WW-46 -- New York, New York! or, Whither Japan's Wireless Software Industry?

=====================================================================
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
=====================================================================

Issue No. 46
Monday, March 4, 2002
Tokyo

INDEX

+++ Viewpoint: New York, New York! or, Whither Japan's Wireless
Software Industry?

+++ Noteworthy News
--> NEC and Telecom Firms Eye Tie-Up as Internet Provider
--> New J-Phone Handsets Will Email Video
--> DoCoMo Goes West in Global Mobile Push
--> Access Lets Users Try New NetFront v3.0 PDA Browser for Free
--> NTT to Start i-mode Services in US

+++ Events (Advertisements)
ACCELERATED BRANDING ROUNDTABLE
Japan and international marketing strategy
March 13th 2002, Tokyo

JAPAN SMALL COMPANY INVESTMENT CONFERENCE
New York City, March 12, 2002

+++ Sign of the Times
Rescued from Snowy Fate by Keitai Mail

+++ Subscriber Statistics, Corrections, Credits, Administrivia

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+++ Viewpoint: New York, New York! or, Whither Japan's Wireless
Software Industry?

Initially, the volume and scope of last week's news reconfirmed our
belief that Japan is No. 1 in all things mobile. First, on March 1,
Big D went public on the New York and London exchanges (President
Tachikawa rang the opening bell in New York), and in Tokyo, J-Phone/
Vodafone started selling their new "Movie Shamail" video-enabled
handset (see second news item below).

J-Phone also opened their new packet-switched network, allowing
subscribers to access enhanced, 6,000-character mail, 12-KB-page
downloads and 100-KB Java apps, all at 28.8-Kbps data speeds. Later,
there were rumors that Sony Ericsson is to launch a new, color-screen
phone by tomorrow (no word on which network). Wow!

Finally, we read (with some smug chuckles...) David Pringle's story
in the February 21 edition of the Wall Street Journal, "Europe had
Decisive Wireless Lead, but Lost it to US." Pringle details how
European software, application and service developers gave up first
spot in the wireless Internet software industry to American companies
due to, among other factors, WAP's failure and the massive spectrum
debts. Pringle wrote:

The latest attempt to turn mobile phones into pocket
computers that can download stock prices, music and
video is based for the most part on US technology.

Instead of traditional mobile-phone technology, Europe's
strength, the next step is coming from the Internet,
where the US dominates. As a result, the use of Internet
standards, such as Sun Microsystems Inc.'s Java, is making
the mobile phone market more accessible to US software
developers.

We knew, of course, that Pringle left out mention of Japan's software
companies since, as everyone knows, they are light-years ahead of the
Americans, and need no mentioning.

But we had a rude shock last Friday.

We went to the CTIA Wireless 2002 trade show site
(http://wireless2002.ctsg.com/) to check how many Japanese companies
would be attending. Billed as the "largest and most highly attended
wireless show in the telecommunication and computing industries," we
figured it was a no-brainer that Japan's wireless Internet players
would be out in droves, since to make it big means, ultimately,
making it in the US.

We expected to find the likes of Cybird (content aggregator), Zentek
(i-mode keitai emulator for developers), Access (i-mode
microbrowser -- they even have a US subsidiary already!), APAS
(interface builder for J-Navi system), Flexfirm (content database
management platform), Layer8 Technologies (ring tone automation
tools), Faith (music and ringtone standards), Dwango (networked Java
games), iMobile (wireless tools), Tsutaya Online (mobile marketing),
Digital Garage (mobile ecom systems), Office Noa (video codec used by
J-phone on 2.5G), among many, many others.

Heck -- we were even whistling the tune to "New York, New York," as
we scanned down the 790-plus listing of CTIA attendees.

But, other than plain ol' stand-bys DoCoMo and Hitachi (booths
1269 and 2884, respectively, in case you're wondering), we didn't see
a single Japanese wireless software house on the CTIA list. None.
Nada. Zip. The big fat goose egg. We were disappointed, to say the
least.

While we still think Japan is leading the way in the wireless
Internet, it's clear that the companies making the wireless
revolution happen here are going to face a tough battle to expand
overseas. And to the extent that America's software industry has a
lock on all things Internet, Japan's wireless developers had better
get proactive and globally minded pretty darn quick if they're to
have any success in the US, Europe or elsewhere that i-mode roams.

Japan's wireless software companies have the lead now; we hope they
don't blow it.

Herewith, we present the "Overseas-Minded i-mode Developer's Tune"
(hum to the tune of "New York, New York"), with apologies to F.
Sinatra:

Start spreading the news, I'm leaving today
I want to be a part of it -- i-mode, i-mode
These vagabond geta, are longing to stray
Right through the very heart of it -- i-mode, i-mode

I want to wake up in Seattle and New York
And find I'm king of the hill -- top of the heap

These Tokyo blues, are melting away
I'm gonna make a brand new start of it -- on old i-mode
If I can make it there, I'll make it anywhere
It's up to me -- i-mode, i-mode

--Daniel Scuka
daniel@japaninc.com

PS. We neglected to mention last week that not only did the Canadian
men's ice hockey team win Olympic gold, but that the women's team
also took the top spot. Apologies for leaving this out. Canadian ice
hockey rules.

===========================ANNOUNCEMENT==============================

WIRELESS WATCH STREAMS!

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 program line-up for last two weeks:

March 4 -- There's one thing Japan's carriers don't do
terribly well: sell wireless data and IT services to the
enterprise. But then there are mobile 'virtual' network
operators. We speak with Dr. Seiji Sanda about his MVNO,
his new v100 data card service, and implications for
GSM/GPRS operators everywhere.

Feb. 25 -- On the mobile Internet, money sounds like ...
ringtones! We talk to Java music developer (and editor of
J@pan Inc's Music Media Watch newsletter) Steve Myers about
audio formats, musical Java games, and how much money is
being made (a lot).

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.

http://www.video-link.com/wireless/index.asp
=====================================================================

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

--> NEC and Telecom Firms Eye Tie-Up as Internet Provider
http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20020227a7.htm
Source: Japan Times, February 27

EXTRACT: NEC has begun talks with NTT and two other major telephone
carriers to create an Internet service coalition, sources said. NEC
is negotiating with NTT Communications, KDDI and Japan Telecom to
launch an alliance that would be known as Japan Online (JOL). The
alliance would not be a merger or integration, but would give the
Internet service providers a combined 10.8 million subscribers, they
said Monday.

That would exceed the estimated 7 million that would result from a
merger between Sony and ISP Nifty, a subsidiary of Fujitsu. Sony is
pursuing talks with Fujitsu to acquire Nifty.

COMMENTARY: The largest ISPs in Japan are the three wireless
operators, and it's clear that the traditional wireline carriers are
feeling the competitive heat. NEC and the three other carriers hope
that a merger of some sort will help them boost their online ad
revenues. It would also give them more sway in acquiring and
developing content. If the JOL and So-Net/Nifty tie-ups come to pass,
Japan's Net portal industry would result in the following lineup:

No. 1 NTT DoCoMo i-mode 30.8 million
No. 2 JOL 10.8 million
No. 3 J-Phone/Vodafone J-Sky 9.5 million
No. 4 KDDI EZweb 9.2 million
No. 5 So-Net/Nifty 7.0 million

--> New J-Phone Handsets Will Email Video
http://globalarchive.ft.com/globalarchive/article.html?id=02030100175
8
Source: Financial Times, March 1

EXTRACT: J-Phone is launching a new service today that will enable
users to take short video clips with a camera-embedded mobile phone
and send them to other mobile phone users. The service, known as
"movie shamail," comes on the heels of its popular photo service
using camera-embedded phones, known as "shamail." Both are being
watched closely by mobile phone operators for their potential to
become winning applications for advanced 3G services.

COMMENTARY: Sha mail has been J-Sky's cash cow for the better part of
a year now, and shows no sign of slowing down. With the addition of
the movie shamail service, both J-Phone and KDDI will have working,
revenue-generating video services running on their existing cellular
2G systems while DoCoMo is struggling to build out its 3G system and
win converts. Note that KDDI and DoCoMo services are
download-and-watch systems; only J-Phone's is a record-and-forward
system.

Notably, J-Phone has said that it does not expect to expand ARPU in
the future, despite the current popularity of its 2G image and video
services and the introduction of 3G services later this year. In last
week's conference call, J-Phone also said:

** It plans to target the corporate market through a direct sales
channel effort
** 3G will be a "soft" launch, with single-mode handsets (until now,
the company has said the launch would be with dual-mode models)
** It plans to raise its content fee from the current 12 percent
(but i-mode's is 9 percent)
** It will consolidate the handset fleet from 35 to 23 (including
3G)

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--> DoCoMo Goes West in Global Mobile Push
http://uk.biz.yahoo.com/020301/80/ct865.html
Source: Reuters on Yahoo, March 1

EXTRACT: Japan's top mobile phone operator, NTT DoCoMo, made its
debut on the New York and London stock markets on Friday in a bid to
raise its profile as it prepares to launch advanced mobile services
worldwide. NTT DoCoMo hoped to forge partnerships with local
operators in the regions to roll out its hit i-mode mobile Internet
access service and told Reuters it was talking to potential partners
in Spain, Italy and France. DoCoMo plans first to introduce i-mode to
Germany, Belgium and the Netherlands in the next two months through
partner KPN Telecom.

COMMENTARY: Amazing. It's got to take a lot of chutzpah to pour
billions of yen into AT&T Wireless, KPN and Hutchison Hong Kong,
write down significant portions of this investment due to the
partners' economic woes, then turn around and offer shares for sale
on the London (denominated in yen, no less) and NYSE exchanges while
fostering baby i-modes in Holland, Belgium, Germany, Italy, France,
Spain, the UK and the US. If there's another carrier anywhere to
match these guys, we'd like to know which one.

--> Access Lets Users try New NetFront v3.0 PDA Browser for Free
http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=
onair/asabt/moren/172070
Source: Nikkei AsiaBizTech, February 28

EXTRACT: Access started offering people the chance to try out its new
advanced browser software -- NetFront v3.0 for Pocket PC -- for a
free trial period that began on February 20. Access has developed the
new browser to run on PDAs that use Microsoft's Pocket PC and Pocket
PC 2002 operating systems. The trial version of the browser can be
obtained by accessing http://www.access.co.jp/ppc/ where 45-day
licenses are available. The Pocket PC OS comes with a standard
browser called Pocket Internet Explorer, but in certain ways -- for
example, it can only handle content written in HTML 3.2 or previous
versions -- it is less usable than the browsers that most people are
used to using with their PCs.

COMMENTARY: The new NetFront browser is compatible with HTML 4.01,
cHTML, xHTML, CSS, JavaScript 1.5 and Dynamic HTML. In other words,
it's just like your desktop browser. We won't see this one on cellys
anytime soon, though. It needs a 206-MHz StrongARM proc (like on the
latest PDAs) and eats up 2MB (3MB is recommended) of ROM memory just
to be carried onboard (it needs between 8 and 11MB -- 13MB
recommended -- of RAM to execute).

===========================ANNOUNCEMENT==============================

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
inbox.

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

--> NTT to Start i-mode Services in US
http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nn20020303b3.htm
Source: Japan Times, March 3

EXTRACT: NTT DoCoMo president Keiji Tachikawa said Friday that the
company plans to launch its i-mode Internet-capable mobile phone
service in the United States before the end of this year.

COMMENTARY: DoCoMo needs to fashion the baby i-modes using the most
open and widely accepted standards that it can -- this is the only
way it can achieve wireless platform domination similar to
Microsoft's on the PC.

Characteristics like video and audio codecs, Java, mail and sound
all have to conform to Net industry standards. Therefore, Japanese
content, service and application (CAS) developers should presumably
have a leg up on the rest of the world when it comes to arriving
overseas on DoCoMo's coattails with ready-made software that can run
on i-mode and be deployed quickly (time to market seems to be rather
vital in getting these baby i-modes running and viable).

But so far, the i-mode system in Japan hasn't conformed to any
standards (other than Big D's own). Is this the reason why the CAS
developers are so reluctant to move overseas? (See Viewpoint above.)

+++ Events (Advertisements)

Economist Conferences presents:

*********************************************************************
ACCELERATED BRANDING ROUNDTABLE
Japan and international marketing strategy
March 13th 2002, Tokyo
*********************************************************************

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+++ Sign of the Times

Rescued from Snowy Fate by Keitai Mail

--> Seven skiers who got lost in the snowy mountains of
Niigata Prefecture Saturday were rescued early Sunday
morning after sending a distress email message, police
said. The group began skiing on the slopes of Mount Hanare
at around 9 AM, Saturday, but they soon became lost in the
rugged mountain ranges, police said. One of members used
his portable phone to send an SOS email message to a friend
appealing for help. The friend in turn alerted Niigata
Prefectural Police.

"Email Message Saves 7 Missing Skiers,"
http://mdn.mainichi.co.jp/news/20020303p2a00m0dm002000c.html

==============================================================
+++ Subscriber Statistics, Corrections, Credits, Administrivia

WIRELESS WATCH EMAIL NEWSLETTER SUBSCRIBERS:
1,986 as of March 4, 2002

WEB PAGEVIEWS:
9,482 during 1 January - 2 March (155 PV/day)

WW VIDEO STREAMS:
3,796 (for 424 hours) during 1-28 February (908 mins/day)

STAFF
Wireless Watch newsletter and Wireless Watch Video Newsletter
researched and hosted by:
Daniel Scuka (daniel@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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