WW-142 -- Is There a Place for Foreign Technology Companies in the Japanese Wireless Market?

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Commentary on Japan's Wireless World

Wireless Watch Newsletter
Issue No. 142
Wednesday June 1, 2005

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@@ Viewpoint: Is There a Place for Foreign Technology
Companies in the Japanese Wireless Market?

============= Entrepreneur Association of Tokyo ============
2 Year Anniversary Panel Discussion "Raising Capital For Your
Business" The panelists will include Hitoshi Suga, Vice Chairman
and Board Member - Tully's Coffee Japan/FoodX Globe Co. LTD.
and Mike Alfant, President of Building 2. Our moderator will
be Michael Korver, Daiwa Securities Group Chaired Visiting
Associate Professor International Business Strategy for the
MBA program at Hitotsubashi University.
Date/Time: Tuesday, June 7th 7:00 pm
Location: City Club of Tokyo - Maple Room(Canadian Embassy Complex)
Language: English Website: http://www.ea-tokyo.com
Email: info@ea-tokyo.com
@@ Viewpoint: Is There a Place for Foreign Technology
Companies in the Japanese Wireless Market?

Foreign wireless technology companies often ask us if they have
a chance in Japan. It is difficult to give a blanket answer - the
market is large and innovative, but different network technologies
and heavy competition require a focused approach. Are there
lucrative market opportunities? We will take a look at mobile mail
and handset technologies.

Mobile mail is still the killer application (after voice) in Japan.
We are therefore not surprised by the rising popularity of mobile
mail in the US and Europe. On an early morning commuter flight from
Los Angeles to San Francisco last month, we estimated that one
out of four passengers were reading their mail with a Blackberry
before take off - similar to what we daily see in JR trains.

It is amazing that Japanese still use their handset with limited
input capabilities for processing mail. We wonder why
Blackberry-like devices have not yet been introduced to the
Japanese market. A suitable partner in the Japanese market would be
PHS provider Willcomm - who are aggressively pursuing corporate
users. Willcomm's shareholder Kyocera manufactures PHS handsets and
owns KCCS, a large provider of IT services and data-center
facilities. It could be worth a try for RIM, the manufacturer
of the Blackberry, to license their technology to Kyocera.
After all, Opera has already licensed its browser to Kyocera.

Foreign handset makers have not been successful in Japan to date.
Motorola and Nokia have tried to get into the market with Vodafone,
but they have not been successful because the handsets lack the
nice features offered by other carriers, which is also reflected in
the disappointing performance of Vodafone's 3G service. Samsung
could have a chance providing CDMA-handsets to KDDI. KDDI
directs this crowded handset market and will probably not allow
Samsung to enter this market at the cost of their long-term loyal
Japanese partners who have been innovative in both technology
and design. Qualcomm is more successful - it is a main supplier
of KDDI's network and handset technologies.

Smaller foreign technology companies (most of which are
start-ups) face a big challenge. They have to talk to both
carriers and handset manufacturers to introduce their
technologies. This is a long process with no guarantee
of success. It requires resources that smaller companies
cannot easily muster by themselves. Japanese competitors
with similar technologies are better positioned and
difficult to compete with at the level of service. Several
technology consultancies active in the Japanese market provide
entry services for these kinds of companies.

The Japanese market has potential for new technologies.
Examples are Qualcomm, Macromedia, and Opera - all
well-established companies before they entered the Japanese
market. Smaller companies in their start-up phase should
give the Japanese market careful consideration, after
which they must make a decision: jump in feet first or
don't jump in at all. There is no way between.

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Written by Arjen van Blokland; Edited by Burritt Sabin


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