WW-55 -- European i-mode Report

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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. 55
Tuesday, May 7, 2002
Tokyo

INDEX

+++ Viewpoint: European i-mode Report

+++ Noteworthy News
--> KPN Downplays Report of Ailing German i-mode Service
--> Youth Let Their Thumbs Do the Talking in Japan
--> Operators Try Out SIM Cards For Wireless LANs
--> Softbank Group Launches Wireless LAN Service Via Yahoo! BB

+++ Events (Advertisements)

+++ Sign of the Times
--> Update from the "Who ya gonna believe? Me -- or your
lying eyes?" department

+++ Subscriber Statistics, Corrections, Credits, Administrivia

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+++ Viewpoint: European i-mode Report

It's been a long wait, but the European baby i-modes have indeed
arrived. Is this the start of another Nippon-sourced, global
technology invasion that will see Japan -- for the first time
-- assert itself in the Internet space? It's impossible to tell at
this stage -- not the least because i-mode is as much a social
phenomenon as it is a business model, and the white-coated guys who
study lab rats have yet to devise any reliable way to predict what
humans will do on a mass basis (Oh, what the backroom boys at DoCoMo
would pay for that kind of gen...). But while the cellphone
buying decisions of many are unpredictable, it's instructive to study
what at least one individual thinks of the newly birthed i-modes.

On April 24, Sam Critchley, a Briton living and working in Amsterdam,
dropped into a KPN shop to pick up a bouncing new i-mode spawn, AKA
the NEC N21i. Later, he posted his experiences and impressions on the
i-mode_group mailing list, and herewith we present an annotated,
authorised version of his post (in honour of Sam's national origins,
we've switched to British English spellings for today's Viewpoint).

"They had an NEC on a little stand," starts Sam, but adds that it was
displayed with an external power supply "to keep the battery from
running out embarrassingly in the middle of a session." Connecting to
the i-mode service is simple; when you click on the 'OK' button, an
icon briefly fills the screen to say 'Loading,' then the page
comes up.

Apparently, pages load quite fast, and the i-mode browser seems to
take only a second or so to 'process' the downloaded cHTML. "Of
course [it's] nothing like as fast as on a decent LAN, DSL, or cable
connection," says Sam. "Still, the wait for a page is only about one
second or slightly more." Except for the battery life, this sounds
pretty much like the same i-mode 'look and feel' as here in Japan.

Sam surfed through Reuters news, the ANWB traffic info site, the
Dinnersite ("seems okay"), Meteoconsult(up-to-date weather based on
region, town, or post code; "works fine"), Hotornot.com -- an online
vote-for-your-favourite-guy-or-gal service ("images of people loaded
quickly enough -- about 4 seconds [each] -- and I voted for a couple
before trying something else"), Telefoongids (white pages; "found my
own number here and of course you can call it directly from the
link"), Online Taxi (order a taxi on line; "didn't try this as I had
my bike with me already ;-) "), and Shellgeostar ("had some problems
downloading a picture of the area surrounding a street address in
Utrecht").

The ANWB organization provides a travel information service for
drivers, bicyclists and walkers/hikers. On their i-mode site, you can
view images of motorways (coloured red for traffic jams); you can
also search by road name (e.g. "A2") and see its traffic situation
from end to end.

As Sam confirms, it looks like many of the Dutch i-mode sites are
similar in form and function to those in Japan -- if leaning somewhat
more to the practical side. "There are already plenty of services; it
was easy enough to see how much data use had happened since the last
bill (updated to within the last eight hours)," he adds. Again --
similar to i-mode in Japan.

Unfortunately, Sam didn't try email, text input, SMS, or
subscribing/unsubscribing to any official sites. Perhaps a WW
reader in Europe could drop us a few notes on these aspects for a
future update?

Probably the most important aspect of Sam's report was his impression
of the cool factor -- utterly important for sparking any kind of
Japan i-mode-like hypergrowth.

Sam says the N21i has a "nice screen" -- he likes the colours (colour
scheme is customisable) -- and the bundled ringtones indeed appear to
embody cool ("it barks like a dog when your best friend calls you");
the sound quality is good. Battery life is poor; Sam used an N21i
quite intensively one evening, and had to charge it up once in the
middle of the evening, and once just as he was going to bed
("Luckily, charging doesn't take too long"). The assistant in the
shop said they're due to receive new long-life batteries (will cost
EUR35). "I will probably go and buy one," he says.

Additional points:

* The phone appears to have no data port
* Navigation is easy (with colour icon-based menus to change options)
* Screen dims if idle for a few seconds to conserve batteries (same
as NEC, Panasonic and other Japanese i-mode phones)
* Phone-based (as opposed to SIM-based) address book entries include
phone numbers, mail addresses, custom ringtones, et cetera
* You can assign images to address book entries so that, say, a photo
of your boy/girlfriend will appear when he/she calls

Sam points out, however, that there are some frustrations. He
reports:

* The N21i costs EUR199, with a EUR52 'connection fee' (that's
23,329 yen/6,096 yen respectively, surprisingly similar to Japan)
* You can't use the phone to act as a modem for a PDA or laptop, as
you can here
* 24-month minimum contract ("this is the worst news...")
* Max 5MB of data per month

There is additional information on the calling plans and discounts
versus handset costs in Sam's original post (link below), and he
later found that he could get the phone for EUR329 with a 12-month
commitment plan at EUR8.95/month.

It seems to us that overall, i-mode as provided over GSM/GPRS via the
N21i in Holland is substantially similar to i-mode over PDC-P via
most popular Japanese handsets in Japan. Sam says i-mode is fast
enough and provides sufficient functionality to "make it attractive,"
adding that, "it's kind of cool actually... a nice little colour
screen, et cetera...and a phone that tells you what the traffic's
like, what time your train runs, et cetera."

Granted, pricing, bundling, and other details are quite different,
but then these are factors determined by the local carrier and
market, not the i-mode business model. We're also keen to watch how
many i-mode sites become available on both the official and
unofficial i-mode Web.

Finally, we wouldn't worry too much about the reports we've seen on
other mailing lists and elsewhere (see first news item and commentary
below) about the slow take up of i-mode to start.

As of 1 May, the two main E-Plus shops in Berlin (Alexander Platz and
Zoo) had not sold a single i-mode phone, ("The interest seems high,
but actual sales are not happening," said Andrea Hoffmann on the
keitai-l list). But remember it took several months for i-mode to get
going here too (initially, DoCoMo only expected to gain 2 million
subscribers in **10** years). Time will tell, and we think i-mode
will be just as successful elsewhere as it has been in Japan.

--Daniel Scuka
daniel@japaninc.com

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

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

--> KPN Downplays Report of Ailing German i-mode Service
http://sg.biz.yahoo.com/020502/15/2ovit.html
Source: Dow Jones on Yahoo, May 2

EXTRACT: KPN downplayed reports in a Japanese newspaper that its new
i-mode service isn't a success in Germany. The report, published in
the Mainichi Shimbun, said KPN's German unit E-Plus is cutting prices
on i-mode-enabled handsets due to a lack of demand. E-Plus spokesman
Klaas Sandrock said the report is half true as the company is
offering customers a reduced price for i-mode handsets. The company,
however, won't comment on demand for i-mode until KPN's first-half
earnings report, due August. Under the offer, E-Plus subscribers can
switch to i-mode and buy a handset with a two-year subscription for
EUR149 instead of EUR249 that a new customer would pay.

COMMENTARY: As of April 26 (five weeks after launch), E-Plus had
about 7,000 non-paying trial customers and some 4,000 regular
subscribers. The first time that Japan's Telecommunications
Carriers Association reported i-mode subscriber figures after the
February 1999 launch was May 2000, when there were 7.1 million
i-moders. Assuming a linear growth over 15 months, this implies that
NTT DoCoMo's i-mode grew at 473,333 per month in the first year and
three months of operation. We also heard that E-Plus handset list
price was cut from EUR249 to EUR149 (versus the EUR199 that Sam
Critchley paid as mentioned above).

While there is no doubt that this is a slow start, DoCoMo has gone
through a tremendous learning curve in helping birth the Dutch and
German baby i-modes. Sure, they could have done some things better,
but getting their partner operators to start thinking 'i-mode' has
been a little like pushing on a rope. Make no doubt about it: Big D
is trying its best to make the babies a success and any lessons
learned from Holland and Germany are sure to be applied to France in
short order, as well as retroactively to KPN and E-Plus.

--> Youth Let Their Thumbs Do the Talking in Japan
http://www.nytimes.com/2002/04/30/technology/30THUM.html?ex=
1020830400&en=f7b418025b5456a3&ei=5040
Source: New York Times, April 30

EXTRACT: Leaning alone against a wall, wearing sunglasses on a rainy
afternoon, Daisuke Yoshioka is a black-jacketed image of urban
loneliness. But, for this member of Japan's thumb generation, a
cyberweb of friends is only thumb strokes away. "I get about 80
emails a day," this 18-year-old college student says, his right thumb
flicking expertly through a directory of incoming messages on the
screen of his Web-capable cellphone. "Some of my friends now only use
their thumbs for pressing doorbells, or pointing at things." "Their
thumbs have become bigger, more muscular," said Sadie Plant, author
of a new report of "On the Mobile," a study of cellphone habits of
people in eight major cities. Talking from Birmingham, England, she
said that Japan's "oya yubi sedai," or "thumb generation," was "the
most advanced in the world.

COMMENTARY: We heartily agree with professor Jeff Funk's comment that
in the US, "young people who hang out in the mall will become the
American thumb generation of the future." The wireless Web revolution
will work just as well (if somewhat slower on the upstart) in
Toronto, Toledo or Trier as it does in Tokyo. And if you're worried
about all the kids working their digits into painful new expressions
of repetitive stress syndrome, relax. This news item concludes
with the comment that so far, thumb stress is mild, partly because
"cellphone text addicts glide their thumbs across the keys, exerting
minimal pressure," according to Yasuuki Watanabe, a Tokyo
neurologist. He adds: "The number [of thumb cases he's treated] is
small; I have just seen several." (In Japan, if you lose a thumb, you
are redesignated under national labor legislation as 'heavily
handicapped.')

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--> Operators Try Out SIM Cards For Wireless LANs
http://www.eventshome.com/Manual/manualpage.asp?eventId=
7145&type=6&manualId=2614&parentId=5358&parentId=7405&parentId=
12467&parentId=12664
Source: Cardtechnology.com, April 2002 issue

EXTRACT: Japanese wireless network operator NTT DoCoMo intends to use
subscriber identity module smart cards to store private encryption
keys as part of a public key infrastructure. The PKI-enabled SIMs for
DoCoMo's third generation network will allow the operator to offer
more advanced mobile Internet services to customers, says Kiyohito
Nagata, executive manager for the DoCoMo customer equipment
development department.

COMMENTARY: This is the first report we've seen of potential
applications and technology to be deployed on FOMA's SIM
card (actually, UIM, for universal identity module). DoCoMo may issue
the PKI-enabled UIMs as early as 2003. The UIM cards are now made by
Gemplus, who is working with DoCoMo to encourage the development and
deployment of e-commerce and other applications via UIM. Clearly, if
Big D can provide subscribers with personal digital certificates
using PKI, that will give the carrier a huge boost in leading its
customers to e-com services paid for via the handset. This would
also appear to tie-in naturally with DoCoMo's Edy e-money plans with
Sony. Sony's Edy contactless e-purse may become the industry standard
in Japan, and Sony's card-issuing arm is to offer the cards at 1,400
am/pm convenience stores, resulting in about 1.4 million cards in use
by early fall (Sony has shipped 70,000 Vaio PCs with a contactless
card reader included).

"NTT DoCoMo Ramping Payment Applications"
http://www.japaninc.com/newsletters/index.html?list=ww&issue=48

Wireless Watch video interview with smart-card maker Gemplus,
February 18, 2002:
http://www.video-link.com/wireless/index.asp

--> Softbank Group Launches Wireless LAN Service Via Yahoo! BB
http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=
onair/asabt/news/183106
Source: Nikkei AsiaBizTech, May 1

EXTRACT: Softbank, BB Technologies, and Yahoo Japan will set up some
tens of thousands of access points all over Japan, so that users can
connect to the Internet using wireless LAN cards. The access points
will be mainly located around stations and restaurants where Yahoo!
BB service is provided. The charge will likely be 2,280 yen per
month.

COMMENTARY: This will be largely similar to what Boingo is doing in
the States, and BT in the UK (the press release said they were
talking with Costa Coffee, other leading retailers, and property
owners). It will cost 390 yen per month to rent the wireless LAN
cards, but Masayoshi Son said that the service will be provided for
free to schools, libraries and civic centers, and that teachers and
students would be given IDs allowing them to use Yahoo! BB email
accounts. He adds that the joint venture is ready to "provide 140,000
to 150,000 lines." We bet he didn't check with NTT East
or West first.

==========================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 last two weeks' program line-up:

May 7 -- Interview with an i-mode Contrarian, Part 1
In the first part of our Killer Interview Series with one of
Tokyo's contrarian telecoms analysts, we find out what
happens to data ARPU when price-insensitive, heavy-volume
users migrate to new services (like Java). The answer? It's
not a pretty sight, and the same may be in store for 3G.
Plus, we cover ARPU stats, compare FOMA data usage to 2G
and reveal what generates the most packet traffic (think
"self-generated content"). Our best video newsmagazine ever!

May 14 -- Interview with an i-mode Contrarian, Part 2
Next week, we finish up our Killer Interview Series and find
out how NTT DoCoMo is handling spam, a serious quality-of-
service issue. Why don't the other carriers have similar
spam problems? Maybe they're just not telling...

(We pushed the Omron interview back a week to May 20.)

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

+++ Events (Advertisements)

The International Computer Association (ICA) and the Japan-America
Society are pleased to announce a major joint networking and business
development roundtable event to be held at 6:30PM on Tuesday May 21
at the FCCJ in Yurakucho.

"The Future of Mobile Data Communication Part III"

The event will include an executive networking cocktail party, a
gourmet stand-up buffet and a roundtable expert discussion with some
of Japan and America's top mobile communication specialists.

More information on their agenda is here:
http://www.us-japan.org/jassw/programs/delegations-2002briefings.htm

Tuesday, May 21, 2002
6:15 Doors open, drinks start
7:00 Stand-up buffet
7:45 Round Table starts
8:45 Q&A
9:00 Finish

Yurakucho Denki Building, Foreign Correspondents' Club
http://www.fccj.or.jp/general/map.htm
Cost: 5,000 (yen) members, 7,000 (yen) non-members
Stand up buffet with one drink ticket included, then cash bar.

RSVP REQUIRED
If you would like to attend:
RSVP to Chris Ohta ohtac@icnet.ne.jp

+++ Sign of the Times:

From the "Who ya gonna believe? Me -- or your lying eyes?"
department:

"Our handset capability is growing gradually, but this
should be an evolution, not a revolution... 3G is a kind
of revolution, but I prefer to use 'evolution,' because
subscribers cannot use revolutionary technology -- it's
too different. Evolutionary technology, they can use.

-- Takeshi Natsuno, one of i-mode's founders,
in J@pan Inc June 2001
http://www.japaninc.com/article.php?articleID=70

"i-mode, a revolutionary mobile phone platform invented by
NTT DoCoMo -- one of the world's leading Japanese
telecommunications companies -- was first introduced in
Japan in February 1999.

-- i-mode Global web site, May 3, 2002
http://i-mode.nttdocomo.com/top.html

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

WIRELESS WATCH EMAIL NEWSLETTER SUBSCRIBERS
2,338 as of May 6, 2002

WIRELESS WATCH VIDEO
Feb 1-28, 2002: 3,796 streams (908 mins/day); 3.2 views/visitor
Mar 1-30, 2002: 4,621 streams (1,557 mins/day); 1.75 views/visitor
Apr 1-30, 2002: 4,750 streams (1,393 mins/day); 1.54 views/visitor

90-day Totals from Feb. 1:
/wireless/index.asp 6,891 (visitors)
Streams: 13,167
Mins/hrs viewed: 113,991 mins/1,899 hrs
Avg. length per visit: 16.5 mins

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

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

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

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