WW-29 -- Expansion-slotted, Multi-networked PDAs Grab Japan

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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. 29
Monday, October 22, 2001
Tokyo

INDEX
+++ Viewpoint: Expansion-slotted, Multi-networked PDAs Grab Japan
- NTT, Honda Car Navigator Lets Drivers Send E-Mail
- INTERVIEW: Commil Seeks Bluetooth Partners in Japan
- LG Telecom & KDDI Agree on Worldwide CDMA Belt
- Japan's DoCoMo to Book Loss on KPN -- Nikkei
+++ Events (Advertisement)
+++ Sign of the Times

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+++ Viewpoint: Expansion-slotted, Multi-networked PDAs Grab Japan

An October ranking of best-selling PDAs by T-Zone, the hyper-popular
Akihabara electronics merchant, revealed a surprising fact.

Although the top-selling PDA for the period October 8-14, 2001, was
from a Japanese maker (the Clie PEG-N750C from Sony), five of the
next nine devices were from **American** PDA manufacturers
(Handspring, HP, IBM, and Compaq).

And of the four Japanese devices in the top 10, three (Sony's Clie
PEG-N750C, PEG-N700C, and PEG-S500C) use the made-in-the-USA Palm
operating system (the fourth, the Sharp Zaurus, uses a proprietary
OS). Of the six US devices, four use the Palm OS, while two are
Windows CE (Pocket PC) machines. It looks like US PDAs -- and
American-designed PDA operating systems -- gave the Japanese a run
for their money, at least during the early part of October.

Of course, there's a great deal of debate over what constitutes an
"American" versus a "Japanese" PDA. The situation is analogous to
the auto industry, where new cars comprise parts from a number of
countries, and deciding a car's providence is often an arbitrary
matter.

With PDAs, even US models from Palm, Compaq, or Handspring, the
screens, processors, memory, and other parts are often sourced
offshore. It's difficult to argue, therefore, that Japan or America
has the lead in PDA design. Palm Japan, for example, is planning to
release a Bluetooth-enabled PDA next year that has an SD-format
expansion slot. Is that an American or Japanese company? Is it
producing a Japanese or American PDA? Does use of a short-range
wireless standard developed by some Swedes and an SD slot developed
by Panasonic make the device neither Japanese nor American?

Nonetheless, there are certainly distinctions to be made between
PDAs sold in Japan and those intended to be sold elsewhere. To wit:
PDAs in Japan with user-selected wireless capability of some sort
are fast becoming ubiquitous.

In T-Zone's top 10, the three Sony Clie models can all be connected
to a cellphone for wireless access, and the Jornada 710, Sharp Zaurus,
and Compaq iPaq 3630 can all accept a PC Card- or Compact Flash-
format wireless data cards (only the IBM Workpad and the Handspring
Visor are not wireless enabled -- yet).

In the US, similar devices (Palm VII, Blackberry pager, the not-yet-
released Palm i705) tend to have the wireless capability built-in,
offering the user little or no choice in carrier, network, or
subscription plan. In Japan, most of the "American" devices (Palm
m500-series, Compaq, HP) feature expansion slots that work with
wireless data cards from NTT DoCoMo, DDI Pocket, and others, taking
advantage of this country's multi-network/multi-carrier environment.

In fact, earlier this year, Palm Japan was actively developing a
local version of the wireless Palm VII for use on DoCoMo's Do-Pa
nationwide packet-switched data network. "We had prototypes," says
Palm's vice-president for Asia Pacific, Craig Will. However, the
network bandwidth was limited to 9.6 Kbps (same as i-mode) and Palm
found that synchronizing onboard data with a PC (via cable) was just
as good.

The device was dropped, and Palm now enthusiastically pushes the DDI
Pocket Air Edge data card, which runs on a PHS network at 32 or
64 Kbps in either circuit- or packet-switched mode. "32 to 64
kilobits per second is pretty darn good for a Palm. Being on
multiple networks is what we want," says Will.

It appears that portable device makers -- Japanese and others --
have realized that providing their users with wireless capability
and, perhaps more importantly, their choice of network, is one key
to boosting their sales rankings.

--Daniel Scuka

T-Zone Sales Rankings for Desktop, Laptop, and PDA
http://www.t-zone.co.jp/etc/uresuji/pc.htm#pda

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

--> NTT, Honda Car Navigator Lets Drivers Send E-Mail
http://dailynews.yahoo.com/h/nm/20011016/wr/
tech_japan_email_dc_1.html
Source: Reuters on Yahoo, October 16

EXTRACT: NTT and Honda said on Tuesday they have developed a car
navigation system that allows drivers to send email without taking
their hands off the wheel. The system, which lets drivers listen to
their email and encode voice messages into text, will be trialed
next year. Aside from map graphics, the new system's voice function
will also tell the driver about road conditions, said Mariko Yabe,
spokeswoman for Honda. "The system will also weed out unnecessary
email when the road ahead looks too tough for the driver," she said.

COMMENTARY: Make no doubt about it: Telematics, and accessing the
Net while mobile (on wheels, that is) is one of the Next Big Things.
Stroll down any busy street on a weekend in Tokyo and you'll be able
to peer into cars and vans as they line up to wait for traffic
signals. Every second vehicle has a navi system installed (and many
have TVs to entertain the kids), so it seems like a no-brainer to
upgrade this installed base to provide Web and mail access.

This system will use NTT DoCoMo's 3G Foma network for the air link,
and will deliver area-based information in addition to custom
information and voice calling. Oddly, the press release doesn't make
reference to the Web or Internet. Is this going to be another i-mode
system, with all contents and services ensconced behind some sort of
semi-walled garden?

US-based Cellport is one smaller player trying to bust into the
Japan market with its onboard cellphone cradle system that allows
any cellphone to become the wireless link to a car's onboard
systems. See link below for J@pan Inc story.

US Telematics Player Braves Japan
Cellport Systems hopes Japan's drivers will adapt its "server and
cellphone-docking station" set-up.
http://www.japaninc.com/mag/comp/2001/07/jul01_investor_us.html

--> INTERVIEW: Commil Seeks Bluetooth Partners in Japan
http://sg.biz.yahoo.com/011016/15/1kgst.html
Source: Dow Jones on Yahoo, October 16

EXTRACT: Commil Ltd., an innovative Israeli firm that develops and
manufactures Bluetooth networks and software, hopes to be the firm
companies come to when they need advanced Bluetooth network
products, a Commil executive said Monday. Commil has identified
Japan as one of the world's leading markets for Bluetooth
technology, and plans to begin selling products here and in other
countries sometime next year.

Commil plans to launch its first product by next April, and its
commercial products will be released three to six months later.
Commil demonstrated its advanced Bluetooth networking capability at
a Bluetooth Congress in Monaco last June by transferring audio and
video between a mobile Bluetooth device and a server, using
Microsoft's NetMeeting software.

COMMENTARY: We don't think Commil is alone in its quest for Japanese
partners. We met in June with Uppsala-based Pocit Labs which was in
Tokyo on a similar mission, also with Bluetooth as the focus.
Bluetooth seems to be gaining some momentum.

Toshiba and other big names have BT data cards and are now selling
laptops with BT built-in; Ericsson, Marubeni, and West Japan Railway
said they would begin a trial service based on Bluetooth technology
at limited sites in Tokyo this year. Ericsson, Marubeni, Handspring,
Sony, HP, and others are also sponsoring the BLT trial in Marunouchi,
Odaiba, Akihabara, and on a shinkansen train.
(See http://www.b-l-t.org/e-html/top.html for more details).

But the argument remains: Where is the incentive to install and
maintain a Bluetooth transmitter? In other words, how do we make
money on this? Aside from the hassle and cost of promoting the fact
that your cafe, department store, or gas station is Bluetooth-
enabled, how will billing for content or services delivered via
a BT PAN (personal area network) be implemented? In the meantime,
the free model seems to be the one to beat, and for BT users,
that's pretty good.

--> LG Telecom & KDDI Agree on Worldwide CDMA Belt
http://sg.news.yahoo.com/011016/16/1kgn0.html
Source: Yahoo, October 16

EXTRACT: South Korea's LG Telecom and Japan's KDDI agreed Tuesday to
set up a "worldwide code division multiple access [CDMA] belt"
through a wide range of technology exchanges and marketing
cooperation. The agreement came on the heels of a May memorandum of
understanding (MOU) reached between the Korean firm and KDDI on
bilateral comprehensive cooperation.

COMMENTARY: LG and KDDI, Japan's No. 2 carrier, use the cdmaOne
(soon: cdma2000, a 3G standard) network for high-speed mobile
services in their respective countries. While the Japanese and
Korean CDMA operators have been able to run the networks,
apparently, at a profit, and both have deployed successful,
WAP-based data services, the idea of a "CDMA belt" may not hold a
tremendous amount of water if it's to extend further afield.
Australian colleagues point out that that country's CDMA network is
a disaster, with high fees and low usage. We're told that it's only
used by those who wish to have that network's greater service area
coverage.

This agreement also comes on the heels of rumors that NTT DoCoMo's
planned investment in SK Telecom (No. 1 with 10.97 million
subscribers as of August; LG is No. 3, after KT Freetel, with 4.35
million subscribers) will fall through due to SK Telecom's
reluctance to move aggressively to W-CDMA -- DoCoMo's preferred
platform.

NTT DoCoMo president Keiji Tachikawa says that should the DoCoMo/SKT
investment fall through, there are other methods for extending and
achieving DoCoMo's goals (to disseminate wideband-CDMA and
multimedia services). He thinks that in Korea, a majority buy, a
minority stake, technical cooperation, and "friendship" are all
possible. "We haven't decided which method to choose for the case of
a Korean partner. We have to continue discussion and agree on the
best choice through such discussions. But we cooperated with each
other for the standardization of 3G, and we are also providing
international roaming service together with SK Telecom today," he
said.

--> Japan's DoCoMo to Book Loss on KPN -- Nikkei
http://biz.yahoo.com/rf/011018/n18267960_1.html
Source: Reuters on Yahoo, October 18

EXTRACT: The ailing financial condition of Dutch KPN Mobile has led
its Japanese partner NTT DoCoMo to a decision to book a valuation
loss of about JPY400 billion, says the Nikkei. According to the
Friday edition of the paper, NTT DoCoMo will book the loss as an
extraordinary charge in its fiscal first-half results ended
September 30.

COMMENTARY: This is, as they say, really big news. DoCoMo acquired a
15 percent stake in KPN for some JPY400 billion last year. KPN
Mobile was to have set up a JV with DoCoMo in March to start
operation of an i-mode service in Europe. This has been delayed, and
there are no concrete plans to kick-start the JV. Also in the
spring, when KPN started reporting cash woes (it has acquired a
rather large debt load, not the least of which is due to the
European
3G auctions), DoCoMo was quick to state that it would not help bail
out its troubled partner (see April link below). Some analysts have
been predicting a write-down since May, and if this loss is correct
as reported, DoCoMo's overseas strategy would seem to be in some
trouble. To top it all off, at home, DoCoMo is starting to
experience marginal subscriber effects on its data ARPU. If the
company's September 30 results report a write-down **and** a
flattening (or drop) in data ARPU, the company will be in for a
bleak new year.

"Has i-mode Lost its Mojo?"
http://www.japaninc.com/mag/sub/2001/10/oct01_imode.html

"DoCoMo Tells Netherlands' KPN to Solve Own Woes"
http://bizns.nikkeibp.co.jp/cgi-bin/asia/frame-asia.pl?
NSH_KIJIID=128923&NSH_CHTML=asiabiztech.html

+++ Events (Advertisement)

ICA Special Networking and Round Table Event
Wednesday, October 24, 2001, 18:00-21:00
The International House of Japan (Roppongi)
http://www.i-house.or.jp/ihj_e/intro_e/index.html

"The Future of Mobile Data Communication" will be the topic of
discussion at this special networking event sponsored by the
International Computer Association. The round table discussion will
comprise some of Japan's top mobile communications experts, who will
be joined by a delegation of mobile specialists representing the
StartUpFactory, an incubator based in Sweden. Discussion topics will
include but not be limited to:

- The European vs. Japanese operator perspective
- Will DoCoMo be able to copy i-mode's success outside of Japan?
- What are the latest trends in mobile content creation and what is
the future?
- Will 3G be a flop? Who will use it for what? What are the
differences between Japan and Europe?
- Who will create and develop services of the future?
- What is the environment for European and Japanese mobile
start-ups?
- What about disruptive technologies -- like unlicensed networks
(e.g. WLAN and Bluetooth)?

Speakers will include Pekka Lundmark, managing partner at
Startupfactory and a ten-year veteran of Nokia; Kazutomo Robert
Hori, president and CEO of Cybird, a leader in the rapidly expanding
sector of content providers for cellphones; and Gerhard Fasol
(http://fasol.com/), CEO and founder of Eurotechnology, which builds
and develops Japan business for European and US corporations.

Please RSVP at the event signup page (no-shows will be charged):
http://www.ica.gol.com/signup.html
Cost: JPY5,000 members, JPY7,000 non-members
For inquiries, contact Chris Ohta at ohtac@gol.com

----------

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December 5-7, 2001 Doral Golf Resort, Miami, FL.

Join us for elite, unparalleled access to key industry information,
case studies and analysis. The Wireless Technology Summit brings you
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Access www.WirelessTechnologySummit.com/japaninc.htm for more
details.

----------

+++ Sign of the Times

Are Pics by Phone Too Convenient?

A Tokyo man has been arrested after posting a series of nude
pictures of an email pen pal ("meru tomo") because she refused to
leave her family and go live with him, police said Friday. Tadahiro
Hamagawa, 39, was arrested for criminal defamation of a 25-year-old
woman from Oita. Police said Hamagawa met the woman through a
personals site around June this year. Hamagawa prompted the woman to
buy a mobile phone capable of receiving digital pictures. The woman
complied and Hamagawa responded by sending her a series of photos of
himself in the buff. Soon afterward, the woman took nude photos of
her own and sent them to Hamagawa. In September, Hamagawa started
urging the woman to leave her husband and become his lover. Upon the
woman's refusal, Hamagawa responded by setting up a Web site
featuring the nude photos the woman had sent him. By October 10, the
day the pictures were removed, about 650 people saw the snaps.

"Jilted man posts pen pal's nude pics on Net"
Mainichi Shimbun, Oct. 19
http://mdn.mainichi.co.jp/news/20011019p2a00m0fp009000c.html

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

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