WW-44 -- Can Japanese Carriers Really Make the Phone an IT Sale?

J@pan Inc Magazine Presents:
Commentary on the Business of Wireless in Japan

Issue No. 44
Monday, February 18, 2002


+++ Viewpoint: Can Japanese Carriers Really Make the Phone an IT Sale?

+++ Noteworthy News
--> J-Sky to Support 28.8-Kbps Packet Communication, Enabling Video Exchange via Cell Phones
--> Camera-equipped Keitai Scoop: SH6XXi
--> DoCoMo to Test Streaming Ads
--> Mitsubishi Electric Developing 3G Base Stations

+++ Events (Advertisements)

Economist Conferences presents:
Japan and international marketing strategy
March 13, 2002, Tokyo

2002 Asian Venture Forum/Japan
The Four Seasons Hotel, Tokyo
March 4-6, 2002

MKI Chit-Chat Night
Thursday, February 28, 2002, 19:00 start

+++ Sign of the Times
This week, we heard that...

+++ Viewpoint: Can Japanese Carriers Really Make the Phone an IT Sale?

A few issues back, Viewpoint focused on Vodafone's entry into Japan,
and we concluded this would be one reason for NTT DoCoMo to worry,
given the foreigner's (assumed) capability in corporate sales (see
link to WW No. 42 below).

It's widely acknowledged by many industry watchers here that the
Japanese carriers' efforts at targeting corporate sales are
rudimentary at best.

To be fair, a major factor is Japanese corporate customers' relative
newness at integrating wireless platforms into their existing IT
infrastructure. Even if DoCoMo, J-Phone, KDDI, DDI Pocket, and the
others offered sophisticated enterprise services and solutions, it's
problematic whether corporate customers would go for them.

That particular Wireless Watch issue generated more comment than any
recent. One respondent replied from Belgium:

My colleagues in Europe would be very amused by your
article. They have been screaming and shouting at
Vodafone for two years to get it to offer the service
you describe. Most companies in Europe want pan-European
services for voice and data; this the Vodafone Group
refuses to provide. It should be able to offer them
almost globally, but still you have to buy country-by-
country. GPRS is still without roaming! Vodafone continues
to operate a series of national companies.

While we stand humbled if not exactly corrected, it's clear that
according to some, Vodafone and other market heavyweights fare
little better than their Japanese colleagues at offering unified
wireless data services and solutions.

But we were right in at least one regard, and that's that the
Japanese carriers are particularly bad at corporate sales. Another
respondent, a long-time Japan hand and ex-IBM manager, sent in
additional comments supporting just this point, some of which are
extracted below:

No mobile operator in the world has discovered the right
formula to deal effectively with the business market.

In Japan, NTT DoCoMo would have us believe that they have
a successful business segment -- it is not so. J-Phone
does not even pretend to address the business market; they
are most successful in the teenybopper area. Much discussion
takes place in Japan around the likelihood that now that
Vodafone is in control of J-Phone they will import their
successful business market strategy to J-Phone. This theory
is flawed, however, as Vodafone does not have a successful
marketing approach to business anywhere.

With the introduction of mobile data capabilities, mobile
operators must sell to the CIO and MIS staff. Selling to the
MIS community within a large company is an overwhelming
challenge for those not imbued in that market's ways. Idle,
pre-meeting chitchat is not about football, but about
Microsoft! In considering a purchase, the customer
traditionally undertakes a level of technical research
unknown in most industries, and the vendor's sales team must
be able to participate credibly in that process -- in fact,
sales success is often predicated more upon the quality of
that participation than on the characteristics of the
product on sale.

The mobile operators [have] a variety of responses. The most
prevalent seems to be to adopt a posture of frozen terror,
perhaps accompanied by a redoubling of their efforts to find
a killer app for the consumer market.

Whither Japan carriers?

We agree with the proposal that the two most realistic approaches
are, (1) for carriers to develop relationships with systems
integrators and value-added resellers already operating in the MIS
market, and (2) for carriers to encourage the creation of Mobile
Virtual Network Operators who specialize in servicing the enterprise

NTT DoCoMo, to its credit, has already said it'll look seriously at
the first. In the coming weeks, we'll see if we can tap J-Phone and
DoCoMo to figure out their plans.

Unfortunately, DoCoMo's attitude with respect to the second solution
is far less enlightened. Granted, we haven't seen any recent
pronouncements, but last September, DoCoMo CEO Keiji Tachikawa said
in an interview that, "in order for us to work with MVNOs, we'd have
to have lots of extra bandwidth available, and we will barely have
enough even for our own FOMA service; there's just no bandwidth to
spare for MVNOs."

In the meantime, Japan's only MVNO is leasing bandwidth from DDI
Pocket, a PHS carrier (which doesn't really make that much profit
due to usurious POTS access fees for the PHS base stations charged
by fixed-line ISDN provider -- surprise, surprise! -- NTT).

We hope that as FOMA expands, and the network is debugged, DoCoMo
can find a little spare bandwidth to resell; they'd be doing
themselves, the market, and the customers a big, fat favor.

--Daniel Scuka

CEO Claims NTT DoCoMo has 'No Bandwidth to Spare for MVNOs,'
September 11/01

Wireless Watch No. 42 "Be Afraid, DoCoMo... Be Very Afraid"



We now produce a weekly streaming video version of the Wireless
Watch newsletter, courtesy of the media gurus at Video-link.com.

Here's the last two weeks' program line-up:

Feb. 18 -- Big D's 3G network is novel for more than just
videoconferencing or data speed. Now, Japanese handsets
have smart cards too. Wireless Watch talks to the smart
card maker about W-CDMA/GSM roaming, applications, and
why you need smart cards on FOMA.

Feb. 4 -- Japan is the land of keitai eye candy, and this
week we take a sneak peek at the latest FOMA, J-Phone, and
KDDI pocket rockets. We send @Sha-mail picture mail, watch
EZmovie, and videoconference at 3G speed. We also asked
local expert Giles Richter, What drives handset feature

We'll post the latest webcast in various streaming formats each
Monday evening, around 17:00 JST.

Tell your friends, burn your bandwidth, and log on to the inside
story with the Wireless Watch Video Newsletter.



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

--> J-Sky to Support 28.8-Kbps Packet Communication, Enabling Video
Mail Exchange via Cell Phones
Source: Nikkei AsiaBizTech, February 13

EXTRACT: J-Phone announced that its J-Sky browser-phone service
would start supporting packet communications as of March 1. A
handset for packet communications also will be launched the same
day. The packet communications fee for this new service will be
JPY0.3/per packet (128 bytes) and the basic monthly fee will be
JPY300, both equal to NTT DoCoMo's i-mode. The first handset geared
for this service is Sharp's SH-51, the world's first handset capable
of editing and sending video mail.

COMMENTARY: J-Phone will also launch its new 'Super Mail' and 'Movie
Sha-Mail' services. Super Mail enables subscribers to send and
receive 6,000 double-byte characters per message (max: 12KB), and
Movie Sha-Mail, an evolution from the hugely popular @Sha-Mail
picture mail service, enables the exchange of video clips by mail.

Notably, the video clips (max: 15 KB -- about 5 seconds at 80x60
dots) can be edited right on the handset, and the system will use
the 'Nancy' codec developed here in Tokyo by Office Noa Inc. We
heard the frame rate is about 10 fps. The new packet system will
enable 28.8Kbps downlink and 9.6 Kbps up; DoCoMo is planning to
upgrade its 2G PDC packet speed to 28.8Kbps (from 9.6Kbps) later
this spring. Other improvements in J-Sky:

** Increase maximum page size/download image size to 12KB from 6KB
** Increase Java download limit to to 100KB from 50KB

We think this is a significant improvement in the J-Sky service and
J-Phone's PDC network. It offers proven, significant revenue
potential with only a modest outlay to upgrade the network (Ericsson
was the infrastructure vendor).

--> "Camera-equipped Keitai Scoop: SH6XXi"
Softbank Publishing
Source: "Otona no i-mode" magazine, Vol. 2, Page 5, February 9

EXTRACT: We've obtained information that DoCoMo will finally release
a camera-equipped cell phone, to be produced by Sharp (rough

COMMENTARY: This is one of the rare occasions that DoCoMo will
launch a major platform upgrade (and with a premium content
service!) using a non-Big-Four-maker handset. Clearly, Sharp is
establishing itself as Japan's (and, by extension, the world's)
leader in camera-equipped handsets. No launch date revealed.

DoCoMo's SH6XXi model (name to be confirmed) appears to use the same
CMOS sensor as Sharp's hypersuccessful J-SH51, sold by J-Phone. It
holds 200 received mail messages, 50 unsent drafts, and up to 40
ring tones (chakumero). Other specs:

** 91g
** 48Wx95Hx22D mm
** 65,526-color GFC display
** 32-voice polyphonic sound
** Harmony Silver, Pink Double, Hard Black
** 500 hours standby/140 hours continuous talk


J@pan Inc magazine produces three other newsletters:

** Music Media Watch (MMW); Tuesdays, A brand-new addition to J@pan
Inc's collection of weekly newsletters. MMW provides in-depth news
and commentary on the major developments in Japan's fascinating and
fast-moving music media industry.

** J@pan Inc Newsletter (JIN); Wednesdays -- A weekly digest of news
and commentary focusing on technology and business in Japan. JIN is
a useful way to keep abreast of events without having to leave your

** Gadget Watch (GW); Thursdays -- Looks at the latest gadgets being
rolled out in Japan and is the perfect newsletter for gadget freaks!
Note, however, that we're not responsible for any cases of 'Japan
gadget envy' that develop; in many cases the products you'll read
about are available only on these shores.

Subscribe, unsubscribe, and find out more at:

We don't sell our lists to spammers, so breathe easy.

--> DoCoMo to Test Streaming Ads
Source: allNetDevices.com, February 15

EXTRACT: Japanese wireless powerhouse NTT DoCoMo and two other
companies said Friday that they are launching field trials of
wireless streaming advertising. DoCoMo will work with Dentsu and
ActiveSky in the tests, which will start Saturday and will run until
March 9. The tests will be conducted in the Tokyo area and will
incorporate streamed interactive video to individuals who agree to
participate. The companies said that 210 people between the ages of
18 and 35 will participate.

COMMENTARY: Participants will use wireless-enabled Sharp Zaurus
handhelds that incorporate technologies from the three companies.
The trial ads will comprise 15-second streams, and trialers will be
polled at the end of the trial to judge the effectiveness of the
ads. In comparison, DoCoMo's i-motion video service on the 3G FOMA
network uses downloaded clips that must be entirely received at the
handset prior to viewing.

If these streaming ads can be ported to cell phones and combined
with a prize or reward to the viewer (click on a link, get a coupon,
enter a contest, et cetera), we think that keitai surfers here will
go nuts. Just imagine a 15-second GLAY clip that offers a discount
on purchasing their latest album at the end... the packet usage
will be off the chart!

--> Mitsubishi Electric Developing 3G Base Stations
Source: Reuters on Yahoo, February 17

EXTRACT: Mitsubishi Electric Corporation, Japan's third-largest
cellphone maker, said on Monday it was developing base stations for
3G mobile phone systems. "It is our hope that we will be able to
sell such systems but we are not at a point where we could announce
any concrete plans," a company spokesman said, denying a weekend
report in the Nihon Keizai Shimbun business daily that development
work was complete. He also played down a Nikkei report that the
company was in talks with the Japanese unit of Lucent Technologies
about possible cooperation in marketing base stations in Japan for

COMMENTARY: We've already seen Japanese handset makers trip over
themselves to establish significant tie-ups with foreign makers for
3G (the Sony-Ericsson deal is just one of several), so it's no
surprise that an infrastructure vendor would consider the same.

The Nikkei also said that Japan's market for 3G base stations would
reach several hundreds of billions of yen over the next two or three
years. MEC has supplied 2G base stations in the past, but is not
currently in the market (NEC and Matsushita Electric Industrial now
supply 3G base stations to DoCoMo).

+++ Events (Advertisements)

Economist Conferences presents:
Japan and international marketing strategy
March 13, 2002, Tokyo

Are you responsible for building global brands in Japan? Hear case
studies from international success stories and local marketing
dynamites including: Amazon.com, Starbucks, Max factor, Virgin
Atlantic Airways, and others.

For details, access:


2002 Asian Venture Forum/Japan
The Four Seasons Hotel, Tokyo
March 4-6, 2002

Opportunities in Japanese Private Equity: A Contrarian View

With Japan still groping its way through the lost decade searching
for growth, yet another "recession" is barring its path. The macro
picture looks gloomy but opportunities for private equity investors
have never been brighter.

2002 AVF/Japan will explore this contrarian view on Japan. With more
than 350 delegates attending last year, AVF/Japan is a MUST-go event
for the serious Asian private equity investor.

For the latest details, please download our online brochure at:


MKI Chit-Chat Night
Thursday, February 28, 2002, 19:00 start

Come and join us for an informal telecoms-related get together.

MKI will present a bottle of Mexican beer to the first 20 persons to
say hello to Jim Tajima (sorry, but you can only say hello once!),
so don't leave the office too late!

Zest Cantina (Iikura)
Grand-Mer Roppongi 1F,
5-18-19 Minato-ku
Tel: 03-5570-6999


+++ Sign of the Times

This week, we heard that...

**One of the first European non-official i-mode sites seems to be
up, at: http://www.imodegirls.nl

** 60 percent of i-mode users subscribe to some sort of ring-tone
download service

** In 2000, JASRAC (Japan's artist's rights body that collects
license fees for ring-tones) pulled in JPY130 billion (we're not
sure if that's for all licensing or only for keitai ring tones...)

And, in this week's Wireless Watch Video Newsletter...

** mobile Java music developer Steve Myers reveals that there are 17
different audio formats in use across Japan's wireless webs and
handset models. Yikes!

1,908 as of February 18, 2002

6,933 during 1 January - 17 February 2002 (144 PV/day)

1,538 streams for 153 hours, 1-13 February 2002 (710 mins/day)

Wireless Watch email newsletter researched and written by
Daniel Scuka (daniel@japaninc.com)

Wireless Watch Video Newsletter researched and hosted by
Daniel Scuka

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

Subscribe at:

Wireless Watch online archive:

To UNSUBSCRIBE to this newsletter, click here:

For more information on advertising in this newsletter, contact:

Send letters to the editor to:

Please contact us with any problems that arise:

Copyright (C) 2002 Japan Inc Communications KK. All Rights Reserved.