Maps For The Masses

Back to Contents of Issue: August 2001

GIS developer finds a way to serve up keitai-sized maps. Maybe it can find its way overseas as well.

by Daniel Scuka

PRIOR TO FOUNDING APAS in 1989, Nihon University student Yoshiaki Sakai spent a lot of time hiking the Himalayas. The environmental engineering student was indulging his passion for geography in a very literal way, and on at least one occasion reached 4,000-plus meters on the slopes of Everest sibling Godwin Austin (K-2) -- the world's second-highest mountain. "I was researching the Himalayan ecology system -- while surrounded by goats," smiles Sakai.

Graduation, however, quickly brought him back down to Earth, and he decided to strike out on his own instead of joining one of the big zenecon (general contractor) construction companies. Sakai explains there was a big demand for field research back then, and for an energetic geo-engineer, it was a good time to start an independent company. "I had five or six staff members, and we earned a half million dollars each year writing re-ports and conducting pre-construction environmental surveys," he adds. But while trudging around in the mud of huge construction projects may have paid the bills, Sakai's heart never strayed far from his early love of geography. In 1996, he refocused APAS as a developer of geographical information systems (GIS) -- a prescient move, since few could have then foreseen the location-based business opportunities that would be sparked by Japan's wireless revolution.

Today, APAS has emerged as a provider of location-based mobile applications and solutions, and has scored a significant success as the OEM developer of J-Navi, a cellphone-based mapping service offered on No. 3 wireless operator J-Phone's J-Sky mobile Web. J-Navi is a sophisticated database system in which a mobile surfer enters, for example, the telephone number of a desired company or other destination, and the database will then fetch a keitai-sized map showing the location and surrounding area of the destination. Searches can also be conducted by company name, partial address information, or other keywords. The service enjoyed a peak of 1 million page views per day during its May to July 2000 launch period, but since then has settled back to a still-respectable 300,000 PVs daily. The system database also comprises some 15 million searchable points of interest throughout Japan, including landmarks, entertainment sites, and recreational facilities.

Surprisingly, the tiny development company had little trouble convincing senior J-Phone mandarins of the system's value. Sakai approached J-Phone late in 1998. "They asked us if we can display a map on the phone, and we said 'Yes,'" he explains, adding, "DoCoMo is a very conservative company, and does everything by themselves. J-Phone was small at the time, [and] they were very welcome and receiving of technology companies." APAS senior technology consultant Mohamad Purbo, an Indonesian expat who managed the detailed coding work for J-Navi, says that the original system took some six months to develop, plus a further three months for stress testing. He says there wasn't a lot of information available on how to design the tiny interface, so development required a lot of trial and error work.

Since launch, peak usage periods seem to be at noon, 3 p.m., 6 p.m., and in the evening up to midnight. "This means [subscribers] use the system for daily life," says Sakai. And use it they do. J-Navi's revenues are nothing short of spectacular. Sakai estimates that the operator is earning roughly ¥4 per PV, equating to ¥36 million per month in airtime fees. Subscribers also pay ¥20 per map, so J-Phone could be pulling in some ¥200 million per month. If the system cost ¥52 million to build (at typical Tokyo system integrator rates), J-Phone's capital expenditure was paid off within a month or so of starting. "This is a very unique service, and is [one of the few] profitable B2C map systems in the world. MapQuest in the US is B2B," says Sakai.

Competing wireless information service providers, notably DoCoMo, have not been idle. DoCoMo's i-mode network offers subscribers iMapFan and Zenrin Maps; iMapFan is an official site that works much the same as J-Navi. i-moders can search for locations based on phone number (only for legal entities), address, station name, or postal code, as well as look up points of interest (including restaurants, accommodations, shops, entertainment, train stations, parking lots, and public toilets) in selected locations. With a Java-capable handset, the maps are also zoomable and scrollable. Looking to differentiate itself, iMapFan has begun offering a weather forecasting service whereby users will be able to search any geographic location in Japan and link to a same-day, next-day, or two-day weather information summary, with the weather data updated every three hours (for another take on how weather data is being leveraged by primary mobile service providers, see "A Weather-Affected, Massively Multiplayer, Java-based i-mode Game," July 2001).

While DoCoMo's iMapFan appears to offer much the same functionality as J-Navi, APAS' system can additionally provide automatic location tracking for users, allowing J-Phone users to view a map of their real-time location, without having to enter any address (location data is provided through the network based on proximity to the cellular base stations) -- a feature that i-mode cannot yet provide. "Location-based services on i-mode are first-generation [based on] manual input of the location by the user, whereas J-Navi might be [considered] second- or third-generation," says Andrea Hoffmann, of Tokyo-based mobile consultancy EGIS.

Nonetheless, despite APAS' hard-won expertise, DoCoMo is a formidable competitor, and can apply significant resources in trying to beat anything that APAS and J-Phone can produce. On July 28, DoCoMo upped the ante significantly by establishing Location Agent, a joint venture aimed at offering location-based and locating services. The JV comprises five companies (Mitsui, NEC, NTT-ME, Seiko Epson, and Efgenex) in addition to DoCoMo -- all heavyweights of Japan's wireless systems integration industry.

Since launching J-Navi, APAS has further refined the system into a new package it calls "," a comprehensive offering that combines local and global geographic data aggregation, a server platform, a Java API (application programming interface) library open to any developer wishing to create location-aware applications or services, and a client that can be customized, the company says, for all mobile devices. After scoring domestic success with J-Navi, the company's product is clearly tailored for the US and other markets, where location-based services should grow to a $9.8 billion market by 2006, according to Sakai. "Carriers want to offer location services because location is one of the fundamental services of [wireless] carrier companies," he says.

APAS has representative offices in Seattle, Korea, and Australia. The Australian connection, where operators Vodafone, Optus, and Telstra all tried to launch WAP (Wireless Application Protocol)-based services in the past 18 months, will be a little tougher to leverage. Garth Thompson, APAS' marketing head in Adelaide, says, "I've spoken to all the operators here, but WAP is dead, so they are skeptical. Content is tough." Thompson thinks he may see success by urging the carriers to adopt APAS' solution as part of a total mobile solution offered to subscribers -- without mentioning WAP at all. To date, 100 percent of APAS' revenues have come from the Japan domestic market, but Thompson is optimistic that overseas revenues will increase. APAS is already conducting user trials with GSM operator Maxis Communications Berhad in Malaysia, which may prove to be the company's first overseas sale (Maxis, with 1.7 million subscribers in May 2001, is 33 percent owned by British Telecom).

President Yoshiaki Sakai
Location Chiyoda-ku, Tokyo
Phone +813- 3512-2501
Established October 1989
Products/services, a suite of software and APIs for supporting location-enabled applications on any platform
Employees 30
Investors Y. Sakai, Woodstock, Global Venture Capital, Jafco, Shamoto Industry, Oracle Japan
Capitalization ¥284.7 billion (pre-IPO)

In the US, APAS' presence was recently boosted when Palm decided to include the client application with every M500. APAS' system will also be deployed on the Japanese version of the wireless information service, scheduled to launch about the time this issue hits the street. The company has also announced a tie-up with the Japan unit of Troy, New York--based MapInfo Corporation, a provider of map-related solutions and data sold in 58 countries, and has spoken with location-based system integrators Webraska (based in France) and Gravitate (US) on possible cooperation in Japan.

At least one VC agrees with APAS' moves toward the US market. "The location space is an interesting one, and has been expected to take off for a couple of years," says Bruno Grandsard, principle at boutique VC firm Japan Internet Ventures. He mentions, however, that US implementation of the 911 emergency locating system (through which a cellphone will be able to report its location to emergency services) has been delayed, and a few carriers have yet to finalize which solution (handset-based or network-based) they will adopt. "Nevertheless, this will happen in the next three years," he states. Grandsard is less optimistic on APAS' particular chances for success in the US. He considers the firm to be positioned more in the mapping space than the location space, and points out that MapQuest (now owned by AOL) dominates this segment. "Since it will take another three or four years for mobile to really take off in the US, I think the incumbents [there] have tons of time to develop applications similar to J-Navi, so my gut feeling is [APAS] will have a tough time," he says.

But consultant Hoffmann disagrees, and says that APAS will succeed in the US so long as the company's technology is based on globally-used technology (like GPS), or at least on technology that can be easily deployed in the US. This may be the case if the company's mapping client on, for example, starts to enjoy wide usage. Hoffmann also alludes to the importance of the location segment versus mapping, and says that mobile B2B and B2C services might be more interested in knowing the location of sales people or delivery trucks. Of course, any initiatives in the location tracking market will inevitably raise privacy concerns. "For personal and consumer services, automatic location tracking will be at least restricted or delayed, as they are controversial in terms of privacy and Big Brother," says Hoffmann. It's precisely this issue that has kept the Japan operators from deploying more functional location tracking systems. David Macdonald, project coordinator at i-mode, says there are many difficult issues involving location services -- especially for a company "the size of DoCoMo with a great responsibility." He says the biggest issues are less technological and more psychological -- like how to deal with the issue of privacy. "We, too, plan to offer more area-based services in the future, but [these] must be carefully thought out, including the impact for our content partners and our users, and launched in a step-by-step way."

Despite the overall hazy picture for location- and map-based services, the company appears to be enjoying the benefits of incremental growth in usage of its technology. In June, Lycos Japan (the No. 3 portal) started using APAS' mapping engine in its Lycos maps service, giving APAS an additional foothold on the wireline Net. Recent improvements to have included manipulating the map data to produce map displays customized for individual devices (which vary by screen size and resolution, for example) and porting the system to L-mode, NTT's new landline version of i-mode. On May 30, Oracle (USA) announced it had selected APAS as one of twenty technology partners to provide location-based services (based on Oracle's 9i database) to network operators worldwide. (APAS is also a technology partner with Alps Map Japan, wireless content developer Aplix, and several other mobile system integrators, as well as with Ericsson, Motorola, NEC, Nokia, and Sun.)

Investors have not hesitated to vote with their checkbooks, and Oracle Japan, old-line VC Jafco, and Global Venture Capital have all come onboard (Oracle has a 10 percent stake). The company has also discussed investment with Palm and Intel. Sakai is thinking of a Japan IPO, but is waiting for the markets to shake out. If wireless usage everywhere keeps growing as it has, APAS could win big. "The first wave of wireless development has been small -- B2C players typically earn $10 million per year," says Sakai. "But the second wave will be focused on B2B -- and will be much bigger."

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