eMobile: "New age" mobile operator innovates

“New Age” mobile operator eMobile started with a “green field” nationwide HSDPA 3G network offering commercial services since March 31, 2007. By August 2008, eMobile has attracted more than 750,000 subscribers. eMobile‘s network covers about 85% of Japan at this time.

At an investors conference, eMobile‘s CEO recently explained, how his company could reduce the costs of the radio network and base stations down to 1/5th – 1/8th of the costs his competitors pay, by carefully selecting the two best base station manufacturers/vendors. Read who these two base station manufacturers are (one of them may be an unexpected choice) in the newest edition of our eMobile – report.

The US$ 1 laptop:

eMobile offers a US$ 1 (YEN 100) laptop – in combination with a 2 year 7.2 Mbps true flat-fee data subscription.

(note that this flat data fee plan has absolutely no data limit. Totally unlimited data plans for laptops are uncommon in Europe and US, where most “flat” data plans come with a very low “fair use” limit above which prices increase dramatically). Low priced laptops are a huge market success in Japan and put pressure on traditional laptop makers. eMobile offers subsidized Asus EEE’s / ASUSTeK EEE’s – and many other laptops, including also iBooks.

100 yen laptop with mobile subscription
100 yen laptop with mobile subscription

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Iscar Ltd of Israel acquired Japanese tungsten carbide tool maker Tungaloy for US$ 1 billion

The Israeli company Iscar has completed the acquisition of Japanese competitor Tungaloy Corporation. Iscar acquired more than 90% of outstanding shares for around US$ 1 billion from Nomura Principal Finance Co.

Iscar is the world’s second largest maker of tungsten carbide cutting tools, and competitor Tungaloy is the world’s fifth largest. Iscar is controlled by Warren Buffet’s Berkshire Hathaway Inc. – Berkshire Hathaway acquired 80% of Iscar for US$ 4 billion in 2006.

The merged Iscar and Tungaloy will be better positioned to compete with global leader Sandvik AB, which has sales on the order of US$ 4 Billion.

Tungaloy Corporation emerged via a management buyout from Toshiba Tungaloy, with Nomura Principal Finance Co. as the largest share holder. Tungaloy has sales of YEN 50 Billion (approx. US$ 500 million), was founded in 1934, and has 2618 employees. Tungaloy is the fifth largest maker of Tungsten Carbide cutting tools in the world.

Iscar entered Japan’s market by opening a 100% owned subsidiary company in 1994, about 14 years ago.

To my knowledge this acquisition is also far larger than any acquisition in Japan by any European Union (EU) company this year (last year, in 2007 Permira announced the acquisition of Arysta LifeScience Corporation for US$ 2.2 Billion and completed the deal during 2008). The three largest acquisitions ever of Japanese companies by EU companies have been Vodafone’s acquisition of J-Phone (transaction value: about US$ 20 Billion), Daimler’s acquisition of Mitsubishi Motors (transaction value: about US$ 2-3 Billion), and Renault’s investment in Nissan (initial transaction value: about US$ 3 Billion) – of these three, only the Renault investment in Nissan was successful, the other two failed.

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H&M success in Japan: green field market entry to Japan

H&M success in Japan: opened the first store in Japan in Ginza on Sept 13, 2008. H&M changed some global business practices to succeed in Japan. Learn how.

H&M opened the first store in Japan in Tokyo-Ginza on September 13, 2008

Long queues in the first few days: 8000 shoppers/day

H&M entered Japan‘s apparel market initially using a green field strategy, opening stores. On September 13, 2008, H&M opened the first store in Japan in Ginza, and is planning two more stores in Shibuya (see picture below) and in Harajuku.

H&M success in Japan – adapt to Japan:

H&M adapted it’s global way of doing things to Japan’s market needs – for example, H&M introduced “Quality Managers” in it’s Japan store, in order to match Japan’s consumers high expectations for quality (and I guess also to avoid problems with Japan’s recently introduced product liability laws).

H&M success in Japan – 8000 customers per day:

One week after opening, customers are queuing in line to enter the store – typical waiting time is about 2 hours, daily number of visitors to the store are estimated to be about 8000/day.

Closest foreign competitors in Japan include US retailer GAP, and Spanish retailer Inditex (Diseno Textil SA)’s ZARA.

Biggest Japanese competitor is Fast Retailing’s UNIQLO.

H&M is preparing to open the second and third stores in Shibuya (photo below) and in Harajuku.

H&M success in Japan – comments:

H&M has had a very successful start and has created a successful opening “event”. To be successful longterm H&M will have to:

  • sufficiently tune to Japan,
  • continue to innovate,
  • compete successfully especially with UNIQLO
Long queues on the first days: 8000 shoppers/day at H&M's first store in Japan
Long queues on the first days: 8000 shoppers/day at H&M’s first store in Japan
H&M first store in Japan, in Tokyo/Ginza opened on 13 September 2008
H&M first store in Japan, in Tokyo/Ginza opened on 13 September 2008
H&M first store in Japan, in Tokyo/Ginza opened on 13 September 2008
H&M first store in Japan, in Tokyo/Ginza opened on 13 September 2008
H&M's second Japanese store is under construction in Shibuya
H&M’s second Japanese store is under construction in Shibuya

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LDP President (and candidates for the next Prime Minister) present their message

The candidates for the next President of the LDP (Liberal Democratic Party) of Japan presented their views and answered questions at the FCCJ in Tokyo to the foreign press. An LDP party electoral college (387 Diet members + 141 regional representatives, in total 528 votes) will vote to select the president on September 22, 2008, who is likely to become the next Prime Minister after Yasuo Fukuda’s resignation. The candidates are:

  • Nobuteru Ishihara (50), son of Governor Ishihara of Tokyo. Minister for Administrative and Regulatory Reform
  • Yuriko Koike (56), Journalist, Minister of Defence under Prime-Minister Abe
  • Taro Aso (67), Minister of Foreign Affairs und Prime Ministers Shinzo Abe and Junichiro Koizumi. Taro Aso is Roman Catholic. Studied at Stanford University and at the London School of Economics.
  • Shigeru Ishiba (51), Minister of Defence under Prime Minister Fukuda
  • Kaoru Yosano (70), currently State Minister for Economic and Fiscal Policy

Our comment:

Media generally predict that Taro Aso is likely to win the race for Presidency of the LDP and thus become next Prime Minister of Japan. Taro Aso comes from a leading family, and has wide experience.
Having attended the event at the Correspondents Club, in my opinion Mme Koike gave the clearest presentation – having worked as TV journalist clearly helps, but its also the content of her political program which is clear and meaningful and easy to understand. Mme Koike’s program included the plan to “destroy Kasumigaseki”, meaning that she plans to take political power from the Ministries to the Government and strengthen political leadership…

There is a generation gap between Aso (67) and Yosano (70) – and – Ishihara (50), Koike (56) and Ishiba (51). The presentations also clearly manifested this generation gap.
In my opinion Japan would benefit from diversity in leadership. Japan already has a number of outstanding women leaders, and would benefit to have some more women in politics as well, including top positions. So if I could vote – which I can’t – I would myself vote for Ms Koike, and I said so in a TV interview by Asahi-TV.

LDP Prime Minister's candidates
LDP Prime Minister’s candidates
LDP Prime Minister's candidates
LDP Prime Minister’s candidates
LDP Prime Minister's candidates
LDP Prime Minister’s candidates

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Japan electronics industry: Outlook for the Chip Industry (CNBC TV interview)

Japan electronics industry

More in our J-ELECTRIC report: http://www.eurotechnology.com/store/j_electric/

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XBOX Japan entry

XBOX Japan entry - Microsoft reduces XBOX prices by 30%

XBOX still faces difficulties in Japan

XBOX Japan entry: Microsoft reduces prices by 30%

Microsoft announced to reduce prices for Xbox-360 by 30% in Japan. We believe that this price reduction will not be enough to bring the breakthrough for Xbox in Japan.

Nintendo has reinvented the game industry, created a completely new paradigm. Nintendo does not reduce prices. Xbox is still in the pre-paradigm shift world… prices are not the issue.

Japan game market report (398 pages, pdf-file):
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XBOX Japan entry: CNBC interview

Japan game market report (398 pages, pdf-file):
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XBOX Japan strategy – Microsoft still struggling

XBOX Japan strategy – Microsoft still struggling Microsoft XBOX introduced XBOX to Japan on February 22, 2002

Microsoft XBOX introduced XBOX to Japan on February 22, 2002

XBOX Japan Strategy – CNBC interview

Microsoft introduced the original XBOX game console in the USA on November 15, 2001, in Japan on February 22, 2002, and in Europe on March 14, 2002.

During the period January-June 2005, three years after introduction of the XBOX to Japan’s market, SONY sold about 2.4 Million game terminals in Japan, Nintendo sold about 1.9 Million, and Microsoft about 9000 XBOXes, about 0.2% marketshare.

As of August 24, 2008, Nintendo has sold about 6.7 Million Wii, SONY has sold about 2.3 PS3, and Microsoft about 380,000 XBOX-360 in Japan, a 4% share in this segment.

Japan game market report (398 pages, pdf-file):
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A few days ago, Microsoft announced a price cut of 30% for XBOX-360 in Japan – the video below gives our comments on this price reduction on CNBC.

Here is a short summary of the CNBC-TV interview:

XBOX Japan Strategy Question: Do you think the price reduction is going to do the trick?

A: No. In other markets maybe, but not in Japan.

XBOX Japan Strategy Question: Do you think XBOX can be successful in Japan? What will it take before Microsoft will give up and say it just isn’t working

A: Of course Microsoft can be successful in Japan with XBOX. There is no law that XBOX cannot be successful in Japan. Microsoft generally is a company that never gives up. But they have to change their strategy for Japan.

XBOX Japan Strategy Question: So Microsoft isn’t doing the right things. What would the right things be?

A: Difficult to say of course, if it was easy Microsoft would already have done this. The situation is that Nintendo has completely changed the business paradigm of the game industry. Microsoft’s XBOX is still operating under the old paradigm.

XBOX Japan Strategy Question: How long do you think Nintendo’s sweetspot is going to last?

A: Nintendo have reinvented the game industry, and completely changed the business models. They also make a lot of their own software. All this puts Nintendo into a very good position.

What can we learn about strategy for Japan from Microsoft’s XBOX experience:

Global products, not adapted to Japan’s market, often do not succeed in Japan. Microsoft’s XBOX is a very good example. Microsoft has one of Japan’s most famous brands, so its not a problem of the brand.

Microsoft faces three problems in Japan:

  1. XBOX is not made for Japanese users in mind
  2. Nintendo changed the paradigm of the game industry, and XBOX is still on the old track
  3. Of three global game console companies (Nintendo, SONY, Nintendo) two are both much stronger than Microsoft in games, and both are on their hometurf in Japan. Microsoft would need to invest more and focus efforts much more on Japan to succeed in Japan with XBOX.

Japan game market report (398 pages, pdf-file):
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Preview – Japan game market disruption market report:

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Read more about Japan’s game markets in our “Japan’s Game Industry” report

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Assessing Japan’s Gaming Sector (CNBC TV interview)

More in our J-GAMES report: http://www.eurotechnology.com/store/jgames/

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