Back to Contents of Issue: November 2000
by Daniel Scuka
MENTION AI, OR ARTIFICIAL intelligence, and many people will conjure up images of evil HAL-like mainframes taking maniacal revenge on (mere) humans. Happily, I-Chara's AI-based social networking service plans to offer Japanese mobile surfers a decidedly more benevolent experience. The service will provide a new way to mingle in wireless cyberspace, allowing participants to mix, match, and -- need we say it? -- shop through use of personalized characters, or agents. For the highly sociable and mobile-obsessed Japanese, I-Chara may just provide the perfect mix of cuteness, sophistication, and personalization, and help boost Japan's nascent eCRM industry. (Electronic customer relationship management.)
"The system uses social filtering, and characters interact based on clustering, direct comparison of interests, and user-generated connections," explains 28-year-old CEO Kim Binsted. The characters (think avatar or personal bot) are selected and customized by users upon initial registration, and can be programmed with as much or as little personal information as desired. Over time, each character, which is constantly circulating in cyberspace, learns its owner's preferences, which are "taught" by selecting and clicking on screen options displayed in popup boxes. After Java-enabled cellphones are released (about the time you read this), subsequent versions of I-Chara will allow for voice instruction and more sophisticated onboard processing. "At its heart, our system provides a way for people to build networks of friends and associates, just like in the real world," says Binsted. Cofounder and president Dave Gutteridge emphasizes that I-Chara is not a role-playing or matchmaking service: "There are other character-based services, but their technology is quite different from ours."
Essentially, the I-Chara system provides a way to match people having similar interests, and also to match people with content (including product and service information) that will be of specific interest to them. As a targeted marketing tool, I-Chara aims to link friend to friend, and friend to sales agent (vendors can have characters too). Unless a user chooses otherwise, all character interactions are anonymous, and users can veto interactions with undesirables, like sales agents. Core partners will include music, cosmetic, and personal service vendors, and later can expand to include restaurants and entertainment. The system is scheduled to launch this year.
Interestingly, I-Chara is targeting only the mobile Web space, eschewing wired desktops as too impersonal, and, in Japan, too often shared between users. There is also no efficient mechanism for collecting subscription fees from dial-up desktop surfers, whereas Japan's mobile service providers take care of that problem. Besides, the tiny screen is perfectly suited for (cute, tiny, personalized) agent technology. "Lots of agent development work has been done, but it's useless for desktops," says Binsted.
Clearly, there are advantages in offering I-Chara via the mobile Net, such as: users can access it anytime, especially when they don't have much to do (think commuter trains); keying a sales agent's coupon offer to a particular location or shop could generate enhanced sales; and if your character is quite active it may appreciate being able to reach you anytime. Nonetheless, users might prefer a PC interface -- which I-Chara doesn't offer -- when defining their initial profile (PCs have better input methods than mobile phones) or perhaps when wishing to see an overview of their social network or their historical use of the system (or any other data that can be better visualized on a big screen). "In general, I don't think that it is possible to say Web-based systems are better [suited] for mobile or fixed devices. It all depends on the situation and on the functions within the system," says Dr. Olivier Liechti, research scientist in the Media Integration & Communications Labs at Kyoto's Advanced Telecommunications Research Institute. IDC Japan analyst Kevin Williams thinks I-Chara is doing the right thing. "Unlike the US, whose consumers can't fathom the Web without a 17-inch, full-color screen, many Japanese first get a taste of the Web via their mobile handsets. Adopting a business strategy early on that takes advantage of this fact is of paramount importance," he explains.
I-Chara can be grouped with other eCRM providers into a Web business category that has only just started in Japan, according to Akira Sato, chief analyst at e-Research Japan. "In Japan, the potential for eCRM and personalization is large," he says. "The market for personalization should grow to ¥165 billion by 2004."
The eCRM industry includes content management, customer service, data analysis, and Web site personalization, and has already taken off in the US. Sato lists some of the obstacles that have slowed things down here: customers are thought to be more severe; Japanese companies don't have the top-notch databases required to underpin many eCRM services; and the systems integration work will require lots of programmers at a time when companies are trying to cut back. "If there's a problem, Japanese surfers will flee the site, so the system has to be high quality to begin with," he says. Also, Yahoo Japan and several other large portals have considered personalization engines, but are still cautious due to Japanese surfers' sensitivity to mismanagement of personal information, he explains. Analyst Williams agrees, adding: "According to IDC Japan surveys, Japan is by far the most security sensitive country, and consumers constantly shy away from disclosing personal information unless absolutely necessary." But Sato is optimistic about services like I-Chara, since character-based systems are "good" for the Japanese. He warns, however, that such systems could "attract too many kids -- what we need are character services that will attract people with money."
Dr. Liechti at the Kyoto labs is also bullish, citing Amazon's recommendation system. "It makes the shopping experience much more interesting. Lots of people go to Amazon just for that, so I am sure that other companies would be happy to pay some money to buy an off-the-shelf social filtering solution." But he cautions that the most important keyword is personalization. "When you go to a site, you want the Web pages to be generated specifically for you." And if a company's focus is on enhancing sales opportunities via agents, then certain enabling technologies become vital, including Java, XML, and Web metadata. "There are already lots of companies active in the field, and most of them are developing the back-end infrastructure that will enable customized services," he adds.
IDC's Williams also thinks characters may be a good way to customize sites for Japanese surfers. He points to existing systems, including Fujitsu's Avatars, where user-defined characters can be placed in certain situations, meeting places, chat sites, or do certain things, like shop. ISP So-net's Postpet has also become a popular way of using characters to go and retrieve mail, visit sites, shop, and play games. "I think adoption of a service [like I-Chara] on a Smart Phone could prove to be both enjoyable and useful," says Williams. If successfully implemented, he says, it could generate significant business opportunities in terms of character creation and interactive gaming. "And for the consumer, it could add a whole different dimension to the Web experience."
The I-Chara system's main problems today are the limitations inherent in the compact HTML used by market leader NTT DoCoMo's i-mode service (presumably WAP would be better after 3G hits), i-mode's expensive data rate (¥0.3 per 128 bytes, meaning a single download of a 16-color, 80-by-80 pixel image would cost about 45 cents), and the (perceived) mediocre quality of graphics available on mobile phone screens, limited to animated GIFs.
Nonetheless, the firm is pushing ahead, and has done well staffing-wise, having hired Tomoko Koda, ex-research director for B2C consumer-oriented software agents at top-tier ad agency Hakuhodo to serve as chief of R&D, and I-Chara's code base is being finalized by a team of developers at Manas Solutions, based in India. In the future, CEO Binsted is looking to expand I-Chara into Korea and later Europe -- anywhere that people have a strong tradition of social interaction. The firm has already picked up ¥30 million in seed funding, and by the time you read this should be into first post-second-round financing. The capital will be targeted at marketing, hiring design and customer support staff, and moving out of the rented house the staff now share with the CEO's furry companion, Leia.
Don't be surprised if the first I-Chara character is a shy puppy that enthusiastically fetches news, coupons, and directions to the nearest dog-friendly izakaya.
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