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There is a lot of discussions about whether Steve jobs is going to announce an iPhone or iPod-Phone at the Apple Computer Developer’s Conference in SF – according to the headline report on Saturday May 13th, 2006 in Nihon Keizai Shinbun ( the world’s largest business daily ) it’s already known since May this year that Apple and SoftBank are developing such a joint mobile phone with iPod and iTunes functions.
On March 17 SoftBank announced the full acquisition of Vodafone’s Japan subsidiary – the former J-Phone – jointly with YAHOO-Japan as a co-investor – so with about 15 million mobile subscribers in the world’s most advanced mobile market (Japan), SoftBank/Apple will have the firepower to make such a phone a success, provided it’s tuned to Japanese consumers’ needs and dreams – my guess is that it probably will be.
By pure coincidence, the Apple/SoftBank headlines appeared one or two days after DoCoMo and Microsoft announced a music cooperation.
Apple/SoftBank iPod mobile phones coupled to iTunes could have quite a lot of impact on Japan’s music industry: about 20% of Japan’s music sales are to mobile phones. Of all music downloads in Japan about 6% are fixed line internet downloads, and 94% are music downloads to mobile phones: internet music downloads are almost neglibile in comparison to mobile phone music downloads.
Therefore even if iTunes has a huge market share in the fixed line internet world, iTunes cannot have much impact in Japan overall if limited to fixed line internet downloads. iTunes downloads to mobile phones will change the business models of Japan’s music industry – at the moment music downloads to mobile phones cost a lot more than iTunes downloads. An iPod/iTunes music store could reshape the mobile music market in Japan.
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i-Tunes Music Store (ITMS) kick-started internet music downloads in Japan, which were falling just before ITMS arrived:
i-Tunes & i-Pod themselves are under attack by KDDI‘s “au Listen Mobile Service” – LISMO!, which includes sophisticated viral marketing, music community and location based services.
Read more in our Mobile-Music-Japan Report (MOMJ)
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(Tokyo, Feb. 6, 2006 by Eurotechnology Japan KK) In the last few days KDDI/AU‘s “MUSIC-HDD” phone (W41T by Toshiba) went on sale nationwide in Japan. The W41T includes a 4 Gigabyte 0.85 inch (22.6mm) diameter Hard Disk Drive (HDD), and can store roughly 2000 full songs. This storage is the same as for a top range iPod-nano (however the storage in an iPod-nano is flash memory, not HDD). With the “MUSIC-HDD” phone and other “music player” phones, KDDI/AU launched the “LISMO!” service, an integrated online-store & mobile & PC music offering, which competes in the same arena as iPod/iTunes.
For more about mobile music in Japan click here.
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Nikkei reports several NTT Docomo acquisitions: DoCoMo will use a total investment of around YEN 10 Billion (approx US$ 100 million) to acquire 32.24% of Tower Records Japan’s shares from Nikko Principal Investments Japan Ltd, and additional shares in a third party allotment taking it’s stake to around 40%. Tower Records Japan plans an IPO, and DoCoMo apparently intends to keep a 33.4% controlling stake even after the IPO.
Tower Records Japan was founded by the US-company Tower Records in August 1979 in a pioneering entry by Tower Records into the Japanese market. At that time, almost all foreign companies entering Japan formed a joint venture with a Japanese company or licensed their brand to a Japanese company. Tower Records instead acquired an unrelated Japanese company with the same name (“Tower Records”) and built it’s business in Japan successfully alone without a Japanese joint venture partner.
In October 2002, Tower Records Japan became independent of the US mother company through a Management Buy-out by Japanese management.
Repordedly, DoCoMo aims to implement many synergies including:
Acquisition of a controlling stake in Tower Records is the latest step in a string of investments by DoCoMo, to expand revenue into new areas independent of ever shrinking voice and data traffic related charges. Recent investments include:
With more than 100 stores the Tower Records Japan investment will give DoCoMo an excellent experimentation ground to develop many new ways of using FeliCa wallet phones in a real-life retail environment.
More about:
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Japanese consumers clearly express their preference:
99.8% of music downloads are to mobile phones, and 0.2% of music downloads are to PCs and portable MP3 players.
Clearly Japan’s internet music services did not offer what consumers want: internet music downloads to PCs and portable MP3 players recently dropped from
KDDI/AU announced that 5 Millions Chaku-Uta-Full songs have been downloaded until April 3, 2005.
Download our 230 page analysis of KDDI/AU
Download our “mobile music” report
Note added: on June 15, 2005, KDDI reported 10 million Chaku-Uta-Full downloads…
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Put until mid-2004, cumulatively KDDI (Japan’s No. 2 mobile operator) sold more “chaku-uta” mobile music song clips in Japan alone than Apple sold music via iTunes globally.
This fact shows both the power of mobile music, and also the size of Japan’s mobile markets in terms of cash sales.
KDDI/AU reports 3 million Chaku-uta-full (full song) downloads since it’s start on November 19, 2004:
More in our “Mobile Music Japan” report.
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Turns out that music is a killer application on mobile – we are working on a number of projects in the mobile music field. We just completed our “Mobile Music Japan” report.
With an incredibly much smaller potential customer base KDDI/AU delivered more downloads of 20-30 second songs (chaku-uta) than Apple’s i-Tunes. Motorola reportedly announced a mobile phone incorporating i-Tunes at the recent CES show in Las Vegas. KDDI/AU‘s tremendous success with chaku-uta indicates that combining Motorola phones with i-Tunes will be very successfull indeed. AU reported 1 million Chaku-Uta-Full downloads within the first 48 days of service (chaku-uta-full started on November 19, 2004).
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Global mobile phone ring tone market (source: Consect LLC, WSJ) in 2004:
W Europe: US$ 1.5 billion (37.5%)
Japan: US$ 1.0 billion (24.0%)
Korea: US$ 0.5 billion (12.5%)
US: US$ 0.3 billion (7.5%)
ROW: US$ 0.7 billion (17.5%)
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Total: US$ 4.0 billion (100%)
see: “Mobile Music in Japan” (report, pdf file)
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