several Wi-Fi cell phones at this year’s Mobidec.
 UGC – User-generated video content
 Mobile Widget
 When asked whether carriers will be marginalized by doing so,
SoftBank answered yes. SoftBank also ccommented that JIL‘s
mobile widgets are going to make a huge difference.
 Widget simplifies CP's work and enhances user experience. SoftBank
aims to be a mobile widget provider.

34. Brief Introduction
Japan's Mobile Internet Market Overview
Japan’s Leading Mobile Internet
Companies
Keywords

35.  Female Users
 China‘s mobile internet users are mostly young males. Japan’s
mobile internet is much more advanced.
 Women are constantly mentioned when talking about fortune-telling,
body-shaping, make-up and gourmet.
 Mobile Cloud Computing
 KDDI is known for being innovative. Recently, KDDI launched its
“KDDI Cloud Server Service” .
 Mobile Business
 Japan‘s mobile business expirenced extraodinary growth with sales
exceeding the total of CP in 2004.
 Once China‘s 3G network matures, mobile commerce will grow by
leaps and bounds.

36. 2010 Global Mobile Internet Conference
Mobile Internet Opportunities in Asia
Beijing, May 27-28th, 2010 2010 GMIC calls for
visionary speakers,
partners and sponsors!
Gold Sponsors
GWC holds the annual Global Mobile Internet Conference
(GMIC), one of the industry’s most influential conferences.
This year, approximately 1,000 mobile internet
professionals will attend the conference.
• Keynote speeches from the world’s industry Panel Sponsor
leaders.
• Country Forums: China, Japan, South Korea, Silver Sponsors
Europe and the United States
• Innovation Show – Startup Competition (20 teams
from 9 countries)
• East & West Dialogue
• GWC Member Meeting

37. MCF is one of Japan's most
influential mobile internet
With the approval of State Council，China associations. Formerly known as Mobile Monday is a global community
Mobile Communications Association was EAI, it was established in 1999 of mobile industry visionaries,
founded in September 16, 2000, under the and changed its name to MCF in developers and influentials fostering
supervision of MIIT . Its members include April 2009. MCF currently has cooperation and cross-border
China Mobile, China Unicom, China Telecom, 298 members, covering carriers, business development through virtual
China’s mobile device manufacturers, service internet companies, mobile and live networking events to share
providers and overseas mobile internet content providers, etc. MCF aims ideas, best practices and trends from
companies. to promote the development of global markets
the world’s mobile content
industry.

38. If you have any thoughts or
ideas about the report please
write to:
www.thegreatwallclub.com yiqun@thegreatwallclub.com
+86 10 5167 2880
www.gmic2010.com
Room709-711
Jing Liang Building,
No.16 East 3rd Ring Middle
www.slideshare.net/greatwallclub Road ,
Chaoyang District, Beijing
Zip code：100022
38