WW-27 -- The Numbers at the Heart of The Wireless Internet

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J@pan Inc Magazine Presents:
W I R E L E S S W A T C H
Commentary on the business of wireless in Japan
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Issue No. 27
Tuesday, October 9, 2001
Tokyo

INDEX
+++ Viewpoint: The Numbers at the Heart of The Wireless Internet
+++ Noteworthy News
- i-Mode's New Avenue of Service: Bar-Code Tickets on Screen
- NEC Expects to Become Japan's Largest Cellphone Maker This Year
- NTT Com, NTT DoCoMo to Launch FOMA-Capable VPN Service for Mobile
- Japanese Men Seek Spiritual Advice Online
+++ Events
+++ Sign of the Times

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+++ Viewpoint: The Numbers at the Heart of The Wireless Internet

The September wireless user statistics were released by the TCA
(Telecommunications Carriers Association) last week, and there are
now 65,355,700 mobile subscribers in Japan (about 7 million more
than the population of the United Kingdom).

Broken down by cellular network system (PDC and cdmaOne), September
saw an increase of 435,600 subscribers (DoCoMo and J-Phone gained
383,000 and 174,400, respectively, while KDDI/Au and Tu-Ka lost
106,600 and 15,200, respectively), and KDDI/Au gained 206,500
cdmaOne subscribers. Total subscribers for each system at month's
end came to 55,504,700 for PDC, and 9,851,000 for cdmaOne.

For the near future, Japan's cellular scene will continue to be
dominated by PDC and cdmaOne, and it will be some time (next year?)
before DoCoMo's 3G W-CDMA network gains sufficient subscribers to
make any difference. In any event, the network hadn't formally
launched as of September 30 (the trial period lasted from May to the
end of September), so the numbers above do not include W-CDMA
figures. We guess this system will be included in the October 30
report.

Speaking of 3G, there's no word on how fast DoCoMo is gaining new
users. If you're one of the few owners of a new P2101v videophone
handset but know of no one to videoconference with, you can register
at http://nooper.com/kk for that site's "Knock! Knock!" directory
service. As new subscribers get the phone, they can try out their
new toy on other (unsuspecting) P2101v owners.

Last month saw 1,386,900 new subscribers join the three dominant
wireless information systems: i-mode, EZweb, and J-Sky. These
services gained 882,000, 187,800, and 317,000 subscribers,
respectively. There are now 27,769,000 i-moders, 8,593,600
EZwebbers, and 8,574,200 J-Skyites, for a total of 44,936,800
wireless Internet users.

Note that there are substantially the same number of EZweb and J-Sky
users, but that J-Sky grew about 2.5 times more than EZweb (317,000
new users last month versus EZweb's 187,800). While we predicted
that J-Sky would overtake EZweb in August, this didn't happen; it
appears that it will in October.

PHS system users were down slightly, to 5,698,500 from 5,708,000.
But we wouldn't write off PHS just yet. DoCoMo has recently started
pushing new PHS-based services, including the M-Stage Visual system,
received via an Eggy portable video viewer, and the M-Stage Audio
service, received on a Picwalk PHS handset. Further, DoCoMo, DDI
Pocket, and several others are all pushing PHS-compatible Compact
Flash-format wireless data cards (modems) for laptops and PDAs. DDI
Pocket reports 2,420,000 users of its H"Link data card, of which
1,450,000 use the service's email system.

Whenever we see these monthly subscriber reports, we wonder how many
of the reported i-mode, J-Sky, and EZweb subscribers actually use
the services. It costs JPY300 per month to subscribe to i-mode, for
example, but that doesn't say anything about how many actually use
the service (many, perhaps, sign up, but don't send mail or surf
DoCoMo's wireless web). The carriers don't actually say how many of
their subscribers use the services.

We saw some figures from J-Phone from three months back that give
some idea. As we explained last week (WW No. 26), J-Phone says the
top ten usages (based on "Content used in the past month") by J-Sky
subscribers were: downloading ring tones (60 percent), downloading
characters (45 percent), accessing the main menu (39 percent), train
timetables (23 percent), fortunes (21 percent), games (18 percent),
accessing maps (15 percent), sports news (14 percent), dictionaries
and general news (8 percent each), and concert ticketing and
reservations (6 percent each).

Very broadly speaking, says J-Phone, each J-Sky subscriber generated
6.5 KB of email and 5.6 KB of SMS usage each day (and we guess that
includes ring tone and image attachments). On J-Sky, a typical email
message has between 70 and 110 double-byte characters, while SMS
mail messages have between 58 and 80. High school students outranked
college students -- who outranked everyone else -- in number of
email messages sent each day (6.5 messages for the high schoolers,
5.5 for the college types, and about 3.5 for all other
demographics).

These subscriber and usage figures point to a continued strong
evolution of the wireless Net in Japan, and anyone contemplating
offering mail, character, or ring tone services would be wise to
plan for increasing usage and target the youth demographic. If you
can do that, you'll have zeroed in on the heart of the mobile
Internet.

--Daniel Scuka

Telecommunications Carriers Association
http://www.tca.or.jp/index-e.html

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+++ Noteworthy News
(Long URLs may break across two lines.)

--> i-Mode's New Avenue of Service: Bar-Code Tickets on Screen
http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=onair/asabt/news/146419
Source: Nikkei AsiaBiz Tech, October 4

EXTRACT: A new i-mode application has emerged in which a bar-code is
displayed on the i-mode screen to serve as an admission ticket.
Entertainment Plus Inc. and Alan Corp. will use this for
advance-sale admission tickets for the 35th Tokyo Motor Show. The
admission tickets are available on "e+ (e-plus)," the ticket sale
site run by Entertainment Plus, via PC. When a user follows the
application procedure, mail with an original URL will be distributed
to the user's i-mode phone. A bar code can be obtained by clicking
the URL. When entering the event hall, the bar code on the i-mode
screen is used for admission. Rather than punching tickets, the
gatekeepers will use a special bar-code reader. The bar code comes
with a unique ID, and cannot be forwarded.

COMMENTARY: Alan Corp. has also been experimenting with bar-code
tickets at movie previews and other events, but it looks like the
Tokyo Motor Show will be the first practical use of this service.
This company isn't the only one looking at bar code ticket
distribution by keitai. Hiroshima-based startup Tasnet
(www.tasnet.jp) has been working with Sega to develop a system for
giving points to Net cellphone-wielding arcade visitors. The idea is
that you get a barcode sent to your keitai screen, which you can
then swipe across a reader in the arcade to get discounts. Sega will
use the collected data for marketing research. Lawson, the major
konbini chain, might also use the system, and we can see all kinds
of possible apps for this. (DoCoMo's c-mode Coke vending
machine-on-steroids also uses a point system to credit users, but
doesn't make use of bar codes.) The sweet spot may just be the fact
that when a concert- or movie-goer buys the tickets online for
delivery to their keitai, the system can also deliver -- Surprise,
Surprise! -- an ad, making the cost of the delivery self supporting.

--> NEC Expects to Become Japan's Largest Cellphone Maker This Year
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%
20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.
ht&s2=ad_right1_topfin&bt=ad_position1_topfin&middle=ad_frame2_top
fin&s=AO7ul1BVQTkVDIEV4
Source: Bloomberg, October 4

EXTRACT: NEC said it expects to surpass rival Matsushita
Communication Industrial as Japan's largest mobile phone maker this
year, boosted by the popularity of its Internet-linked folding
handset. NEC plans to ship about 14 million mobile phones
domestically in the year through March, 16 percent more than
planned, NEC associate senior vice president Ben Nakamura said in an
interview. NEC expects phone makers to sell 47 million handsets in
Japan this year, giving it a 30 percent share. Tokyo-based NEC was
the first with a folding handset featuring a larger screen, giving
users more space to read email and view Web pages. The model is
among the best selling in Japan and has been imitated by handset
makers such as Matsushita and Sony who are trying to replicate NEC's
success.

COMMENTARY: Despite the massive series of recalls that affected all
of the makers (some 2.5 million handsets in all), NEC, for one, is
forecast to report handset sales of JPY1 trillion by fiscal year's
end (March 31, 2002). NEC wasn't as badly affected by the recalls,
the biggest error occurring with its N2001 3G handsets used in the
just-ended 3G trial by DoCoMo (NEC handsets were also recalled
during Manx Telecom's 3G trial on the Isle of Man). As a result, NEC
hasn't suffered as much as Sony, Matsushita, and the other makers
(see WW No. 22 for more on NEC handset problems). Matsushita's
shares are down 78 percent over the past 52 weeks, while Sony's are
down 59 percent and NEC's are down 54 percent.

--> NTT Com, NTT DoCoMo to Launch FOMA-Capable VPN Service for Mobile
http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=onair/asabt/news/145641
Source: Nikkei AsiaBizTech, October 1

EXTRACT: NTT Communications and NTT DoCoMo announced that their
virtual private network (VPN) service, "Remote Access Line Service"
(RALS), already in operation, will support FOMA starting later in
October. FOMA is NTT DoCoMo's 3G mobile communication service that
began on October 1. RALS is compliant with PHS and cellular phone
services provided by NTT DoCoMo (for circuit/packet switched services).
With support for FOMA, users will be able to use circuit-switched
services at 64 Kbps. VPN is a service that provides a secured remote
access environment for corporate users.

COMMENTARY: This is the first hint of any sort of corporate- or
enterprise-targeted application that we've seen for 3G -- and it's
about time. Why is DoCoMo not bending over backwards to deploy
corporate services on 3G? Isn't that where the money lies?
Ironically, it appears that this VPN access service on Foma will use
the circuit-switched 64-Kbps mode, which is precisely the same speed
on the now almost decade-old PHS network.

--> Japanese Men Seek Spiritual Advice Online
http://dailynews.yahoo.com/h/nm/20011006/wr/japan_fortune_dc_1.html
Source: Reuters on Yahoo, October 6

EXTRACT: Fortune-telling sites are blossoming in this gadget-loving
nation, along with the soaring number of people using cellphones --
which offer privacy and convenience -- to surf the Web. On an
astrology site operated through wireless content provider Cybird, 30
percent of subscribers are men seeking daily readings on prospects
for business, relationships, or simply money. A recent survey showed
that of those male subscribers, most were in their forties, Cybird
said. On the mobile version of Togen Kiko, or "Journey to the World
of the Unknown," over 100,000 subscribers pay a monthly fee of
JPY300 to receive divination just by punching in their name and
gender. On the matchbox-size screen, the fortune seeker gets a daily
glimpse into the day ahead. If things look gloomy, a little
character shows up smothered in rain.

COMMENTARY: It's absolutely mind-boggling to see the popularity of
fortune-telling services on wireless. And that popularity extends to
sites that, ostensibly, have nothing to do with the future. On
Tsutaya Online's wireless sites, members can access their
fortunes while searching for videos to rent or while buying DVDs.
The service is annotated with the catch phrase, "Check your love
fortune." Snippet of free advice No. 200: Never underestimate what
will sell on wireless.

+++ EVENTS (Advertisement)

ACT Conferences presents
Mobile Messaging and Internet Applications 2001

From Wireless Email to mCommerce -- this event will take a close
look at the opportunities ahead in the field of advanced wireless
messaging. What kinds of applications are on the horizon? How will
location-based services affect mobile messaging? For more
information or to register online, go to:

http://www.actconferences.com/mmia2001/index.htm?jt
or contact: mfilomia@actconferences.com

+++ Sign of the Times

More Stupid Keitai Tricks

A man who telephoned a woman over 220 times demanding that she
become his girlfriend has been arrested after he ignored a warning
to leave her alone, police said Friday. Masashi Kimura, 37, a
company employee from Miwa, Aichi Prefecture, was arrested for
breaking the Stalker Regulation Law. Furious at his unwanted wooing,
the woman sought help from the police in mid-September. Officers
warned Kimura to stop calling the woman. He refused, however, and
the woman alerted the police again. Kimura was promptly arrested.

Source: "Pain-in-butt Stalker Rings Woman 220 Times," Mainichi, Oct. 5
http://www12.mainichi.co.jp/news/mdn/search-news/835507/pain2din2dbutt20...

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STAFF
Written by Daniel Scuka (daniel@japaninc.com)

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