WW-43 -- NTT DoCoMo Looks for Help

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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. 43
Tuesday, February 12, 2002
Tokyo

INDEX

+++ Viewpoint: NTT DoCoMo Looks for Help

+++ Noteworthy News
--> NTT DoCoMo Release FOMA 3G Revenue Figures
--> Openwave Supply 3G Multimedia Capabilities to Japan
--> NTT DoCoMo To Launch Portal Site for PDAs on March 1
--> NTT DoCoMo to Offer i-mode in Germany

+++ Events

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+++ Viewpoint: NTT DoCoMo Looks for Help

Last Monday, we told you about the one thing that no Japanese
carrier can do, and that's sell to the enterprise. Despite having
built the world's best wireless Internet systems, the carriers here
have been unable to create IT-centric, enterprise-focused sales and
marketing organizations offering not only voice services via
data-enabled mobile phones, but additional mobile terminals
(unwired PDAs and laptops, etc.), enterprise software, and related
services.

Last Friday, NTT DoCoMo president Keiji Tachikawa admitted as much
(see link below). Speaking to a conference, Tachikawa said that
DoCoMo would seek to partner with a systems integrator to help
harness the full capabilities of its high-speed 3G mobile phone
services. He added, ironically, that the carrier's existing 2,000
enterprise sales staff were "not enough" to deal with the potential
corporate market for 3G services. If a field force of 2,000 is
insufficient, we can only guess the problem is worse than we had
surmised.

Granted, Tachikawa was referring to the quantitative challenge of
serving the large number of potential 3G corporate customers in
Japan. But we also think this was a tacit admission that DoCoMo is
worried about the scope or qualitative challenge -- which is
completely unmatched to DoCoMo's (and the other carriers') expertise
in consumer sales developed to date. If otherwise, why would he
specifically state that DoCoMo is looking for a systems integrator
partner?

While Big D has already discussed such assistance with major SI
vendors like SAP and IBM (fine for overseas markets), it's clear
that they will need some significant SI partner horsepower here at
home if they're to effectively access Japanese corporates as a key
driver for 3G (one of FOMA's stated goals). If you'll allow us to be
just a teensy bit smug: We told you so!

We wonder if this presages a new range of opportunities for system
integrators, technology vendors, and platform and software providers
to do business with the troika of Japanese carriers (what DoCoMo
does, the others eventually copy). KDDI/Au, while struggling, is a
confirmed Qualcomm user, so any existing US Qualcomm partner should
be setting up office in Tokyo ASAP (Snaptrack already has). DoCoMo
is already using a range of foreign SI partners (PacketVideo, et
cetera.) UK-based Logica does significant business here with J-Phone
(they built the 2G SMS system and have the contract for the 3G
version as well). As the carriers focus on enterprise sales, will we
see more global technology brands setting up here?

If there is any doubt that Vodafone, the new owner of DoCoMo
competitor J-Phone and the world's largest cellular group (about one
in every four cellphone subscribers on planet Earth uses a
Vodafone-affiliated carrier), intend to push the Vodafone brand in
Japan, doubt no more. Take a look at the link beneath this
paragraph, and consider long and hard what will happen when the
J-Phone logo disappears, Vodafone is running the No. 2 carrier in
terms of subscriber numbers (should happen mid-2002 at the current
rate of growth), and the new British and American managers put the
afterburners on to target the enterprise market.

--Daniel Scuka
daniel@japaninc.com

NTT DoCoMo Seeks Systems Integration Partner
http://www.totaltele.com/vprint.asp?txtID=48627
Source: Reuters on Totaltele.com, February 8

<----------------------------ANNOUNCEMENT---------------------------
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investigate the hidden story of what's happening on Japan's wireless
scene. He's reported on J-Phone's hyper-best-selling cam-phone, a
firm in Shinjuku that reverse-engineers handsets, the challenges of
porting content to Japan's -- and Europe's -- wireless webs, and
more.

We'll post the latest webcast in various streaming formats each
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+++ Noteworthy News
(Long URLs may break across two lines.)

--> NTT DoCoMo Releases FOMA 3G Revenue Figures
http://www.wirelessworldforum.com/w2fnews11580.html
Source: NTT DoCoMo Press Release; WirelessWorldForum, February 7

EXTRACT: NTT DoCoMo has released figures stating its 3G ARPU was
JPY10,400 per month from October to December 2001-- around 25
percent higher than the JPY8,500 for the current i-mode service.

COMMENTARY: We're seeing what happened with the Java launch
replicated with FOMA. An initially higher usage of packets leads to
an initially higher ARPU, but this quickly dies down as the
early-adopters and intensive packet users migrate, leaving the low
packet users behind on the old service. Net result? No additional
ARPU for the carrier.

Late last year, WI Carr Indosuez wireless analyst Keiran Calder
issued a report analyzing packet usage and ARPU during DoCoMo's
trial 3G period, from May to October 2001. During this period, beta
testers used, on average, 16 times more packets than 2G PDC i-mode
users. But remember, FOMA packets are significantly cheaper than 2G
PDC packets (JPY0.02-0.002 versus JPY0.3), so the overall 3G data
ARPU was not significantly higher on FOMA than on 2G PDC. Uh Oh! We
think the planners at DoCoMo are burning the midnight oil to figure
this one out. Even if FOMA is seeing a 25-percent boost in ARPU as
this report states, we expect this to taper off back to 2G levels --
just like Java packet ARPU has.

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--> Openwave Supplies 3G Multimedia Capabilities to Japan
http://www.3g.co.uk/PR/1746.htm
Source: 3G.co.uk, February 7

EXTRACT: Openwave Systems announced that it has been enabling
wireless carriers in Japan to offer multimedia messaging
capabilities to subscribers to send and receive digital photos and
short video clips with the Openwave messaging suite.
One of Openwave's largest customers in Japan, J-Phone, announced in
January 2002 that over 3 million camera phones have shipped. The
J-Phone camera phone, which allows users to send and receive photos
through "Long Mail" service, uses the media-enabled Openwave
messaging suite including Openwave Email Mx.

COMMENTARY: It will be interesting to see how this plays out on
J-Phone's 3G system. Keep in mind that Ericsson has a global MMS
(multimedia messaging system) contract with Vodafone, but one
analyst commented that this contract only covers 11 countries and
not J-Phone or Verizon. Why do these technology contracts always
remain so hush hush until all involved can definitely claim
face-saving success, as Logica can now with J-Phone's @Sha-mail
system?

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--> NTT DoCoMo to Launch Portal Site for PDAs on March 1
http://sg.biz.yahoo.com/020207/15/2ftzx.html
Source: Dow Jones on Yahoo, February 7

EXTRACT: NTT DoCoMo said Thursday it will launch a portal on March 1
to provide a range of content and applications to users of personal
digital assistants (PDAs). The move is aimed at capitalizing on the
growing popularity of PDAs among consumers in Japan. The portal
site, called infogate, can be accessed via a browser-equipped PDA
connected to many types of DoCoMo mobile phones, including its
third-generation cellphone, DoCoMo said. Users of the service will
be able to access general information, such as news and weather, and
online applications.

COMMENTARY: In the same way that we are seeing the i-mode model
being replicated outside Japan, we're seeing the model being
replicated on additional platforms inside. Unlike i-mode on
cellphones, however, users of infogate will be able to use the
service to access customized online applications. Costs for the
service include a basic monthly fee of JPY100 plus usage fees.
DoCoMo also said that corporate users will pay extra for group
access. This isn't the first time i-mode has been replicated; NTT
East and West launched L-mode, a fixed-line version of i-mode, about
15 months ago.

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--> NTT DoCoMo to Offer i-mode in Germany
http://sg.biz.yahoo.com/020206/15/2fnx8.html
Source: Nikkei, February 7

EXTRACT: NTT DoCoMo decided Wednesday to launch its i-mode mobile
Internet- access service in Germany next month in cooperation with a
major cellular phone company there, according to Thursday's editions
of the Nihon Keizai Shimbun. In the first overseas introduction of
i-mode, which has been a smashing success in Japan, the mobile phone
giant will transfer communications technology to E- Plus, which will
then provide the service. E-Plus is a unit of Dutch firm KPN Mobile,
in which NTT DoCoMo holds a 15-percent stake. The unit commands the
third-largest market share in German mobile phone services.

COMMENTARY: Handsets will be supplied by Toshiba, which will also
supply i-mode handsets for KPN's i-mode launch in April; NEC has
also released the specs for its GSM/GPRS i-mode-compatible handset
(along with Mitsubishi and Panasonic). The surprise is that Toshiba's
models will be OEM versions supplied by Taiwan-based Taiwan EMS. Yet
another indication that the Japanese cellular giants find it tough
to compete outside of this island nation. We saw one comment saying
that Toshiba wanted to have a European strategy after the failure in
their cooperation with Siemens; looks like they've got one.

++ EVENTS

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

Edited by J@pan Inc editorial team (editors@japaninc.com)

Wireless Watch Video Newsletter produced and edited by Lawrence
Cosh-Ishii (lcosh-ishii@video-link.com) in cooperation with
Video-Link.com

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