WW-58 -- 504-Series i-mode, infoGate and JASRAC: There's a Lot Happening in Tokyo this Month

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

Issue No. 58
Monday, May 27, 2002
Tokyo

INDEX

+++ Viewpoint: 504-Series i-mode, infoGate and JASRAC: There's a Lot
Happening in Tokyo this Month

+++ Noteworthy News

+++ Events (Advertisements)

+++ Subscriber Statistics, Corrections, Credits, Administrivia

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+++ Viewpoint: 504-Series i-mode, infoGate and JASRAC: There's a Lot
Happening in Tokyo this Month

NTT DoCoMo finally brought out the 504-series i-mode phones last
Friday. They're beauts, and will go a long way to establishing some
healthy competition for the Movie Sha Mail (2G) models that J-Phone
has been using to kick market-share butt over the past few months. Big
D's 504s will also stack up nicely against KDDI's 3G handsets. Sure,
the 504s' download speed -- while three times what you get on older
i-mode handsets -- is still only 28.8Kbps, versus KDDI's 144Kbps
(nominal).

But the 504s have an enhanced Java environment (you can save up to 200
i appli Java programs), can be connected to a Sony PS2 game console
and feature an infrared sensor enabling subscribers to make purchases
and authenticate pre-registered credit card information (which will help
the cellphone replace credit cards and some ID cards in this country).
There's also going to be a camera-phone model to compete (albeit a
year late) with J-Phone's Sha Mail system. Wow!

In addition to re-establishing hardware competitiveness (note we
didn't say "dominance" -- the KDDI 3G models are still pretty cool, we
think) -- we've started hearing more and more rumors this month about
DoCoMo's plans for infoGate, the carrier's everything-other-than-i-mode
portal.

The basic plan is to group DoCoMo's current offering of some 30-plus
wireless services into two major categories: i-mode will continue to
cover off all consumer-focused wireless Internet content and service
offerings, while infoGate will comprehend business-focused services.

While simple in concept, a significant amount of reconfiguring is
required, and it appears that not all the kinks have been worked out
yet.

For example, we heard one unconfirmed comment that the M Stage
Visual and M Stage Audio streaming content services -- currently
offered via the dedicated (and, in our opinion, ineffectual) "Eggy"
and a couple of other PHS devices (and NOT i-mode) will come under the
infoGate business portal, primarily because everything streaming will
be lumped with FOMA, which is a business service in DoCoMo's
estimation -- and not a consumer service.

For a highly credible contrarian point of view, watch this week's
Wireless Watch Video Newsmagazine interview with Takaharu Mita, who
states flat out that FOMA should be a consumer service -- particularly
considering the video conference capability (which, he thinks, reveals
too much emotion for business negotiations).

Finally, the JASRAC (Japan Society for Rights of Authors, Composers
and Publishers) annual report has come out, stating that royalties
from music downloaded via the Internet (which, in Japan, predominantly
means the mobile Internet) equaled 3.8 **billion** yen in fiscal 2001.

Like we've told you inpast issues of WW, music and ringtone download
is a big business on Japan's wireless webs and anyone who tries to
build a similar system (Hello KPN and E-Plus) should take note (and
maybe even subscribe to Wireless Watch ;-)).

--Daniel Scuka
daniel@japaninc.com

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+++ Noteworthy News
(Long URLs may break across two lines so copy to your browser.)

--> NTT DoCoMo to Introduce 504i Series for Enhanced i-mode Service
http://www.nttdocomo.com
Source: Press release, May 5

EXTRACT: NTT DoCoMo announced today that the company will begin
selling its mova N504i phone on May 29, 2002. The 504i series is the
first group of PDC-based handsets compatible with enhanced i-mode,
offering packet data transmission speeds of up to 28.8Kbps, three
times faster than the original PDC-based i-mode. They also support
Java Archive (JAR) applications of up to 30Kb and associated data of
up to 100Kb per application for rich i appli content.

COMMENTARY: The signal difference between these and all previous
i-mode phones is that the 504-series have an infrared sensor, enabling
subscribers to make purchases and verify their personal identification
(having pre-registered credit card and personal information). This
opens the door to the first true e-commerce usage of a phone in Japan,
and will start paving the way for EDY e-money-compatible models in the
future. Convenience chain Lawson is to begin a trial service from May
24th under which users can download coupons for discounts on purchases
at Lawson stores; Lawson is also thinking about making ticket sales
available under the new service.

Dai-Ichi Kosho (operator of the Big Echo karaoke chain) is also
thinking -- unsurprisingly -- about using the new handset capabilities
to allow users to pay for songs using their cellphones.

--> NTT DoCoMo's Cellular Phone with Camera Unveiled at Tokyo's
Business Show
http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=onair/asabt/news/186566
Source: Nikkei AsiaBizTech, May 22

EXTRACT: NTT DoCoMo also is exhibiting the i-shot, a cellular phone
with a built-in camera, as a reference. The details of its
specification, price and when it is to be released are not yet
available, but it is expected to have the same functions as J-Phone's
Sha-mail.

COMMENTARY: The handset is made by Sharp, the same vendor that makes
the Sha-Mail phones for J-Phone. Look for the new i-shot to be largely
similar to the J-SH51. J-Phone, by the way, will still be ahead with
the Movie Sha-Mail system.

Access the Wireless Watch Video Newsmagazine with Movie Sha-Mail
software developer Office Noa, at: http://www.wirelesswatchjapan.com

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

--> Pop Tunes Ringing up Phone Royalties
http://www.asahi.com/english/national/K2002052400401.html
Source: Asahi Shimbun, May 24

EXTRACT: Songwriters and composers are raking in big bucks thanks to
music lovers scrambling to download their favorite toe-tapping tunes
as an alternative ring for their cellular phones. Royalties collected
for music downloaded from the Internet jumped threefold in fiscal
2001, with the rise largely attributed to chakumero, or tunes used in
place of the traditional ring tone on mobile phones. Royalties
garnered from music downloaded from the Internet amounted to 3.8
billion yen in fiscal 2001, according to an annual report by the Japan
Society for Rights of Authors, Composers and Publishers (JASRAC)
released Wednesday.

COMMENTARY: JASRAC says that music fans downloaded **more than** 60
million chakumero ring tones **each month** -- making the ring tones
"a lucrative source of income for songwriters and composers." No
kidding!

--> Will Americans go for mLife?
http://www.salon.com/tech/feature/2002/05/22/mmode/index.html
Source: Salon.com, May 22

EXTRACT: But is it American enough? For many skeptics, i-mode-type
services will never take off in the US, for one simple reason: the
car. In Japan, the ubiquitous mass transit system is often cited as a
primary reason for i-mode's success. The transit system creates a
lifestyle full of 'microniches' of time. There's a lot of hanging
around nearby bus, subway and train stations, usually waiting for
friends or for transport. I-mode and its competitors have filled this
otherwise empty space with well-received services and cutting-edge
handsets -- handsets that cellphone aficionados like Matthew Hart
drool over.

COMMENTARY: An excellent story and well-written by ex-J@pan Inc
editor-in-chief Steve Mollman. Overall, his thesis of hopeful doubt is
appropriate, and lends a lot of credibility to the arguments for
AT&T's baby i-mode to develop differently than the European i-mode
spawn.

But we do take issue with one quoted source's comment in this story,
namely that i-mode took off in Japan at a time when (implying "because
of") PC Web penetration was low. The truth of the matter is that in
1999 (i-mode was launched in February 1999), PC Web penetration in
Japan was 18.0 percent -- higher than Italy and France and about the
same as in Germany -- three of the countries where the SMS phenomenon
has taken off (see link below). We would argue that the mobile Web
took off in Japan because the handsets were ubercool, the content was
simple and compelling and the carriers offered a unified service
envelope **despite** there being a lot of interest in and penetration
of the PC Web at the time.

Nonetheless, this is an excellent story and well worth reading in the
original.

Various counties' PC Web penetration rates in 1999:
http://www.1globalplace.com/CountryResearch/CountryStatistics.asp?countr...

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--> Vodafone Sheds Teeny-Bopper Image in Japan to Lure DoCoMo Users
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20
News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=
ad_right1_topfin&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=
APPGOBBY1Vm9kYWZv
Source: Bloomberg, May 27

EXTRACT: A Japanese executive holds back tears as he watches his
infant son take his first step -- all by watching a video on the
screen of his mobile phone. The Vodafone Group's latest ads in Japan
feature clean-cut, young professionals exchanging video clips using
handsets with built-in cameras. Gone is Norika Fujiwara, the
model-actress whose appeal helped make the product of Vodafone's
J-Phone a hit among the country's teenagers. The campaign is a sign
that Europe's largest wireless phone company is courting the
traditional customers of Japan market leader NTT DoCoMo as it tries
to boost the No. 3 operator's 17 percent market share. Advertising
executives say the image shift won't be easy.

COMMENTARY: J-Phone has undergone a massive reorientation since
Vodafone took over, and the transformation isn't done yet. Note that
J-Phone added 9 percent fewer new users last month than the
year-earlier and its subscribers don't spend as much as DoCoMo or KDDI
users -- J-Phone's ARPU is about 7,900 yen per month, versus more than
8,000 yen for both competitors. The company has to drop the
teeny-bopper image and appeal to business users, or die. Or rather,
the company has to appeal to **both** the teeny-boppers and business
users -- and it has to do so on an advertising and marketing budget
that equals mere pocket change (i.e. about 1/3) of DoCoMo's.

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** Here's the program lineup for the next two weeks:

May 27 -- Takaharu Mita is just a regular guy with a DoCoMo
3G videophone -- but like many early-adopters, he's got no
one with whom to hold video calls. In March, he posted his
number on his FOMA Diary Web site and invited the world to
call -- anytime. Well, the world responded and Mita-san has
got a lot to say about videophones, Big D and how society's
gonna change...

June 3 -- WiredPocket is a US-based, mobile software
startup focusing on the enterprise space. That's fine for
over there, but it's just a tiny slice of the primarily
consumer market over here. So why in heck would WP open a
Japan office? And have they really got a chance?

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

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

+++ Events (Advertisements)

Carriers World Japan 2002
Tokyo, Japan
10-11 July 2002

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players, Japan is experiencing tremendous interest from global
carriers trying to get a foothold in this once monopolized telecom
market. Recognizing the revenue and competitive potential of the
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The event will present road maps to help you navigate your way
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For more information, visit us at:
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+++ Sign of the Times

A Woman and her Picture-Capable Keitai
Access the link below to see what someone actually does with a
Sha-Mail picture-mail handset.
http://www.amysanders.com/sister/keitai/keitai40.html

"Mobile email saves polar explorer's life"
http://www.vnunet.com/News/1131965
A mobile Internet connection has saved the life of a British explorer
trapped on an ice flow near the North Pole. David Mill emailed
Canadian rescuers and sent them a digital picture of a runway he had
cleared in the ice with his sledge. After clearing a site as best he
could, Mill emailed the authorities, attaching a digital picture of
what the site looked like so the pilot would be able to find him.

If he'd had a GPS handset, the Canadian Forces rescue plane could have
found him in no time! Why doesn't KDDI have a sales office in
Inututuk?

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

WIRELESS WATCH EMAIL NEWSLETTER SUBSCRIBERS
2,445 as of May 26, 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
http://www.video-link.com

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