Categories
Mobile telecommunications

Mobile 2.0 at the Korean Communications Conference

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

Review our “Mobile 2.0” presentation here:

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)
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)

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Japan's electronics industry telecommunications

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

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.-

Gerhard Fasol’s lecture at Stanford University “New opportunities vs old mistakes – foreign companies in Japan’s high-tech markets”

Copyright 2013 Eurotechnology Japan KK All Rights Reserved

Categories
Mobile

beeTV – DoCoMo’s new mobile TV

Japan leads mobile phone experimentation

Japan introduces and tests a large range of experimental and innovative mobile services

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.

beeTV is NTT-docomo's test balloon for next generation mobile TV
beeTV is NTT-docomo’s test balloon for next generation mobile TV

Copyright (c) 2013 Eurotechnology Japan KK All Rights Reserved

Categories
Mobile

Potential Flu Pandemic Positive for Telcos

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Mobile

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

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 payments, 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.

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Mobile

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

[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.

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Mobile

iida – a new brand for KDDI’s design series

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….

KDDI iida charger
KDDI iida charger

KDDI iida design series - by Yayoi Kusama
KDDI iida design series – by Yayoi Kusama

KDDI iida mobile phone by Yayoi Kusama
KDDI iida mobile phone by Yayoi Kusama

KDDI iida mobile phones by Yayoi Kusama
KDDI iida mobile phones by Yayoi Kusama

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
electronics component makers Mobile

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

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!

In December 2008 97.5% of global mobile TV was in Japan and S-Korea
In December 2008 97.5% of global mobile TV was in Japan and S-Korea

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.

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
mobile payment QR codes

Top 10 mobile trends for 2009

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

  1. Mobile payments and wallet phones
    see our mobile payment report
  2. GPS and location based services (LBS) such as navigation and mapping
    see our location based services (LBS) report
  3. Mobile search including location related search
  4. QR codes and other 2D bar codes for information input into mobile phones
    see our location based services (LBS) report
  5. Ultra low cost mobile phones for low end not only in emerging markets but also in advanced countries in economic crisis times
  6. Subsidized $1 mini-laptops with flat rate HSDPA (7.2Mbps) data plans
  7. WiMax networks come into commercial service
  8. Embedded B2B applications
  9. Beautiful OLED ultra-high resolution screens (bigger than iPhone displays)
  10. Mobile agent services

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
electronics component makers Japan's electronics industry Japan's electronics multinationals media Mobile TV

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

We analyze the effect of the crisis on operating margins in three different sectors in Japan:

(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.

Margins of top Japan's electronics multinationals and Nintendo
Margins of top Japan’s electronics multinationals and Nintendo

(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.

Operating margins of Japan's top 3 mobile operators
Operating margins of Japan’s top 3 mobile operators

(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?

Operating margins of Japan's TV media groups
Operating margins of Japan’s TV media groups

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

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Mobile

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

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.

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Mobile

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

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.

Quarterly operating income of KDDI
Quarterly operating income of KDDI

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Mobile

3G mobile diversity in China

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's planned 3G investments compared to Japanese mobile phone network investments
China’s planned 3G investments compared to Japanese mobile phone network investments

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.

Japan's mobile network diversity - overview of competing networks
Japan’s mobile network diversity – overview of competing networks

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Mobile

Mobile marketing with QR-code

If your business requires interacting with lots of people in Japan, if you are offering services to consumers, or just as a convenience offered on your business cards – think about QR codes:

Eurotechnology Japan blog: Mobile marketing with QR-code

Copyright (c) 2013 Eurotechnology Japan KK All Rights Reserved

Categories
Mobile

5 top tips for mobile marketing?

Answering the question: “What are the 5 top tips for mobile marketing”

Our company worked for several of the world’s largest consumer companies on mobile marketing here in Tokyo/Japan.- Many of Japan’s mobile trends usually move to Europe and US within about 3-5 years. So here are some tips from our work on mobile marketing in Tokyo/Japan:

  1. Leverage spontaneity: use the “here & now” effect of mobile

Mobile phones are among the very few privileged items almost all people carry on their body at all times and allow people to react on the spot. Mobile phones allow people to buy “here and now”, on the street, on the toilet, from bed, changing trains, waiting for a bus etc. Successful mobile marketing campaigns use this “here and now” effect. As an example, see the iPod campaign in Tokyo-Shibuya, or the North-West Airlines campaign in Tokyo/Shinjuku (discussed in detail in our QR-code report).

  1. Provide real value

Things work best when people perceive and actually receive real value. For example, an airline seat, or a share purchasing/selling transaction at the moment they want it. Don’t disappoint people by promising value, which you don’t deliver.

  1. Make it fast: close a transaction in seconds not minutes

Mobile phones are mostly used in short bursts. Attention span is short. Apple’s iPod campaign allowed people to buy an iPod from the Apple store via mobile phone here and now, in a very short time (find a detailed description in our QR-code report)

  1. Do innovate if its really new – but don’t re-invent the wheel

Japan is a huge mobile laboratory – many mobile business models discussed in Europe or US now have already been tested out years ago in Japan. Read our reports,
search on the internet, or do thorough market research in Japan

  1. Treasure security – your mobile sites need to be more secure than websites, not less secure

Customer data lost via mobile phones, or a hacked mobile banking site is just as disastrous as if the same occurs for a fixed line traditional website. Mobile sites can potentially be broken from remote locations in your own country or from a country you wish you never had to deal with.

We worked on security of mobile financial industry sites.

Copyright (c) 2013 Eurotechnology Japan KK All Rights Reserved

Categories
Economics Japan's electronics industry telecommunications

Japan trends 2008/2009

One of our clients in the financial industry asked me several trend questions:

  1. Q1: Biggest surprises in Japan in 2008?
    • Collapse of Japan’s mobile phone handset market (read our blog). In this context the Japanese telecom equipment makers association invited me to give a presentation, which was booked out 2-3 weeks ahead – about 100 Japanese telecom equipment maker managers attended! The General Affairs Vice-Minister / Secretary of State attended….
    • The dramatic increase of acquisitions by Japanese companies:
  2. Q2: Biggest changes for 2009?
    • Hopefully LED/Solid state lighting going mainstream to save energy
    • Batteries and solar cells in combination starting to replace petrol for cars
    • Solar cell battle (between Q-cells, SHARP and others)
  3. Q3: Key topics in Japanese media for 2009?
    • Financial crisis and reviving the economy
    • Crisis of the car industry – and car industry’s paradigm shift

Copyright 2013 Eurotechnology Japan KK All Rights Reserved

Categories
electronics component makers Japan's electronics multinationals Mobile

ICT trends for Japan for 2009

Smartphones, European exits from Japan, and M&A

ICT trends for Japan: Ericsson and Nokia Siemens Networks (NSN) remain engaged in Japan’s ICT sector

by Gerhard Fasol

One of the Embassies here in Tokyo asked me to write a report about ICT trends for Japan…

ICT trends for Japan: Mobile phone sector

Pushed by the Government the mobile operators changed the business model for mobile phone sales from a straight subsidy model to an installment payment system. As a consequence the mobile phone sales collapsed, creating huge difficulties for Japan’s mobile phone makers, but greatly improving the financial results of mobile operators.

Smart phones grow market share in Japan

An interesting trend is the growth of the “smart-phone” market (Blackberry, HTC-Windows-Mobile phones, iPhone etc.) and mini-PCs, which can be acquired for YEN 1 with subsidy from eMobile.

In this context the Japanese telecom equipment makers association invited me to give a presentation, which was booked out 2-3 weeks ahead – about 100 Japanese telecom equipment maker managers attended! The General Affairs Vice-Minister / Secretary of State attended…

Nokia terminates mobile phone business in Japan

On November 27th, 2008, global press announcements announced that NOKIA will stop making mobile phones for Japan’s mobile operators with immediate effect. DoCoMo and SoftBank had NOKIA phones in preparation and had already started marketing efforts – these were cancelled a few days after NOKIA’s press announcement.

NOKIA had founded the Japan subsidiary on March 3rd, 1989, almost exactly 20 years ago, thus NOKIA has given up entering Japan’s mobile phone market after 20 years of efforts. NOKIA will not totally shut down in Japan, NOKIA announced that R&D and procurement will continue, and VERTU announced to enter Japan’s market with a mobile vertual network operator (MVNO) model renting network capacity from DoCoMo, and opening own shops.- However the opening of these direct VERTU stores keep being postponed.

NOKIA joins the row of European telecom companies which have given up operations in Japan: Vodafone, Cable & Wireless.

Nokia Siemens Networks (SNS) is continuing business in Japan as well, so NOKIA will not be entirely gone from Japan.

M&A

European company’s acquisitions in Japan are currently at low levels, including the ICT sector. By far the largest acquisition in Japan by a company from the European/Mediterranian area was not by an EU company, but by the Israeli company Iscar which acquired the Japanese company Tungaloy for around US$ 1 Billion. However, this acquisition was driven by US capital. Read details in our blog here.

In the opposite direction, Japanese acquisitions in EU and elsewhere, there is a boom of acquisitions by Japanese companies abroad. For example, TDK acquired the German company EPCOS, Fujitsu acquired the outstanding 1/2 of Fujitsu-Siemens, NTT-Data acquired 72.9% of Cirquent which was a 98% subsidiary of BMW before. SONY acquired the outstanding 1/2 of the SONY-Bertelsmann Music Group from Bertelsmann.

The current trend is definitely a strengthening of Japanese acquisitions in Europe.

The most important issue however are not the acquisition transactions themselves, but the crucial issue will be whether these acquisitions create or destroy value. In many cases the difficulties to overcome “cross-cultural” issues are enormous. Many huge wrecks line the road: Vodafone-Japan, Cable-Wireless-Japan, NOKIA’s mobile phone business in Japan, or DoCoMo’s overseas acquisitions. There are also many success stories – the most impressive and famous one Nissan-Renault, however there are many more. An interesting case in progress is Nippon-Sheet-Glass (now NSG Group)’s acquisition of Pilkington Glass (read about a presentation by NSG’s CEO here in our blog).

Copyright 2013 Eurotechnology Japan KK All Rights Reserved

Categories
Mobile

NOKIA quits Japan – for now…

NOKIA’s Japan subsidiary was founded on April 3, 1989 – almost 20 years ago. On November 27, 2008 NOKIA announced to terminate selling mobile phones to Japan’s mobile operators, effectively withdrawing from Japan (except for purchasing, R&D and VERTU).

NOKIA’s sales figures in Japan were a well kept secret until last week when several Japanese newspapers wrote that NOKIA sold 200,000 phones during FY 2007: thus NOKIA’s market share was 0.39% – after 20 years of market entry efforts.

Considering the disastrous collapse of mobile phone handset sales in Japan, NOKIA’s move to quit sales in Japan actually makes a lot of sense. Nothing prevents NOKIA from re-entering Japan again in the future.

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Mobile

Japan’s mobile phone disaster

Japan’s mobile phone sector is admired the world over, and Japanese mobile phones are years ahead the rest of the world regarding functionality. However, Japan’s mobile phone industry may be heading for a disaster, similar to the European 3G spectrum license fee disaster which almost bankrupted Europe’s mobile phone operators – unless changes are made quickly. Statistics released today show that mobile phone deliveries in October dropped down to 1/4 of steady sales maintained over the last 8 years as the figure below shows.

Switch from subsidy business model to installment contract model causes Japan's mobile phone handset market to collapse (temporarily)
Switch from subsidy business model to installment contract model causes Japan’s mobile phone handset market to collapse (temporarily)

What is the reason for the disastrous drop in mobile phone deliveries?

Until recently Japan’s mobile phone operators subsidized mobile phone handsets. Consumers would typically pay YEN 10,000 (about US$ 100) for handsets with built-in digital TV, GPS, movie camera with auto-focus, electronic money and tickets, QR-code reader, and much more, which cost the operators up to YEN 100,000 (US$ 1000) per handset.

Encouraged by Japan’s Government, mobile operators recently switched from the subsidy model to an installment plan, while discounting the monthly usage fees.

While previously consumers put YEN 10,000 (US$ 100) or in some cases YEN 1 (1 cent) on the counter to receive one of the world’s most advanced handsets, since a few weeks ago consumers are faced with a 2 year installment purchase contract where they pay the full YEN 60,000 (US$ 600) or YEN 80,000 (US$ 800) for a handset in installments of around YEN 3000 (US$ 30) each month for two years. Not surprisingly handset sales dropped into the cellar as shown above (the figure above actually shows the deliveries from manufacturers to mobile operators, not the actual retail sales).

What are the likely consequences?

  1. continuing consolidation of Japan’s mobile phone handset makers
  2. surviving handset makers will push into international markets
  3. operators will push harder for cheaper handsets
  4. operators might return to a modified subsidy model
  5. NOKIA might get another chance in Japan

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Mobile

Paradigm change of the global mobile phone business and opportunities for Japanese mobile phone makers

presentation by Gerhard Fasol, at the Industry Association of Japanese telecom and networking equipment makers, Friday November 27, 2008, 15:00-16:30

Presentation was fully booked several weeks before the talk, attended by about 100 managers and executives of Japan’s telecom equipment makers, and included also the Vice-Minister/Secretary of State of Japan’s General Affairs Ministry, which is responsible for telecom regulation in Japan.

Copyright 2013 Eurotechnology Japan KK All Rights Reserved