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disruption Galapagos effect Internet Mobile

Mobile internet’s 17th birthday

The global mobile internet revolution started with Docomo’s i-Mode on February 22, 1999

i-Mode, Happy Birthday!

i-mode menu NTT docomo
i-mode menu NTT docomo

Today, exactly 17 years ago, on February 22, 1999, NTT-Docomo launched the world’s first mobile internet service, i-Mode, at a press conference attended only by a handful of people.

NTT-Docomo created the foundation of the global mobile internet revolution, and i-Mode is still a cash-cow for Docomo in Japan, but Docomo did not succeed to capture global value.

i-Mode pioneered many business models, which are today monetized by Apple and Google (mainly via Android).

i-Mode also contributed to make Japan the world’s biggest App market in terms of cash revenues, and helped Japanese app companies to be among the world’s largest and top grossing.

Read in detail in our blog:
i-Mode was launched Feb. 22, 1999 in Tokyo – birth of mobile internet

Japan telecommunications industry report

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Categories
M&A Mobile mobile games

Japan mobile operators grow to US$ 25 billion in operating profits for FY2014 (ended March 31, 2015)

Annual revenues exceed US$ 170 billion in FY2014

Japan’s mobile telecommunications sector continues to grow

The global mobile internet and smartphone revolution started in Japan in 1999, and Japan’s mobile telecommunications market is the world’s most advanced and most vibrant. Much mobile innovation and inventions, such as camera phones, color screens for mobile phones, mobile apps (i-Appli in Japan), and mobile payments were invented and first to market in Japan.

Globally the first mobile internet started in Japan in February 1999 when NTT-Docomo brought i-Mode to market. NTT-Docomo did not succeed to develop global business based on i-Mode, however, SoftBank took the lead, and is now building a global business built on Japan’s telecommunications sector’s strengths.

To understand Japan’s telecommunications market read our report:

Japan mobile operators grow revenues to over US$ 170 billion in FY2014

While former monopoly operator NTT-Docomo’s business continues to shrink since its peak in 2002, KDDI is growing its predominantly domestic Japanese business slowly but steadily.

SoftBank on the other hand drives rapid growth with domestic Japanese acquisitions (Vodafone-Japan, Japan Telecom, eMobile and Willcom) and overseas acquisitions, which include US operator SPRINT, US mobile phone retailer BrightStar, Finnish game company SuperCell and many others – not to mention SoftBank’s investment in Alibaba.

Japan's top three mobile operators combined revenues grow to over US$ 170 billion
Japan’s top three mobile operators combined revenues grow to over US$ 170 billion

Operating profits rise to approx. US$ 25 billion in FY2014

Operating profits and net profits are steadily increasing for Japan’s three mobile operators combined.

Former monopoly operator NTT-Docomo’s operating profits peaked in 2002, and have been steadily decreasing since this peak.

Both challengers KDDI and SoftBank on the other hand are growing operating profits steadily: KDDI mainly domestically in Japan, with relatively small global business, while SoftBank has dramatically increased business outside Japan with a series of acquisitions and investments, including US operator Sprint, US mobile phone distributor BrightStar and Finnish game developer SuperCell.

Operating income of Japan's three mobile operators combined increases to approx. US$ 25 billion
Operating income of Japan’s three mobile operators combined increases to approx. US$ 25 billion

To understand Japan’s telecommunications market read our report:

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Mobile

Docomo financial report for FY2013: operating income of YEN 819 billion (US$ 8.2 billion)

Docomo financial report for FY2013: US$8.2 billion operating profits but withdraws from India

by Gerhard Fasol

Docomo financial report: Kaoru Kato, CEO of NTT-Docomo explaining NTT-Docomo's annual results in Tokyo on April 25, 2014
Kaoru Kato, CEO of NTT-Docomo explaining NTT-Docomo’s annual results in Tokyo on April 25, 2014

On April 25, 2014 NTT-Docomo announced annual results for FY2013 (April 1, 2013 – March 31, 2014) and explained the way forward.

Annual revenues are YEN 4461.2 billion (US$ 33.6 billion),
operating income is YEN 819.2 billion (US$ 8.19 billion),
net income is YEN 464.7 billion (US$ 4.6 billion).

These figures are of course amazing results, and Docomo remains one of the most important mobile operators globally.

Docomo financial report – technology roadmap:

Docomo is now planning to:

  • introduce VoLTE in summer 2014,
  • quad-band LTE with 150Mbps in FY2014,
  • LTE-Advanced with 225Mbps in FY2014/2015,
  • and aim for 10Gbps bandwidth beyond FY2015,

ensuring that Docomo will remain a leading edge mobile operator for the foreseeable future.

Docomo financial report – announces failure in India:

Still, there are some shadows on Docomo’s amazing success story:

  • Docomo announced withdrawal from the joint-venture with TATA-Teleservices in India, thus another of Docomo’s ventures to create growth outside Japan has failed. This is the last in a very long string of failures of NTT-Docomo outside Japan, after having lost about US$ 10 billion on investments in KPN-mobile, AT&T-Wireless, and Hutchinson, and the attempt to develop i-Mode mobile internet services in many countries.
  • NTT-Docomo has now been overtaken by SoftBank on most key performance indicators (KPIs). SoftBank has achieved higher overall subscriber numbers, higher revenues, higher operating income and higher net income than NTT-Docomo.
Docomo financial report: Kaoru Kato, CEO of NTT-Docomo, bathing the crowd and answering questions at the annual results meeting on April 25, 2014 in Tokyo
Kaoru Kato, CEO of NTT-Docomo, bathing the crowd and answering questions at the annual results meeting on April 25, 2014 in Tokyo

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Mobile

Potential Flu Pandemic Positive for Telcos

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Japan's electronics multinationals

Tech Sector Outlook (CNBC TV interview)

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

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Categories
M&A Software telecommunications

NTT-Data expands to Europe: Acquisition of Cirquent GmbH

NTT Data and BMW agreed today, that NTT Data will acquire 72.9% of outstanding shares of Cirquent GmbH

NTT Data thus gains BMW as largest customer in Europe

Today, August 1, 2008, NTT Data and BMW agreed, that NTT Data will acquire 72.9% of the outstanding shares of Cirquent GmbH in order to globalize.

Cirquent was part of the BMW Group, and is Germany’s 7th biggest system integrator

Between 1992-2008 Cirquent was part of the BMW Group. Cirquent is No. 7 in the Luenendonk ranking of German system integrators. Among Cirquent customers are BMW, Deutsche Boerse, Muenchner Rueck (reinsurer), and T-Mobile Germany. Cirquent has about 1800 employees and achieved sales of EURO 286 Million in 2007.

Cirquent share ownership ratios after this acquisition:

  • 72.9% NTT Data
  • 25.1% BMW AG
  • 2% Cirquent GmbH employees

After this acquisition, BMW becomes NTT Data’s largest customer in Europe. We consider this acquisition an excellent move by NTT Data, NTT Data acquired Germany’s 7th largest system integrator, including about 1000 highly qualified employees, and at the same time also gained BMW as largest customer in Europe, together with a number of other blue chip customers such as Deutsche Boerse, Muencher Rueck and T-Mobile Germany.

Read more about Japan’s telecom sector in our J-COMM report.

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Categories
Mobile

Japan’s Mobile Space Not Saturated

More in our J-COMM report: http://www.eurotechnology.com/store/jcomm/

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Categories
Mobile

Market caps of companies in mobile: global vs local

Google, Apple, Nokia, HTC, Vodafone and are winning the driver’s seat of the global internet revolution. DoCoMo, KDDI and SoftBank essentially stay inside Japan for now – limiting their growth prospects and leaving global opportunities to others.

Market caps of Japan's telecom operators compared to global telecom and internet companies
Market caps of Japan’s telecom operators compared to global telecom and internet companies

GOOGLE with Android and APPLE with iPhone are reaching for the driver’s seat of the global mobile data revolution. Global companies including GOOGLE, Vodafone, Apple and NOKIA grow to US$ 100s Billion valuations, while local companies NTT, DoCoMo, KDDI and SoftBank remain essentially limited to Japan’s market for now. Smartphone maker HTC increases impact – including in Japan.

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Categories
Mobile

SoftBank and KDDI win market share, Docomo loses

SoftBank from 4th to 1st position within less than 12 months… SoftBank‘s turn-round of x-Vodafone-Japan, went faster than many expected. Within less than 12 months SoftBank went from last place to first place in customer sign-ups, overtaking even KDDI‘s super-popular AU.

Willcom recently suffers from SoftBank‘s revival, as well as from eMobile‘s flat rate data services.

Find latest market share data in our report on Japan’s telecom industry.

Month-to-month net subscription growth/decline for Japan's mobile phone operators during the period when mobile number portability (MNP) was introduced
Month-to-month net subscription growth/decline for Japan’s mobile phone operators during the period when mobile number portability (MNP) was introduced

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Categories
Mobile

First half FY2008 results: SoftBank and KDDI profits increase, DoCoMo’s trends is downward

In the last few days NTT, NTT-DoCoMo, KDDI and SoftBank announced their first half financial results. SoftBank and KDDI are the winners both for market share and for profits, while DoCoMo‘s results and market shares are sinking, and pulling the NTT-Group down at this time. Extrapolation indicates that DoCoMo‘s net profits may fall into the red about one year from now, drastic action is taken soon.

Net after-tax income of Japan's top three mobile operators NTT-docomo, KDDI and SoftBank. Currently docomo's net profits follows a downward trend, and risks to drop into the red, unless docomo takes drastic measures.
Net after-tax income of Japan’s top three mobile operators NTT-docomo, KDDI and SoftBank. Currently docomo’s net profits follows a downward trend, and risks to drop into the red, unless docomo takes drastic measures.

The thin lines show linear interpolations of quarterly net profit data. Our extrapolation seems to indicate that DoCoMo‘s net profit might fall into the red towards then end of calender year 2008 unless drastic action is taken. If current trends continue, SoftBank‘s net profits might exceed DoCoMo‘s mid-2008. We expect DoCoMo to take dramatic action before this happens.

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Categories
Mobile

3G RAZR for DoCoMo and i-Mode

At the Wireless Japan Exhibition, DoCoMo showed two types of Motorola’s RAZR phone for 3G:

  • one RAZR purely for 3G, including i-Mode, for DoCoMo’s FOMA 3G service. This phone has similar dimensions as the standard US version of RAZR (shown on the left hand side of the image below)
  • a second, much thicker version of RAZR for international roaming (shown on the right hand side of the image below), which includes a FOMA/3G/wCDMA/UMTS modem and a GSM modem
Motorola's RAZR for NTT docomo
Motorola’s RAZR for NTT docomo
Motorola's RAZR for NTT docomo's 3G network
Motorola’s RAZR for NTT docomo’s 3G network

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Categories
Mobile

DoCoMo speeds up 3G by 10 times

DoCoMo has upgraded radio networks to 3.6 Mbps in the Tokyo region, and NEC’s N902iX handsets will be released very shortly.

DoCoMo has upgraded 3G networks in the Tokyo region to 3.6 Mbps (data download) in the Tokyo region using HSDPA technology (HSDPA = High-Speed Downlink Packet Access), and will soon sell NEC’s N902iX handsets. HSDPA upgrades will come to the Kansai (Osaka/Kyoto/Kobe) region from autumn 2006.

DoCoMo announced that during 2007 the data uplink (sending data from mobile phones) will be upgraded to 1 to 2 Mbps, which is a substantial improvement to FOMA’s present 64 kbps upload speed.

DoCoMo/FOMA download speed: 3.6 Mbps (summer 2006 in the Tokyo region, Osaka/Kansai and other regions to follow)

DoCoMo/FOMA upload speed: 1 … 2 Mbps (from 2007)

NEC mobile phone handset N902iX for NTT docomo's  HSDPA network
NEC mobile phone handset N902iX for NTT docomo’s HSDPA network

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Categories
Mobile

NTT Docomo CEO: Wall Street Journal “Leadership Question of the Week” – Japanese leadership

Learning from Dr. Keiji Tachikawa, NTT Docomo CEO

NTT Docomo CEO: Japanese leadership in the Wall Street Journal

Wall Street Journal, in the section “Leadership Question of the Week”, on Monday June 12, 2006 on page 31, published an article I wrote about a very extraordinary experience I had several years ago at the German Embassy here in Tokyo, with Dr. Keiji Tachikawa (立川敬二) – then CEO of NTT-DoCoMo (Dr. Keiji Tachikawa has since then moved on to become the head of Japan’s Space Agency JAXA).

Please find the unedited manuscript here (the actual published version was shortened a bit).

Leading in Asia:

What was the best business advice you received and who gave it to you?

The best business advice I received in Japan was from the former NTT Docomo CEO, Dr. Tachikawa – he taught me that when two parties do business, both parties have to profit/benefit – not just one party. He also taught me to go straight to the point, not waste time with irrelevant things.

Here the story in more details:

I had met Dr. Tachikawa at a reception at the German Embassy – purpose of the reception was to bring together German and Japanese leaders in telecommunications and mobile phones.

I noticed that Dr. Tachikawa, then NTT Docomo CEO, was standing for quite some time at the window, looking out into the beautiful garden of the Embassy with no one to talk to.

Why was Dr Tachikawa standing alone with no-one to talk to? My explanation was that the Japanese CEOs at this reception were mainly from DoCoMo’s suppliers, and therefore probably too shy to talk to Dr Tachikawa since Japanese business customs places these suppliers on a lower social ranking than their major customer DoCoMo. On the other hand, the German CEOs who had come from Germany, probably did not know who it was who was standing lonely at the window.

So I approached Dr Tachikawa and we talked quite a while – all in Japanese.

His first question after the initial introduction was very surprising – Dr Tachikawa asked me, how our company makes money, where our income comes from.

Having been CEO of our Tokyo based company for the last 10 years, I am very often asked where our company’s offices are located, how big our office is, how many people we employ and other irrelevant conversational detail., Dr. Tachikawa did not ask any of these irrelevant things – he went straight to the point: how do we make money. In my almost 10 years as CEO in 1000s of conversations, Dr Tachikawa was almost the only manager (Western and Japanese) who went straight to the point not losing time over irrelevant details.

A few days later I received an email from Dr Tachikawa inviting me to his office at DoCoMo’s headquarters to discuss possibilities of cooperation between NTT-DoCoMo and our very small company Eurotechnology Japan KK which I had founded about 10 years ago here in Tokyo.

I was amazed by Dr Tachikawa’s kindness. A few days later I spent about one hour in his office at the top floor of Sanno-Tower at DoCoMo’s headquarters, right next to the Prime Minister’s Office.

I had prepared four proposals and towards the end of our conversation I showed these four proposals to Dr. Tachikawa. He rejected three of them, and decided that DoCoMo was interested in one of my proposal.

I learn a lot from his way of action – he immediately took three decisions about the one proposal he was interested in:

  1. he said that we must now find a way that both our company profit from this plan
  2. he decided who within DoCoMo would be responsible to carry this project out with our company, and
  3. he decided where the source of the budget for this project should be

I have been working 20 years with Japan now – and Dr. Keiji Tachikawa is certainly the Japanese manager I learnt most from, in the meetings I was lucky enough to have with him.

Best regards

Gerhard Fasol PhD
Eurotechnology Japan KK
http://fasol.com/

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

Categories
Mobile

BlackBerry for Japan

DoCoMo plans to sell BlackBerry to corporates in Japan

With the RiM/NTP patent infringement lawsuit settled with a US$612.5 million payment, DoCoMo and Research in Motion (RiM) announced on June 8, 2006 that DoCoMo plans to start selling BlackBerry in Japan from autumn 2006 to corporate customers. Will RiM invest US$ 612.5 million to build business in Japan? Less? or more?

Over the last years I was asked 100s of times by foreign CEOs and expatriate managers why BlackBerry does not work and does not exist in Japan. Several large global corporations also asked us for work arounds to get solutions in place for Japan which fulfill the job of BlackBerry. Finally, also several venture companies came to us which supply secure corporate email solutions and corporate scheduling applications similar to BlackBerry’s offerings.

Which BlackBerry device will DoCoMo offer

Although we have not seen an official announcement of the precise BlackBerry device DoCoMo will offer, we assume that it will be based on the Blackberry 8707 device.

We have also heard the following details:

  • The planned BlackBerry for Japan will work on DoCoMo’s FOMA (wCDMA) network in Japan, and will also have in-built connectivity for GSM and GPRS (2G legacy networks which are and will be in use for a long time to come in most countries outside Japan)
  • The initial BlackBerry device will have no Japanese input, which restricts the device to foreign expatriates in Japan, and guarantees to keep BlackBerry initially out of the mainstream Japanese market. This means that the initial market will be mainly managers in foreign subsidiaries in Japan. Those managers who are integrated into Japan’s business world and private world, will need a separate local Japanese mobile phone to communicate and exchange email messages with their Japanese colleagues

Why was there no BlackBerry in Japan?

For a number of reasons:

  • RiM did not invest in Japan
  • RiM reached no agreement with Japan’s mobile operators
  • BlackBerry until recently did not work with 3G (wCDMA/UMTS) which dominates in Japan
  • Also, BlackBerry’s QWERTY keyboard gives no advantage for Japanese language input
  • and finally, Japanese mobile phones with added software already provide most functions of a BlackBerry (and a lot more functions which BlackBerries cannot do)

What are BlackBerry’s prospects in Japan? Will BlackBerry be successful in Japan?

The key issue will be whether RiM invests sufficiently to succeed in Japan. Foreign telecom firms – including some of the most famous – have a record of underinvesting in Japan, and as a consequence to fail, or to remain trapped with a 0.5% market share. Will BlackBerry remain focused on the niche foreign executive market, or will BlackBerry expand into the much bigger mainstream in Japan?

The success of Willcom’s W-ZERO is an indicator that BlackBerry might be successful beyond the expatriate market.

What will make success difficult for BlackBerry in Japan?

Success is not at all guaranteed for BlackBerry in Japan. We see as key issues:

  • according to our information BlackBerry will not allow Japanese language input
  • apparently BlackBerry will not support i-mode. Lack of i-Mode automatically cuts BlackBerry out of Japan’s mainstream
  • RiM will need to fulfill DoCoMo’s quality requirements, which tend to be higher then those in other markets
  • RiM’s art will be to balance necessary investments and profitability requirements

Read an article in Red Herring about BlackBerry’s announced entry to Japan, partly based on an interview with our CEO.

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Categories
Mobile

Blackberry comes to Japan (interview for Red Herring)

On June 8, 2006, DoCoMo and Research in Motion (RiM) announced that DoCoMo will start marketing RiM’s BlackBerry to corporate customers from autumn 2006.

DoCoMo will offer a version of BlackBerry which will use wCDMA (FOMA) 3G network connection in Japan, and will also be able to operate on legacy GSM/GPRS networks which are still in common use in other parts of the world (there is no and there has never been any GSM network in Japan).

Read an article in Red Herring about BlackBerry coming to Japan,

and read our “eurotechnology.japan.blog” about BlackBerry coming to Japan.

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Categories
telecommunications

NTT to invest US$ 45 Billion over 6 years

Softbank is rapidly becoming the third universal telco in Japan, targeting NTT’s most important income streams. KDDI of course is also targeting NTT’s fixed line income.

On November 2, 2004, NTT announced plans to compete: NTT will invest 5 Chou YEN (YEN 5000 Billion = US$ 45 Billion) over 6 years (2005-2010), i.e. about US$ 7.5 Billion/year. 60% of this investment will be for optical IP networks. NTT plans to build about 30 million FTTH lines.

NTT fibre to the home (FTTH) contracts
NTT fibre to the home (FTTH) contracts

read more here in our report on Japan’s telecom sector…

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