eurotechnology.japan.blog

Mobile 2.0 at the Korean Communications Conference

noreply@blogger.com (Eurotechnology-Japan) — Mon, 15 Jun 2009 08:13:00 +0000

Chairing and keynoting Track 3-3 "Mobile 2.0" at the Korean Communications Conference in Seoul on Thursday June 18, 2009 at the COEX Conference Center.

What will Mobile 2.0 be and how do we get there?
Korea and Japan can be like a time-machine: if we look at Korea and Japan today, we can get a good idea of how Mobile 2.0 could evolve in Europe and US and other advanced markets 5-8 years down the road. Is this a perfect time-machine? No. i-Mode and Japan’s mobile phones never made it onto the world stage, but Korean mobile phones did.
This keynote will set the stage for the Mobile 2.0 panel discussion. I will introduce some of the most outstanding new services which have cultural and society impact: mobile social networks, and literature created on mobile phones for mobile phones, as well as mobile payments, which have the potential to replace money as we know it.
Will Korea, Japan, China and the rest of the world arrive at the same Mobile 2.0 and what will the timing be?
Which are the critical issues? We identify four critical issues for the rapid development of Mobile 2.0, and will discuss these issues with the following panel:
1. Platforms
2. Business models
3. Globalization
4. Standardization vs risk taking and entrepreneurial initiative

Download the "Mobile 2.0" presentation here (pdf file)

Photo:
front row: Ms Kyung-Ja Lee, PhD (Commissioner of the Korean Communications Commission),
Back row (left to right): Kyung Hee Song (Director Radio Planning Division of Central Radio Management Office), Emilian Calemzuk (President FOX TV Studios), Jonathan Levy (Dpty Chief Economist, FCC), Gerhard Fasol (Eurotechnology Japan KK), Kate Bulkley (Journalist), Carlson Chu (Sr VP PCCW Ltd, Hong Kong)

New opportunities versus old mistakes - foreign companies in Japan's high-tech markets (presentation at Stanford University)

noreply@blogger.com (Eurotechnology-Japan) — Tue, 02 Jun 2009 00:53:00 +0000

About 10 years ago, on October 28th, 1999, I was invited to give a talk about this topic at Stanford University's US-Japan Technology Management Center for Stanford Faculty, alumni and Silicon Valley entrepreneurs. 10 years is a good period to check out how much of that is still valid today, and how much Japan has changed during the last 10 years.-

Foreign companies in Japan's high-tech markets (Stanford University lecture)

View more Microsoft Word documents from Gerhard Fasol.

beeTV - DoCoMo's new mobile TV

noreply@blogger.com (Eurotechnology-Japan) — Mon, 25 May 2009 01:33:00 +0000

On May 1, 2009, DoCoMo in cooperation with media firm Avex started the mobile TV beeTV which brings 8 channels including a MOOLOG Channel (MOOLOG = MOOvie-bLOG)

beeTV is an indicator how Mobile TV may impact Japan's Media Sector.

More Drastic Changes Needed at Sony (CNBC TV interview)

noreply@blogger.com (Eurotechnology-Japan) — Wed, 13 May 2009 15:11:00 +0000

Read more about SONY and Japan's electrical industry sector: http://www.eurotechnology.com/store/j_electric/index.shtml

Subscribe to our newsletters: technology newsletters from Japan

Potential Flu Pandemic Positive for Telcos

noreply@blogger.com (Eurotechnology-Japan) — Mon, 27 Apr 2009 15:36:00 +0000

More about Japan's telecom sector: http://www.eurotechnology.com/store/jcomm/
More about DoCoMo: http://www.eurotechnology.com/store/docomo/
More about KDDI: http://www.eurotechnology.com/store/kddi/
More about Softbank: http://www.eurotechnology.com/store/softbank/

David E Kuhl and Dennis L. Meadows - winners of the 2009 Japan Prize

noreply@blogger.com (Eurotechnology-Japan) — Tue, 21 Apr 2009 17:41:00 +0000

David E Kuhl and Dennis L Meadows, the winners of the 2009 Japan Prize gave a presentation in Tokyo on April 22, 2009.

Professor David E Kuhl was given the Japan Prize for tomographic imaging in nuclear medecine, he has been called the "father of emission tomography", having developed tomographic imaging in nuclear medicine.

Dennis Meadows is famous for his book "The Limits of Growth" (1972), which was written by three MIT scientists including Meadows as a project funded by the Club of Rome. Meadows has shown that current economic and human activity has become unsustainable.

Asked about the current economic crisis, Meadows explains the current economic crisis as the bottom of the Kondratiev cycle, which has a period of 45-60 years (about 50 years). According to Meadows the reason for the Kondratiev cycles is overinvestments in production resources. Excessive production resources need to be adjusted to actual needs periodically, and this period is about 50 years. The last Kondriatiev-type elimination of production overcapacity was caused by the damages of the 2nd World War. Currently this down-adjustment of production resources occurs in peace-time.

Assessing Oracle-Sun Deal (CNBC TV interview)

noreply@blogger.com (Eurotechnology-Japan) — Mon, 20 Apr 2009 15:33:00 +0000

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

Jean-Claude Trichet, President of the European Central Bank ECB in Tokyo

noreply@blogger.com (Eurotechnology-Japan) — Fri, 17 Apr 2009 16:09:00 +0000

European Central Bank (ECB) President Jean-Claude Trichet gave a presentation here in Tokyo on April 18, 2009 about the current financial and economic crisis.

Some of the main points here, more in our newsletters.

Trichet blamed the crisis on an underpricing of the unit of risk. He also emphasized that its not a general crisis affecting all companies and financial institutions, but that some badly managed companies and banks are in bad shape, while well managed companies and financial institutions are in good shape and doing fine.

Trichet praised excellent international cooperation in taking measures to improve economic and financial stability and he also mentioned that unconventional steps will be announced at future meetings.

Overall his words were very carefully chosen and defensive, well aware of the impact of his words on the capital markets

Does the "not-invented-here" syndrome slow down the development of mobile internet and mobile content outside Japan?

noreply@blogger.com (Eurotechnology-Japan) — Fri, 17 Apr 2009 10:45:00 +0000

It is well known that mobile internet, mobile payments and mobile content business and many other areas of mobile broadband are much more developed in Japan and South Korea than in other countries.
NOKIA and Vodafone and some other western mobile phone companies had the opportunity to take part in Japan's mobile payment systems, mobile TV solutions and many other mobile businesses - instead they preferred not to do so and to withdraw from Japan's mobile market.

Similarly it seems that mobile payment, mobile-TV developments outside Japan are being developed from scratch without much regard to what has been learnt in Japan in debugging such mobile businesses both from the technology viewpoint as well as the usability, security, convenience etc viewpoints.

Lets discuss if the "not invented here syndrome" could be a factor.

"Mobile Internet Device will replace Cell Phone! Do you agree?" [from a LinkedIn discussion]

noreply@blogger.com (Eurotechnology-Japan) — Fri, 17 Apr 2009 10:27:00 +0000

[My answer to a recent LinkedIn discussion group question: "Mobile Internet Device will replace Cell Phone!"]

This is too narrow a view.

I would say: today's state of the art cell phones already include the role of internet device + many other functions, mobile internet devices cannot do.

1. For several years practically all Japanese cell phones have been "mobile internet devices" + camera + barcode reader + digital & analog TV + GPS navigator + movie camera + wallet + cash + train ticket + appartement key + comic book + e-book reader + alarm clock + etc. read the details in our reports:

http://www.eurotechnology.com/store/

2. have you read Karl Popper? - he is a philosopher. He says it makes no sense to discuss terminology. He would object to this discussion topic - because he would say that this is just mincing definitions and has no substance.

Upbeat on Intel (CNBC TV interview)

noreply@blogger.com (Eurotechnology-Japan) — Mon, 13 Apr 2009 15:30:00 +0000

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

Nintendo's CEO Satoru Iwata and Games Developer Superstar Shigeru Miyamoto

noreply@blogger.com (Eurotechnology-Japan) — Thu, 09 Apr 2009 11:53:00 +0000

Nintendo's CEO Satoru Iwata and games developer superstar Shigeru Miyamoto presented in Tokyo on April 9, 2009 about Nintendo's situation and future plans.

Iwata emphasized plans to move from one DS per household to one DS per person, by personalizing the DS, and by seeing that DS enriches everyday life. As examples he mentioned applications in hospitals and schools (which provoked a question from the audience what he plans to do about children who's parents cannot afford to purchase a DS for their children), and in museums, where explanations on exhibits are given via the DS.

Nintendo plans a "My DS" experience, by including two cameras in the new DSi, and with online downloads of small non-cartridge games and other applications from a new online store to enrich owners' daily lives.

Asked about Nintendo's plans for the recession, Iwata answered, that key is to keep Nintendo's products at the top of consumers' wish lists.

Read more about this presentation and analysis of Nintendo and Japan's games sector in our J-GAMES report.

iida - a new brand for KDDI's design series

noreply@blogger.com (Eurotechnology-Japan) — Wed, 08 Apr 2009 11:43:00 +0000

KDDI created a new brand: "iida" for the long running best selling AU design series mobile phones. KDDI introduced some of the most recent iida design series models at the KDDI Designing Center. In addition to the earlier Yamaha musical instruments phones, KDDI introduced a spectacular phone created by Yayoi Kusama.

Fun is the green leaved charger....

Investor Club: What crisis? Meet some booming Japanese companies

noreply@blogger.com (Eurotechnology-Japan) — Sun, 22 Mar 2009 12:03:00 +0000

It's not all doom and gloom here in Japan. Nintendo's sales and operating profits are rising 8.8% year-on-year. KDDI saw its net profits increasing 59% year on year. Yahoo Japan increases dividends by 22%-25% for 2008. Who are today's winners in Japan's IT industry? Gerhard Fasol will show us how and why some great Japanese companies excel in today's crisis.

The talk reviews today's status of Japan's electrical companies, the telecommunications sector and the internet sector, and introduces seven different companies, which show rapid growth of revenues, operating income and net income despite the crisis. These seven companies we introduce turn the crisis into an opportunity.

The PowerPoints of this presentation are available as the April-2009 issue of the (paid) Eurotechnology-Japan newsletter series. Subscribers receive one newsletter each month - the April issue is an augmented and expanded version of the PowerPoints of the presentation above.

To subscribe to the newsletters and to download the presentation click here (April 2009 issue of our Eurotechnology-Japan newsletter, requires subscription)

Mr Fasol is one of the best specialists of Japan's IT industry. After 12 years in Japan working for the most prestigious Japanese institutions and companies (the University of Tokyo, NTT, Hitachi...), he founded the strategy and M&A firm Eurotechnology Japan KK in 1996. Mr Fasol has advised some of the greatest companies, including NTT, SIEMENS, Deutsche Telekom, Cubic, Unaxis and about 100 fund managers on strategy for Japan, as well as the President of Germany. He helped a French pharmaceutical company acquire a factory in Japan.
He comments regularly on CNBC on Japan's tech sector.

Schedule: March 24th, 2009 (Tuesday) from 18:30
The conference will be followed by a light cocktail.
Place: French Chamber of Commerce and Industry in Japan, meeting room
Iida bldg 1F, 5-5 Rokubancho, Chiyoda-ku, Tokyo 102-0085
Tel.: 03-3288-9624
Access map: www.ccifj.or.jp
Language: English
Fees: 5.000 yens (to pay in cash at the door)
Payment will be required for cancellations or no-show after this deadline.
Announcement on the website of the French Chamber of Commerce
read a report on the talk here in the monthly newsletter of the French Chamber of Commerce in Japan (in French)

Background reading: our J-ELECTRIC report about Japan's electric companies

and our Eurotechnology Japan Blog

Kyocera expands to EU via acquisition of TA Triumph-Adler

noreply@blogger.com (Eurotechnology-Japan) — Sat, 21 Mar 2009 20:39:00 +0000

Kyocera is one of Japan's powerful electrical companies, which together are about as large economically as the whole of the Netherlands.

Taking advantage of low EURO exchange rates and the high YEN, and low valuations during the current economic crisis, Kyocera acquired 93.84% of TA Triumph-Adler AG for a total purchase price on the order of EURO 98.7 Million.

Triumph was founded 1896 as a bicycle maker, and has grown into a major European office equipment manufacturer and sales company. Triumph used to be famous for typewriters, with the disappearance of typewriters, Triumph went through a long sequence of restructuring and through many merger and acquisition transactions.

Kyocera acquired TA Triumph-Adler for its distribution network: TA Triumph-Adler has about 35,000 companies as customers in 33 countries, with 70% of sales in Germany, giving Kyocera a much larger distribution footprint in Germany and EU.

For an overview and analysis of Japan's formidable electrical companies read our J-ELECTRIC report.

72.5% of all digital mobile TV on this planet earth is in Japan

noreply@blogger.com (Eurotechnology-Japan) — Wed, 25 Feb 2009 03:42:00 +0000

About 50 million mobile phones equipped with digital terrestrial mobile TV ("oneseg") have been delivered up until today - not counting "oneseg" tuners for PCs, car navigation units and stand-alone units. Comparing this number with reports of mobile TV roll-out in other countries around the world, we conclude that 72.5% of todays mobile phones with mobile TV are in Japan.

How much mobile TV do Japanese people watch on their mobile phones?
In the latest version of our mobile-TV report, we explain in detail our methods to determine that averaged over all of Japan's population of 125 million (including those who don't have a mobile-TV yet), the average viewing time is between 0.4 - 2.3 hours of mobile TV / month. WOW!

Mobile TV 2.0 (OneSeg-2)
Not surprisingly, Japan's media giants are now starting to move, and develop programming specially designed for mobile TV: for example "lunchbox" mobile TV broadcast to mobile phones from 12:00noon - 12:40pm weekdays with news, weather, diet information, summaries of TV shows... it's only a question of weeks or months now in Japan for mobile TV to develop into a totally new advertising and m-commerce medium, and some has started already.

Starting the global mobile internet revolution with i-Mode in February 1999, we can see Japan's leadership emerging in the mobile TV arena. Japan's challenge is to leverage this know-how globally, Japan missed this chance with i-Mode and left the field to iPhone and friends!

72.5% of all mobile phones with digital TV globally are in Japan:
In the same way as with mobile internet (i-mode), Japan is again the global forerunner in mobile TV, together with South Korea.

Professor Junichi Hamada, President of Tokyo University

noreply@blogger.com (Eurotechnology-Japan) — Tue, 24 Feb 2009 11:28:00 +0000

Attended Professor Junichi Hamada's presentation at Tokyo University. Professor Hamada is expert on the legal aspects of journalism, freedom of press and media regulation. Professor Hamada will be the new President of Tokyo University from April 2009.

In his presentation Professor Hamada discussed the changes in the media sector, and of course also his views and strategies for Tokyo University.

Asked during question time about his views of University ranking lists, his answer was that serving society is much more important than ranking lists.

For my own work at Tokyo University see: Fasol Laboratory webpages

our future: hot, flat, and crowded... celebrating Ludwig Boltzmann's 165th birthday

noreply@blogger.com (Eurotechnology-Japan) — Thu, 19 Feb 2009 15:27:00 +0000

Ludwig Boltzmann was one of the most important physicists and philosophers: it is almost impossible for any engineer, chemist or physicist to do a day's work without using Boltzmann's tools and results every day. Ludwig Boltzmann is this author's and Eurotechnology Japan KK's founder's great grandfather - and his excellence is our company's guiding light.

Ludwig Boltzmann was born 165 years ago on February 20, 1844, and last Friday, February 20, 2009 we celebrated by inviting several of Japan's science and technology leaders to the Ludwig Boltzmann Symposium in Tokyo with kind cooperation and hospitality by the Ambassador of Austria and the Austrian Embassy.

First speaker was Professor Hisashi Kobayashi, Founder of the IBM Tokyo Laboratory, former Dean of Engineering of Princeton University. He showed how Entropy and noise in communications is linked to Boltzmann's generalized Entropy and the H-Theorem. Coming from Princeton, Hisashi also showed us elegantly how strongly Einstein's work is linked to Boltzmann's.

Professor Kiyoshi Kurokawa, former Dean of Medicine of Tokai University, former President of Japan's Science Council and Advisor to two Japanese Prime Ministers and now Professor at Japan's new Political Science University, gave an intense and passionate speech about which changes are necessary to live in our future which will be hot (as in global warming), flat (as in global communications and internet) and crowded (due do population growth). Kiyoshi also made a passionate appeal to Japanese organisations (including the S&T leaders participating at our Symposium) to change, open up and compete globally.

Kazu Ishikawa of Exa Japan gave a fantastic demonstration how Boltzmann's equations are used to simulate airflow for the construction of cars, airplanes, jet engines ... Boltzmann's equations replace the macroscopic Navier-Stokes equations as numerical wind tunnels. Boltzmann's equations are particularly needed for the simulation of transients.

Finally, Gerhard Fasol, Ludwig Boltzmann's Great-Grandson, gave two talks: one talk about Ludwig Boltzmann's scientific achievements, his search for understanding the 2nd Law of Thermodynamics with mechanics, the effects of collisions and the generalization to non-equilibrium - leading the H-Theorem, and the generalization of Entropy and Boltzmann's philosophical work. The second talk introduced the human side of Ludwig Boltzmann: his life and his passions.

Photo: Hisashi Kobayashi shows why Boltzmann's work is important for telecommunications, and how Einstein's work is linked to Boltzmann's. Her Excellency, the Austrian Ambassador follows closely.

Photo: Hot, flat and crowded. In a passionate speech, former science and tech advisor of two Japanese Prime-Ministers, Kiyoshi Kurokawa talks about the future, and how to be prepared to compete.

Photo: The Austrian Ambassador invited the participants of the Ludwig Boltzmann Symposium to the Austrian Residence.

More photos here

Top 10 mobile trends for 2009

noreply@blogger.com (Eurotechnology-Japan) — Wed, 18 Feb 2009 05:29:00 +0000

Answering the question "Top 10 mobile trends for 2009: what would you choose?" We answer from our perspective here in Tokyo:

Mobile payments and wallet phones
see our mobile payment report

GPS and location based services (LBS) such as navigation and mapping
see our location based services (LBS) report

Mobile search including location related search

QR codes and other 2D bar codes for information input into mobile phones
see our location based services (LBS) report

Ultra low cost mobile phones for low end not only in emerging markets but also in advanced countries in economic crisis times

Subsidized $1 mini-laptops with flat rate HSDPA (7.2Mbps) data plans

WiMax networks come into commercial service

Embedded B2B applications

Beautiful OLED ultra-high resolution screens (bigger than iPhone displays)

Mobile agent services

Foggy Outlook for Global Tech Sector (CNBC TV interview)

noreply@blogger.com (Eurotechnology-Japan) — Mon, 09 Feb 2009 15:26:00 +0000

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

Wild differences in operating margins for mobile, TV media groups and electricals

noreply@blogger.com (Eurotechnology-Japan) — Mon, 09 Feb 2009 03:49:00 +0000

We analyze the effect of the crisis on operating margins in three different sectors:
(1) electronics,
(2) mobile communications,
(3) TV media groups.

In sector (1), Nintendo's margins are above 30% and increasing despite the crisis, while traditional electronics companies' margins are evaporating.
(2) for mobile operators DoCoMo, KDDI and SoftBank margins are 10%-20% and increasing despite the crisis! Could mobile phone usage be crisis resistant?
(3) TV media groups had healthy margins in the 10%-20% range back around 2001- however these margins have been slowly melting away, and TV group margins are heading to cross the zero line into the red zone by 2010-2011. Watch out for a TV media crisis. Read more below.

Consumer electronics sector operating margins:

Nintendo bucks the trend: while Japan's electronics firms' margins are dropping into the red, and have never been much higher than 5% during the last 10 years, Nintendo's operating margins are above 30% and rising despite the crisis.

(Find full data, fully labeled graphics and analysis in our report on Japan's electrical companies)

Mobile phone sector margins are 10% - 20% and rising despite the crisis.

Mobile phones seem to be resistant to the current crisis. DoCoMo's, KDDI's and Softbank's margins are healthy and improving despite the crisis.

(Find full data, fully labeled graphics and analysis in our JCOMM Report)

Margins of TV media groups have been melting away since their peak in 2001.

Back in 2001 Japan's TV media groups used to enjoy healthy margins of up to 20%. Over the last 8 years these healthy margins have molten away, and Japan's large TV media groups are likely to all simultaneously go into the red from 2010 onwards, unless dramatic action is taken. Media groups will need to grow profitable new business, e.g. mobile-TV, and other cross-media growth areas.
Could it be that recent anti-takeover measures have made the large TV media groups complacent?

(Find full data, fully labeled graphics and analysis in our J-MEDIA Report)

Panasonic Warns on Loss (CNBC TV interview)

noreply@blogger.com (Eurotechnology-Japan) — Tue, 03 Feb 2009 15:22:00 +0000

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

8 years since commercial start of location based services (LBS) in Japan in July 2001

noreply@blogger.com (Eurotechnology-Japan) — Thu, 29 Jan 2009 03:25:00 +0000

It will soon be 8 years since DoCoMo started commercial location based services (LBS) for mobile phones in Japan in July 2001. During these 8 years, Japan's mobile LBS industry has grown and a range of differentiated mobile LBS services has emerged - indicative of how the LBS industry might develop in other countries in the next few years (Read our LBS-FAQ here, and our mobile LBS report here).

NOKIA's recent acquisition of Navteq for US$ 8.1 Billion has drawn much attention to LBS for mobile phones.

The world's first commercial location based service (LBS) for mobile phones - "i-Area" - was rolled out by DoCoMo in Japan in July 2001 - eight years ago! - is still going strong, and for some time also includes location dependent mobile search: you type "ramen" into the search box and back comes a list of ramen noodle restaurants for the neighborhood near you. "i-Area" is a pre-GPS service - no GPS is necessary. Like so much about Japan's mobile internet eco-system, i-Area has a non-obvious complex business model fine-tuned over 8 years now.

GPS came later - KDDI introduced the first GPS phone in December 2001 - a little more than seven years ago - and today about 1/2 of all mobile phones have GPS in Japan. Japan's Government requires all cellphones to have GPS built in. Therefore, within a few years, as users replace their older phones, 100% of Japan's cellphones will have GPS, giving a boost to the mobile LBS industry.

Interesting companies? An undisputed leader is Navitime - offering "total navigation" to about 2 million subscribers - almost 2% of the population of Japan. Many people in Japan, including the author of this newsletter, cannot live without total navigation....

Bombarding subscribers with mobile discount coupons by SMS for shops in the neighborhood is often mentioned in western blogs about mobile LBS. I have not yet received a single one during the last 8 years of mobile LBS in Japan - although these do exist if you want them.

+ 49% y-o-y net profit increase for KDDI

noreply@blogger.com (Eurotechnology-Japan) — Thu, 29 Jan 2009 03:09:00 +0000

Japan's telecom operators are a very bright spots in a dismal economic crisis. I think that's not a coincidence.

Why? The deeper purpose of Japan's location based services, QR-codes, mobile music, e-moji, wallet phones and keitai credit etc. has always been to make mobile phones inseparable from people's daily lives, so that people would use their mobile phones a lot, even if there is an economic crisis. This strategy seems to work.

Japan's second largest operator KDDI was the first to announce financial results this round:
- quarterly net income increased +49% year-on-year, and
- operating income increased +18.5% compared to same quarter last financial year.

KDDI is particularly interesting because KDDI is a model for the 3G roll-out by China Telecom in China, which was awarded a license to build a 3G network using the same CDMA2000 technology as KDDI.

KDDI was initially far more successful than both DoCoMo and Vodafone (now Softbank) to roll out 3G in Japan - as documented in detail in our 3G report. Analyzing carefully what KDDI did right, and the difficulties DoCoMo and Vodafone encountered, as well as proper exploitation in differences between technologies will be a must.

KDDI introduced many advanced services such as GPS (global positioning and related location base services LBS), full song mobile music, etc several years earlier than DoCoMo and Vodafone -> SoftBank, helping the image of the brand and raising revenues (ARPU). This advance allowed KDDI to overcome the handicap of lower market share compared to DoCoMo. Read more below, and in our reports.

KDDI's 3rd quarter net profits rose by 49% yoy.

Comparing 3rd quarter FY2009 (Oct. - Dec. 2008) with 3rd quarter FY2008 (Oct. - Dec. 2007) operating income increased +18.5% and net income increased +49%. These are spectacular results considering the terrible economic crisis going on now.
Notice also KDDI's very aggressive income growth targets forward to year FY2011 (shown for operating income, thin orange line).

Steadily increasing net annual incomes on the order of US$ 2 billion/year is not bad in times such we have now. Find a detailed analysis in our KDDI report.

3G mobile diversity in China

noreply@blogger.com (Eurotechnology-Japan) — Wed, 21 Jan 2009 20:17:00 +0000

China's Ministry MIIT granted three different 3G cellphone licenses on January 7, 2009:

* a TD-SCDMA license to China Mobile (457 million GSM subscribers)
* a wCDMA license to China Unicom (133 million GSM subscribers)
* a CDMA2000 license to China Telecom (43 million CDMA subscribers acquired in 2008 from China Unicom, 216 million fixnet phone subscribers, 38 million broadband subscribers)

MIIT estimates that the operators will invest about US$ 41 Billion for 3G over the next two years, ie about US$ 20.5 Billion/year - about the same annual rate as Japan's 3G investments every year over the last 8 years since 3G introduction.

Network technology diversity (instead of the Government deciding on a single radio technology standard) means that China's mobile market a few years down the road may have some similarities to Japan's today. Several Japanese companies, including "time machine company" SoftBank are working to bring 3G mobile services and technologies from Japan to China.

In our opinion, competition between different 3G radio network technologies is one of the factors driving Japan's 3G success story.

MIIT decided not to abandon CDMA2000, in order to enhance competition between technologies. Another factor may have been that Japan's CDMA2000 operator KDDI was initially much more successful in bringing 3G to market than competitors DoCoMo and Vodafone (which sold Japan operations to SoftBank).

In Japan it was not market leader DoCoMo or Vodafone, but KDDI with CDMA2000 winning the 3G introduction battle. Better be prepared for surprises in China too, and don't underestimate China Telecom.

US$ 41 billion for 3G in China over 2 years is similar to the figures for Japan.

Japan's mobile operators have invested a around US$ 15 - 20 Billion every year for more than 10 years (for details see our JCOMM report), very similar in size to expected annual 3G investments for all of China.

Japan's 3G introduction took about 8-9 years (from October 2001 until 2009/2010 - Japan's last 2G phone was shipped in December 2007). Therefore we expect 3G introduction to take about 10 years for China - could be faster because China can learn from 3G introduction in other countries.

China opts for network diversity - like US and Japan

The figure below - from our JCOMM report about Japan's telecom sector - shows the 2G -> 3G transition in Japan, where several networks with different technologies compete in the market place. We believe this competition between different technologies is a key factor for the rapid success of 3G in Japan.

China having chosen multiple competing technologies, we may see a similar 3G success story as in Japan, however with much larger subscription numbers.