WW-110 -- The converence of digital mobile and analog media

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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 Japan's Wireless World
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Wireless Watch Newsletter
Issue No. 110
Tuesday, October 21, 2003
TOKYO

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CONTENTS

++ Viewpoint: The converence of digital mobile and analog media

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++ Viewpoint: The converence of digital mobile and analog media

New mobile subscriber growth has slowed dramatically in Japan. In
comparison with two years ago, the number of new monthly subscribers
dropped from 642,000 to 385,000 in September 2003. Vodafone in par-
ticular is suffering from growing market saturation, adding only
26,300 new subscribers last month. While Vodafone was once threathening
KDDI痴 number 2 position in the market, the KDDI group, including
Tu-ka, now has 2.2 million subscribers more than Vodafone.

As the economic lifetime of handsets has come down from 2 to 1.5 years,
subscriber churn is becoming a major threat for the Japanese carriers.
One way to keep existing subscribers and attract new ones is to add
appealing functions to handsets. Within the next few months we will
see phones entering the market with analog TV and FM radio receivers.

But this is not a new phenomenon. The concept of adding FM radio to
handsets was pioneered by Nokia in Europe and Astel in Japan, while
Samsung Electronics had already introduced analog TV in its mobile
handsets in Korea back in 1999. These functions were just nice add-ons
without any synergy with the mobile Internet. The new wave of handsets
with analog receivers, however, will trigger an interesting convergence
between the old analog media content providers and the mobile industry.

KDDI will introduce handsets that are able to receive FM radio and
further exploit the highly successful real-music download service
"chaku-uta." While listening to radio programs, KDDI痴 customers can
see so-called "Now on Air" information through the mobile Internet
channel. With a simple click on a link, they can download real-music
and set the file as chaku-uta. As KDDI targets the youth segment, we
expect a big potential for these type of services.

Analog TV will be introduced by Vodafone in December on NEC handsets.
Interactive TV voting and questionnaires will be the first services
to be launched through the mobile channel, followed by TV shopping.

The Japanese electronics industry also has mobile digital TV on its
roadmap. Matsushita (Panasonic) announced a digital TV receiver packaged
in an SD-memory card that fits into mobile phones. In addition, Sony
has miniaturized a digital TV receiver module that can be packed into a
memory-stick. As both companies have a strong position in the handset
industry, we expect digital TV to arrive on mobile phones within a
year, adding more mobile entertainment for the end-user.

-- Arjen van Blokland

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

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