WW-01 -- Think Big, DoCoMo, and Concentrate on What You do Best

J@pan Inc Magazine Presents:
Commentary on the week's wireless news from Japan

Issue No. 1
Friday, March 23, 2001

Viewpoint: Think Big, DoCoMo, and Concentrate on What You do Best
Noteworthy News
- Japan game makers aim to harness mobile power
- NTT DoCoMo eyes faster launch of 4G phones
- Third party to define i-mode menu listing criteria?
- J-Phone Group to deliver 3D images to keitai
- Vertex Link ships mobile content conversion software
- KDDI, Qualcomm complete (3G) cdma2000 1xEV-DO trials

Welcome aboard the first issue of Wireless Watch, J@pan Inc's
weekly email take on all things unwired in Japan. Wireless Watch
will provide a healthy slice of wireless and mobile news coming
out of Japan combined with our own commentary and opinion.

There's little doubt that Japan leads the world in wireless
hardware technology and network development, but it's also miles
ahead in mobile content, services, and applications -- proving
conventional wisdom about the lack of creativity in the Japanese
software and services industry dead wrong.

To get an idea of how the wireless Web will unfold in the US,
Europe, and elsewhere, it's vital to keep an eye on Japan --
and Wireless Watch will help you do just that.

Let's get started...


Think Big, DoCoMo, and Concentrate on What You do Best

The troops over at DoCoMo are no doubt gearing up for the
European invasion expected this fall. But a number of media
reports at home indicate strategic muddlement, if not outright
confusion, over at Sanno Park Tower HQ. What, you might ask,
could possibly be wrong? DoCoMo is lord and master of i-mode --
the No. 1 most successful mobile Internet service ever. The
network's metrics (subscribers, official and unofficial sites,
revenues, and global buzz) continue to rocket skyward, the
recently launched (and premium priced) Java phones are already
selling like hot yakitori at the Sapporo Ice Festival, and the
company's market cap exceeds that of its parent, NTT, by about
60% (!!). Time for DoCoMo to sit back and rest on its laurels,

But those press reports have us wondering. One, in the Nikkei,
said that DoCoMo is considering allowing a neutral third party
to decide who gets to locate on the i-mode default menu -- this
allegedly in response to critics who charge opaque listing
standards and more than a whiff of bias. Another Nikkei report
said the operator would open up i-mode's pay-for-content billing
services to non-official wireless Web sites, also part of a move
to boost transparency. Finally, the Yomiuri reported last week
that i-mode's masters will open up the i-mode portal to other
cellular operators by the spring of 2003.

While we applaud DoCoMo's moves to spread the wealth and loosen
the leash a little, perhaps the operator should pause for a long
look in the mirror, where it will see: a wireless network
operator! DoCoMo is not, and never was, a portal operator.
Instead of messing around with listing standards, offering
billing services to third parties, and haranguing other
operators into adopting xHTML (so their subscribers can access
the i-mode portal), why not outsource the portal operation

Think about it: The firm is already tied-up with the heaviest of
heavyweight portals, AOL Time-Warner, and there's no doubt
additional partners could be found, if necessary, who know how
to market content, run e-commerce, and aggregate eyeballs (and
wallets) better than the pocket-protector crowd at DoCoMo ever
will. By handing over operation (not ownership) and setting
modest commissions, DoCoMo could concentrate on building the
network, and with a real master at the i-mode portal's helm,
data traffic -- and DoCoMo's revenues from packet fees and
commissions of all types -- would soar higher than an H-2 rocket
launched from the Kagoshima Space Center (with no risk of

Further, with new i-mode subscribers evidently unlimited, why
not contract out additional portals, including one each to
@Nifty and Biglobe? The default on the phone could still be set
to DoCoMo's original portal, of course, but users would be able
to switch at will. The Yomiuri report, at least, did mention
that DoCoMo was talking to these two big wireline ISPs and
portal site operators, but we fear DoCoMo's not thinking about
complete outsourcing -- just some sort of wishy-washy, half-way,
"permit-access-but-keep-control" partnering. Our free advice?
Think big, DoCoMo, and concentrate on what you do best. In the
meantime, the coolest Wireless Web service of all time will
continue to be run by a bunch of engineers.

-> Japan game makers aim to harness mobile power
(Source: Reuters via Yahoo! Finance, March 19)
EXTRACT: The keitai is fast becoming a competitor to watch in
the gaming hardware arena. Nintendo's new GameBoy Advance and
Sony's PS2 gaming platforms are already wireless-enabled, but
only to the point of using the phone as a modem to download
games onto the console (players use a special cable to connect
the gaming console to their phone). More serious competition
comes from NTT DoCoMo's Java-enabled 503i series i-mode phones,
which allow phone owners to play old favorites like Tetris and
Pacman right on the small screen.
COMMENTARY: As the success of i-mode itself has shown, if you
put entertaining functionality (even if simple to start) into
the hands of millions of mobile surfers, they will find time to
use it. I'm not surprised that simple games given new life on
the keitai can grab eyeballs, thumbs, and (lucrative for DoCoMo)
airtime. We threw up a basic version of Hangman on our i-mode
site (www.japaninc.com/i), and with zero marketing, the game
picked up 25,000-plus page views. Wow!

-> NTT DoCoMo eyes faster launch of 4G phones
(Source: SiliconValley.com, March 17)
EXTRACT: NTT DoCoMo said that it could launch new
fourth-generation (4G) mobile services by 2006, some four years
sooner than expected. The Yomiuri Shimbum quoted industry
experts as saying that the move would allow DoCoMo to set the de
facto standard for 4G network infrastructure, handsets, and
services. 4G download speeds should reach 20 Mbps, roughly 2,000
times faster than existing 2G and 2.5G networks, and at least
ten times faster than 3G networks.
COMMENTARY: NTT has tried several times to convince the
international telecom community to adopt its protocols for
mobile telephony, but without success; Japan was the only
country that adopted NTT's proprietary 1G analog (1979) and 2G
digital (PDC, in 1994) systems. Now, with i-mode, NTT DoCoMo has
been catapulted into global lead position, and it will do
everything it can to get other operators and standards bodies to
adopt its preferred technology. Hey--they're just doing what
Microsoft did ...

-> Third party to define i-mode menu listing criteria?
(Source: Nikkei New Media via AsiaBizTech Web site, March 20)
EXTRACT: NTT DoCoMo said it is considering allowing a new
third-party organization to determine the standards for
permitting content and service providers to be listed on
i-mode's official menu. The Public Management, Home Affairs,
Posts and Telecommunications Ministry is studying the
as-yet-unidentified organization. The move appears aimed at
critics who charge the company with using vague and arbitrary
standards when handing out menu slots.
COMMENTARY: i-mode is DoCoMo's network and DoCoMo's brand name,
and it's no surprise that the company keeps a tight grip on
which content and services are allowed into the Walled Garden.
Imagine Yahoo! asking someone else to decide who gets listed on
its menu; we think DoCoMo shouldn't have to either. In fact,
filtering, organizing, and validating i-mode content is actually
one of the big advantages that i-mode offers time-pressed mobile
surfers. If the company blocked access to the Web at large, we
might agree with this move, but it doesn't -- and we don't.
(Outsourcing complete operation of the portal would be something
entirely different; see our comments above.)

We now offer Wireless Watch, Gadget Watch, and JIN -- three free,
weekly email newsletters. Keep up with the latest Japan-specific
news on technology innovation -- filtered for relevancy, annotated
for context, and hot off the presses. To subscribe, access:

-> J-Phone Group to deliver 3D images to keitai
(Source: Nikkei NetBusiness via AsiaBizTech, March 19)
EXTRACT: J-Phone, together with Bandai Networks and HI Corp.,
announced it will launch cellphones with 3D graphic display
capabilities in June 2001. The new technology, called Mascot
Capsule Engine/Micro3D Edition For J-Phone, will allow 3D
animated characters to be displayed on cell phone screens, most
likely as part of Java-based games and other downloadable
software. Bandai Networks said it will launch a download service
to allow customers to access the 3D characters.
COMMENTARY: Bandai's character download service has done well on
the wireless platform, but savvy animation houses in Japan (and
elsewhere) are looking for ways to provide wireless surfers with
more than just funky screen wallpaper. If 3D graphics lead to
faster consumer uptake of personalized avatars -- ideal for
one-to-one marketing -- someone's going to make a pot of cash.

-> Vertex Link ships mobile content conversion software
(Source: AsiaBizTech News, March 19)
EXTRACT: Vertex Link Corp. has released server software, dubbed
Cafemoon C3gate Server Ver. 1.0, that converts regular Web sites
into mobile phone-formatted sites, which would then be viewable
by users of the i-mode, EZWeb, and J-Sky Web mobile Net
services. The software, developed by Inprobe Networks, uses
Java, and will cost at least JPY500,000 per license. Cafemoon
C3gate Server converts HTML- or XML-language Web pages into
cHTML (for i-mode), WML (for EZWeb), MML (for J-Sky Web), and
other formats.
COMMENTARY: If you take a wired Web site, strip out the graphics
(or dumb them down to low-res), and squeeze the text into a
long, narrow format, you've got... something that's not much fun
to look at. The service-centric wireless Web is sufficiently
different from the graphic- and text-centric traditional Web
that we think smart content and service providers will see the
value in building wireless sites from scratch, and not merely
reformatting existing sites. This might be a nice utility to
have, we suppose, but not at half a million per copy. Besides,
microbrowser heavyweight Access has already announced a mobile
browser that will display multiple site formats (the Compact
NetFront Plus).

-> KDDI, Qualcomm complete (3G) cdma2000 1xEV-DO trials
(Source: CTIA Wireless 2001 email press release, March 21)
EXTRACT: KDDI and Qualcomm announced the successful completion
of third-generation (3G) cdma2000 1xEV-DO trials in cooperation
with Hitachi, Sony, and Kyocera. The trial was conducted between
July 2000 and February 2001 in Tokyo, and saw applications such
as streaming video, Web browsing, and e-mail running at up to
2.4 Mbps.
COMMENTARY: Not all operators share DoCoMo's faith in
(expensive) W-CDMA technology, and this just shows that viable
options are available. KDDI should be able to migrate its
present cdmaOne network over to the faster cdma2000 1xEV
standard for much less than it will cost DoCoMo to build its 3G
W-CDMA network. Despite the constant drone of DoCoMo 3G hype,
it's nice to see the No. 2 player winning some success.


Written by Daniel Scuka (daniel@japaninc.net)
Editor: Steve Mollman (steve@japaninc.net)

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