WW-67

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J@pan Inc presents the Wireless Watch Japan Newsmagazine:
W I R E L E S S W A T C H J A P A N
Commentary on the Business of Wireless in Japan
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Issue No. 67 (Preview)
Tuesday, August 13, 2002
Tokyo

+++ Noteworthy News
--> Japan's Cellphone, PHS Diffusion Rate Tops 60%
--> Faith Buys France's Digiplug For 1st European Unit
--> Third-Generation Mobile Phones to Be Launched in China
--> Japan's Digital Content Market Up 7.3 Percent in 2001

+++ Subscriber Statistics, Corrections, Credits, Administrivia

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

--> Japan's Cellphone, PHS Diffusion Rate Tops 60%
http://sg.news.yahoo.com/020809/16/31dpe.html
Source: Nikkei on Yahoo.com, August 9

EXTRACT: The combined number of subscribers to cellular phone and PHS
(personal handy-phone system) services stood at 76.91 million at the
end of July, accounting for 60.3 percent of Japan's population, the
Telecommunications Ministry reported Thursday.

COMMENTARY: Japan may have a record here: The diffusion of cellphones
topped 60 percent of the population a mere eight years after
deregulation! Cellphone subscribers now number 71.23 million, while
there are 5.67 million PHS users. This report also said that DoCoMo,
KDDI/au, and J-Phone have 58.6 percent, 17.97 percent, and 17.96
percent subscriber shares, respectively.

The interesting fact here is that despite KDDI's huge success with
their new CDMA 3G system (over 1.64 million subs as of July 31 after
just three months), J-Phone still commands almost as much market
share. This can largely be attributed to the success of the Sha Mail
picture-phone terminals. J-Phone said today that the firm has 6
million Sha Mail users -- almost 50 percent of the overall subscriber
base. This summer, Japan is shaping up into an absolutely fascinating
market with each of the Big Three Carriers duking it out based on
differing technologies: Big D has Java all wrapped up, KDDI has a
commanding 3G lead, and J-Phone has, as mentioned, picture phones.
(But all three have ringtones -- and that's one of the biggest money
makers.)

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--> Faith Buys France's Digiplug For 1st European Unit
http://sg.biz.yahoo.com/020809/15/31g5f.html
Source: Nikkei on Yahoo.com, August 10

EXTRACT: Faith Inc., which provides downloadable mobile phone ringer
melodies, announced Friday that it has purchased Digiplug SA, a Paris
firm in the same business, The Nihon Keizai Shimbun Saturday morning
edition reported.

COMMENTARY: As we mentioned above, ringtones are huge, and Faith --
the little Tokyo ringtone maker that could -- is reaping the fruits of
riding DoCoMo's coat tails with a positive overseas expansion
strategy. The Tokyo firm paid 20 million euros (about 2.3 billion yen)
for the 39-person French company. Where'd they get 2.3 billion yen?
Like we said, ringtones are big business... This report goes on to say
that Digiplug expects to record sales of over 2 billion yen for the
fiscal year through December 2003, about four times greater than the
previous year.

Link
"Latest Ringtone Developments in Asia and the US" from J@pan Inc's
Music Media Watch newsletter
http://www.japaninc.com/newsletters/index.html?list=mmw&issue=29

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--> Third-Generation Mobile Phones to Be Launched in China
http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=onair/asabt/fw/200291
Source: Nikkei AsiaBizTech, August 12

EXTRACT: NEC Corp. and Matsushita Communication Industrial Co.
announced June 3 that they founded COSMOBIC Technology Co. a
research and development company for third-generation mobile phones,
in Shanghai jointly with Huawei Technologies Co., one of China's
leading telecom equipment makers. Third-generation mobile phones will
be put into commercial service in 2003 at the earliest in China. The
three companies founded COSMOBIC Technology to license production
technology of mobile terminals supporting W-CDMA, which is one of
three types of third-generation mobile communications standards of
Chinese mobile terminal makers.

COMMENTARY: It's already public that KDDI will be sourcing CDMA 2000
1X EV-DO (2.4 Mbps nominal download speed) infrastructure from Korea
in 2003, and now the Chinese will be sourcing 3G handsets from the
Japanese. Dare we conclude that the wireless industry is doing more
than its fair share to boost intra-Asian trade? WWJ thinks that
Japanese firms (like NEC, Matsushita and Mitsubishi) are the only
companies in the world that have W-CDMA terminal devices in
commercial production, so maybe the Chinese didn't have much of a
choice. But given the intense pride that Chinese tech companies have
been demonstrating -- in trying to localize all types of foreign
technology (including, like KDDI, 3G CDMA infrastructure from Korea),
the fact that they're going with Japanese firms for W-CDMA speaks
volumes about the development risk of working with W-CDMA technology
(COSMOBIC doesn't make terminals, hence the need for the Japanese).

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--> Japan's Digital Content Market Up 7.3 Percent in 2001, DCAJ Says
http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=onair/asabt/moren/20047
1
Source: Nikkei AsiaBizTech, August 8

EXTRACT: Japan's market for digital content for 2001 expanded 7.3
percent from the previous year to 1.6828 trillion yen, according to an
estimate made by the Digital Content Association of Japan (DCAJ). What
sustained the growth of the market was video content, including DVD
and content for mobile phones such as ring melodies for incoming calls
and stand-by screens.

COMMENTARY: This report states that sales of mobile content grew by
**184 percent** to 115.4 billion yen over 2000. In addition to mobile
and digital video content, map applications for PCs and car navi
system software saw steady growth, increasing by 23.6 percent to 30.9
billion yen from the year previous. DCAJ says Japan's digital content
market in 2002 will be 1.8872 trillion yen, expecting a double-digit
year-on-year increase of 12.1 percent. With the ongoing stellar growth
in home broadband access, the advent of 3G wireless, and the growth of
WLAN access points, we guess that this estimate is on the low side.

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+++ Subscriber Statistics, Corrections, Credits, Administrivia

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STAFF

WWJ video newsmagazine researched, edited and hosted and email
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