WW-92 -- BeatCast and Kaopass - Unknown Mobile Applications that won't be for Long

Wireless Watch Japan Mail Magazine
Commentary on the Business of Wireless in Japan
Issue No. 92, Tokyo, Monday, March 10, 2003
Subscribe for free: http://www.wirelesswatchjapan.com
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in this issue
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++ Viewpoint: BeatCast and Kaopass - Unknown Mobile Applications that
won't be for Long

++ Advertorial (promotion):
>> Access Your Mail Accounts via Your Cell Phone

++ Wireless Notes
** DoCoMo Boosting M-Zone?
** SD Card-format PHS Mobile Data Cards

++ Noteworthy News
--> NTT DoCoMo's I-mode Mobile Sys Gets 2nd Chance In Europe
--> Japan's DoCoMo Posts Record 3G User Growth in Feb
--> Contracts Near 80 mil. in Feb.
--> Analysis: Japan's Megapixel Phones Eye Digital Cameras' Turf

++ Events (promotion)
>> GLOCOM Platform Monthly Seminar
>> SECOND ROUNDTABLE ON BRANDING IN JAPAN

++ Sign of the Times
"Illegal Loan Victims Reach Record High"

++ Subscriber statistics, corrections, credits, administrivia

----------------------------------

++ Viewpoint: BeatCast and Kaopass - Unknown Mobile Applications that
won't be for Long

Today's WWJ newsletter boasts our first honest-to-goodness sponsor who wanted to
pay to place an advertorial. Don't groan! The more we get of these, the more
likely we are to keep bringing you our great coverage of the business of
wireless in Japan.

While I can't endorse the service one way or another, the developer, at least,
is interesting. Tokyo-based ISP Typhoon, founded by Nelson Fung, was one of the
first Japanese companies to sue in a US court against a US spammer that used a
false "typhoon" return address in their unsolicited bulk mailings. Typhoon won a
partial settlement for $2,500, and Nelson has since gone on to create a new
mobile mail service (see "Advertorial" below).

----

Juicy rumors? About the time that North Korea lobbed a second missile into the
Sea of Japan earlier today, I was having a quick lunch at the Mark City
Starbucks with L., a participant in the ETP (European Training Plan). The ETP is
sponsored by the EU and provides for up-and-coming business folks to spend a
couple of years in Japan studying the language and business culture and gaining
experience at a Japanese company.

My source, a voluble, affable Italian with an in-depth telecoms background, was
excited after a weekend trip to Hokkaido - he had run into a senior manager from
DoCoMo Hokkaido in charge of marketing.

He cited the manager as saying that, so far, 80 percent of FOMA customers in
Hokkaido use the 3G network "only for voice;" the manager foresees this pattern
continuing in the rest of the country. "He insisted," said L. between bites of a
chicken-and-something sandwich, "that their strategy is primarily on business
users, as it was with 2G PDC."

The manager described one system whereby farmers could use FOMA's video
capabilities to monitor their cabbage fields via some sort of webcam; sadly, the
traffic fees earned from such usage come to 5 to 12 Yen per transmission, and
the farmers check only about once per month.

L. further cited the manger as saying that, regardless of FOMA's lack of
subscriber take-up, the company is "committed" to FOMA: "He seemed convinced
that FOMA will take off, but can't say when." Neither can anyone else - and the
clunky, short battery-life 3G handsets have been a big part of the problem.

Whether any of L.'s information is accurate, it is true that FOMA has struggled
to date - but that may be about to change. The Telecommunications Carriers
Association (TCA) announced last week that NTT DoCoMo sold 37,000 FOMA terminals
in the (short) month of February - an impressive (if yet modest) increase over
January's 2,600 and December's 3,000. The reason? The new FOMA handsets with
150-hour-plus battery life.

While this is still small jyagaimo (KDDI pulled in 579,400 in February!!), it's
the first noticeable up tick in FOMA sales - ever. Can Big D come from behind?
Probably not - but it would be nice to see more W-CDMA handsets that can compete
against KDDI's kick-ass fleet.

----

I got in late this afternoon from a shoot at BeTrend, a mobile software
developer being incubated at SunBridge's Venture Habitat in Shibuya. It's rare
for me to be Oh-My-God! impressed by mobile applications these days (blame it on
George Bush and the endless beat of dreary war drums...), but the demo we saw
was really terrific.

While the system - an ASP-based, Java-powered, sales-and-marketing tool - is new
and still in the testing phase (the technology's received zero coverage in
English media so far), the first client is - get this! - auto maker GM (the Opel
brand).

BeTrend CEO Hideaki Inoue stepped us through the service, "BeatCast," which
allows all sorts of content (text, graphics, images, audio) to be push- and
pull-delivered to a celly.

The animations were great, the sound effects weren't irritating (like they are
with a lot of Java applets), and you could access pics of all the latest car
models that slide onto the screen from the left or the right. If there's a
better way to sell cars via mobile, this may be it. (You can see our complete
report in an upcoming WWJ video program, probably in early April.)

By the time we have that program ready to go, you'll also have seen an in-depth
focus on BitWallet's new Edy cashless payment system, now undergoing intensive
work to make it ready for mobile (destined to be Japan's top mobile story for
2003?); we'll also show you Omron's "Kaopass" ("facepass") face-recognition
software (also not yet reported in English media). We participated in a Kaopass
demo using a regular DoCoMo keitai which took about 2 seconds to recognize your
humble author's unsightly mug - and, no, the handset didn't crash. ;-) Both
programs were recorded at the IC Card and Security shows at Tokyo Big Sight, and
should air in the next few weeks.

But seeing all these applications got me thinking that one of WWJ's themes for
2003 appears to be non-content-download services. Sure, there's plenty of
business to be done on mobile with simple digital content offerings - images,
screen savers, ring tones, nantoka, nantoka... But this year, it looks like
services, particularly marketing and promotional services whose effectiveness is
measured by more than just subscriber numbers, are big.

I guess the 2G handsets are finally sufficiently sophisticated that all these
gee-whiz services can be deployed.

This would be different than, say, in California, where a state lawmaker has
proposed a bill that would provide for a 30-day cancellation period for people
who sign contracts for new cell phones.

"Buying wireless service isn't like buying a DVD player because you can't 'road
test' it while you're sitting there in the store," said Senator Debra Bowen in a
press release. "There's no way to really know if your wireless phone is going to
live up to the promises made by the salesperson until you start using it in your
everyday life. If you figure out the clarity and coverage don't meet your needs,
but you've signed a two-year contract, you're stuck with it."

I bet a certain W-CDMA carrier is relieved that no such law is under
contemplation in this jurisdiction.

-- Daniel Scuka
daniel@wirelesswatchjapan.com

++ Advertorial (promotion)
---------------------------------------------------------------------
Access Your Mail Accounts via Your Cell Phone

"classY Mobile" (pronounced "class Y") lets cell-phone users access private and
work e-mail accounts via Internet-capable mobile phones. classY Mobile also
allows users to respond to messages with the e-mail address of their choice, and
to delete unwanted "spam" messages.

** Message from Nelson Fung, creator of classY Mobile:

Although there are similar products on the market (which are on the official
menu of NTT DoCoMo!), I went ahead and developed classY Mobile because
existing services are difficult to use, offer too many features, and are
relatively expensive. In contrast, classY Mobile is easy-to-use and offers
only needed features. classY Mobile is available now in both Japanese and
English versions for EZweb, i-mode, and J-Sky subscribers. Moreover, unlike
our competitors, classY supports access to POP3 and IMAP mail servers.

Various Japanese businesses and individuals have tested classY Mobile over the
last 12 months. However, knowing that our Japanese users tend not to complain
and report bugs, I am now looking for interested parties to give our system
some serious thrashing!

Japan-based users can sign-up for free at: http://classY.jp/
---------------------------------------------------------------------

++ Wireless Notes
---------------------------------------------------------------------

** DoCoMo Boosting M-Zone?
http://www.nttdocomo.co.jp/p_s/mzone/
Received a nice plastic bag with a brochure and a pack of tissues (standard
Tokyo street-level marketing fare) from a young lady in Ginza last week. The
packet flogs DoCoMo's "M-Zone" WLAN service, and the brochure prominently
displayed a map showing where you can access the (recently expanded) system
around Tokyo station (13 locales, including Tokyo International Forum). Time for
Big D to play catch up to Yahoo! Mobile?

** SD Card-format PHS Mobile Data Cards
http://www.sii.co.jp/mc/
Went to Machida on Saturday to buy a 256-MB SDRAM memory module to replace the
original one that has long plagued my PC with crashes and other devilry (3900
yen, for those that are interested). Sofmap was selling the new SD Card-format
mobile data cards for DDI Pocket's PHS network for 17,800 yen - a little pricey
for something that is so small it can be lost in a blink. Compact Flash-format
models sell for free (incl. with a new contract) to about 1,500 yen. Still, the
SD Card-format devices look very cool poking out of a Toshiba PDA...

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++ Noteworthy News
--------------------------------------------------------------------------------

--> NTT DoCoMo's I-mode Mobile Sys Gets 2nd Chance In Europe
http://sg.biz.yahoo.com/030307/15/38oof.html
Source: Dow Jones on Yahoo, Mar. 7

EXTRACT: If at first you don't succeed, then try again - or so says NTT DoCoMo.
I-mode, NTT's mobile multimedia messaging service, was launched in Germany,
Holland and Belgium almost a year ago by network operator KPN NV (KPN), but
consumers weren't keen. Now, the Japanese mobile network operator is launching
i-mode in France and Spain, and is hoping this second European push succeeds.
NTT is confident that it has not missed its window of opportunity in Europe and
believes the i-mode service can succeed if it is marketed and priced well. There
are 36 million i-mode users worldwide, but only 200,000 are in Europe, according
to KPN. It's no wonder that the Dutch operator could only attract one banal
question from a room full of industry watchers after its i-mode presentation at
last month's 3GSM in Cannes, Europe's biggest mobile telecom conference.

COMMENTARY: What a bunch of boring industry watchers! WWJ got KPN The
Netherlands' CEO Cees van den Heijkant in front of the camera in January and
fired all sorts of keen questions (see WWJ video No. 48 - link below).

This story reports that DoCoMo hasn't ruled out further equity tie-ups in
Europe, and KPN is in talks with Siemens for a new i-mode handset. It also says
that i-mode remains a weak competitor to Vodafone and other wireless Internet
systems (Vodafone Live is outselling i-mode 3-to-1). Unfortunately, KPN doesn't
have deep marketing pockets. In France, Bouygues sold its stock of 100,000
i-mode handsets over Christmas and will proceed with the launch of a new i-mode
terminal, the NEC N22i shortly - largely on the strength of a simple fee
structure. Maybe the Dutch can learn from the French who learned from the
Japanese? Jupiter Research forecasts 1.5 million i-mode subscribers in Europe by
the end of 2003; time will tell.

KPN Mobile NL CEO: Ring Tones 'Most Popular Content'
http://www.wirelesswatchjapan.com/vp/48.shtml

----------------------------------

--> Japan's DoCoMo Posts Record 3G User Growth in Feb
http://www.forbes.com/home_asia/newswire/2003/03/07/rtr900225.html
Source: Reuters, Mar. 7

EXTRACT: NTT DoCoMo posted record growth in the number of users of its
third-generation (3G) mobile phones in February, an industry group said on
Friday, boosted by new handsets with longer battery life.

COMMENTARY: DoCoMo has released one new FOMA model with much-improved battery
life: The N2051 (with 15-second/100-KB i-motion mail); the F2051 and P2102V are
still pending.

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--> Contracts Near 80 mil. in Feb.
http://asia.news.yahoo.com/030307/kyodo/d7pk9m700.html
Source: Kyodo on Yahoo, Mar. 7

EXTRACT: The total number of mobile phone and personal handy-phone system (PHS)
subscription contracts has neared 80 million, with the number standing at 79.85
million at the end of February, up 0.5% from the previous month, a
telecommunications association said Friday. In terms of the three main mobile
phone companies, the NTT DoCoMo Inc. group had 43.23 million mobile phone
contracts, followed by the KDDI Corp. group at 13.72 million and the J-Phone Co.
group at 13.62 million, it said. J-Phone closed the gap with KDDI to around
96,000 with its prepaid mobile phone handsets launched Feb. 10 selling well,
according to the association.

COMMENTARY: J-Phone seems to be doing well with its prepaid handsets. In a mail
to press and analysts last week, J-Phone PR gave the following subscriber status
report (no mention of the "Enjourno" pre-paid handset):

Feb. 28 Jan. 31 Increase
Subscribers 13,621,000 13,456,200 164,800
PDC 13,611,100 13,451,500 159,600
J-Sky 11,883,200 11,718,900 164,300
Sha-mail 8,615,000 8,295,700 319,300
Movie S-M 1,582,800 1,464,900 117,900
Java 6,049,200 5,807,600 241,600
VF Global Stnd 9,900 4,700 5,200

----------------------------------

--> Analysis: Japan's Megapixel Phones Eye Digital Cameras' Turf
http://www.reuters.com/newsArticle.jhtml?type=technologyNews&storyID=234...
Source: Reuters, Mar. 7

EXTRACT: Japan's cell phone makers, pioneers of the camera-equipped handset,
look set to intrude into digital camera makers' turf as a fierce battle for
market share draws them toward photo-phones with million-pixel resolution. No
one is yet consigning digital cameras to the high-tech scrap heap, but some of
the dozen or so handset makers that crowd the Japanese market are preparing to
launch "megapixel" photo phones this year with picture quality good enough to
make prints. Smaller players such as Fujitsu or Mitsubishi Electric would be the
first to make the leap to megapixels, hoping to emulate Sharp's success last
year with innovative camera-phones.

COMMENTARY: Battery life and bandwidth (not to mention onboard memory) will
affect the recording of megapixel images more so than they have affected the
tiny images recorded by camera phones thus far. Current cameras can achieve
310,000 pixels - providing images equal to those seen on early PC monitors. But
to achieve real "keeper" photos, you need about 1 million pixels. Kyocera will
launch a megapixel handset in Japan this autumn; DoCoMo should have one out in
May or June - Sony Ericsson should follow suit. Next problem: printing out all
those gorgeous photos that snappers will take with their cameras.

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++ Events (promotion)
---------------------------------------------------------------------
>> GLOCOM Platform Monthly Seminar
March 18 (T) 16:00-18:00

Part 1: 16:00-17:00 (English)
Nina Han (NBR, University of Washington): "Democracy in Japan"
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Masami Atarashi (Global Linkage): "Japan from Global Viewpoint"

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Brand Mythology: results-driven strategies to leverage the brand story
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- B2B targeted versus consumer sector branding
- Global and local case studies of failure and success

Online registration is available at:
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++ Sign of the Times
--------------------------------------------------------------------------------

Illegal Loan Victims Reach Record High
http://www12.mainichi.co.jp/news/mdn/search-news/872675/cell20phone-0-2....
Mainichi Shimbun, Jan. 30
The number of illegal loans involving unlicensed moneylenders and exorbitant
interest rates soared to a record high last year, with over 230 cases and
122,000 victims uncovered. A report by the National Police Agency found that a
record 122,115 people were victimized through illegal loans in 2002, suffering
a combined loss of about 15.98 billion yen. Police said the incidents often
involved dealers lending small sums of money over and over again. To make it
easy for people to borrow the money, some lenders did not operate offices,
restricting their business to cell phone calls. In other cases, people would
obtain a Tokyo moneylenders license, then solicit people nationwide through
e-mail.

... It's odd how "legitimate" businesses are supposed to have a fixed-line
number, while others (like WWJ) that operate only via cell phone are thought to
be less above-board; stories like this don't help ...

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--------------------------------------------------------------------------------

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WWJ Video Newsmagazine host & research:
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WWJ Mail Newsletter editor & host:
Daniel Scuka (daniel@wirelesswatchjapan.com)

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Michael Thuresson (mthuresson@labusinessjournal.com)

WWJ Video Newsmagazine digital media producer:
Lawrence Cosh-Ishii (lcosh-ishii@wirelesswatchjapan.com)

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