WW-107 -- The View from Japan -- Is Europe痴 Mobile Market Catching Up?

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J@pan Inc presents the Wireless Watch Newsletter:

W I R E L E S S W A T C H

Commentary on the World of Wireless in Japan
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Wireless Watch Newsletter
Issue No. 107
Monday, September 22, 2003
TOKYO

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CONTENTS

++ Viewpoint: The View from Japan --
Is Europe痴 Mobile Market Catching Up?

>> Noteworthy News: KDDI Welcomes its 10th Millionth 3G User

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++ Viewpoint: The View from Japan --
Is Europe痴 Mobile Market Catching Up?

The past two weeks we have been traveling through Europe looking at
the progress of the mobile Internet in the "Old World." As many of our
readers are based in Europe and the US, we would like to share some
of our observations and make some stark comparisons with the Japanese
market.

Color handset penetration in Europe is at almost 5 percent. As in
Asia, the most popular services are chat, e-mail, downloads of
ringtones, wallpapers and games. This proves once again that
Japanese and Koreans are not so different from Western people.

MMS uptake is disappointing so far. Only a small fraction of those
with an MMS handset send multimedia messages. Reasons for this include
high prices for MMS, the lack of a critical mass of devices for peer-to-
peer messaging, and limited interoperability between carriers. Once
penetration rates surpass 15 percent, we expect MMS usage to start
growing, just as it has in Japan with J-Phone痴 sha-mail and DoCoMo痴
i-shot services.

European business models for carrier-operated portals are less
favorable for content providers than they are in Japan. Revenue
share agreements of 50-50 percent are not uncommon in the market.
Big carrier groups like Vodafone and T-Mobile host a lot of content
from their own platforms and are directly competing with the providers
of ringtones and games that cannot have their content linked into the
portals.

Though the quality of GPRS browser phones is improving, we found
quite a number of software glitches that would have lead to an immediate
recall of all phones in Japan. A Vodafone live! Panasonic phone
crashed in our hands at regular intervals. Fortunately, the customer
service desk was willing to replace the phone.

We were impressed by the latest Alcatel and Sagem phones with Openwave
browsers. These low-priced phones have good color screens and are
equipped with a camera. While a year ago, one had to navigate through
a complicated menu structure to open a WAP/GPRS session, nowadays
more phones give WAP access through a single press of a button. GPRS
roaming worked remarkably well. Without missing a beat, we were able to
connect from the UK to the OrangeWorld portal in the Netherlands and
access all services.

Nokia has too strong a position in the European market. They cover
the whole value chain of the mobile industry. In addition to their
almost 40 percent handset market share in Europe, they also have
a solid presence with network infrastructure and content through
Club Nokia. This dominant position is hampering innovation in the
market.

Our overall impression is that mobile Internet is finally taking off
in Europe -- but at a slower pace than everybody expected a year ago.

-- Arjen van Blokland

**FOR MORE: "Europe's Mobile Phone Market Struggles," from Cellular
News
http://www.cellular-news.com/story/9663.shtml

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>> Noteworthy News: KDDI Welcomes its 10 Millionth 3G user

In Brief: On September 17, KDDI痴 CDMA2000 1X services passed the
10 million customer mark -- remarkable growth for a service that
started 18 months ago.

This autumn the carrier will start the new 1xEV-DO service with even
higher speeds. A data-card to insert in a laptop will be launched as well,
providing downloads speeds of up to 2.4Mbps.

KDDI does not plan any flat-fee rate for the new 1xEV-DO at this moment.
The reason behind this might be that they do not want to cannabalize
their DDI Pocket PHS services, which already offer monthly flat-fees
for data.

**FOR MORE: "KDDI Confirms the Number of 3G Mobile Phone Users Tops Ten
Million"
http://www.3gnewsroom.com/3g_news/sep_03/news_3765.shtml

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STAFF
Written by Arjen van Blokland; edited by Roland Kelts
(editors@japaninc.com)

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