WW-164 -- Jphone Revisited

J@pan Inc presents the Wireless Watch Newsletter:


Commentary on the Business of Wireless in Japan

Issue No. 164
Friday July 6, 2007

Featuring our Real Estate Special, Web 2.0 Marketing and more!

JPhone Revisited
By Arjen van Blokand

Before Vodafone fully acquired JPhone, the Japanese carrier was
very popular among young users. Its state-of-the-art handsets
were impressive with nice gadgets like cameras. The sha-mail
(picture messaging service) was the first of its kind. In the
rapidly growing market, PR campaigns with Japanese idols and
talents were successfully used to attract new customers. The
runner up position of the KDDI group was even threatened to be
overtaken by JPhone.

It all went terribly wrong after Vodafone took over the company
and re-branded JPhone to Vodafone. The company's innovation was
hammered out by the Vodafone Global Standard with clumsy handsets
that might have been cool in Europe but were far behind the KDDI
and DoCoMo handsets. Subscriber numbers even started to decline
during several months in 2005. Vodafone finally admitted that it
could not keep pace with the demanding Japanese market and pulled
out selling former JPhone to Softbank in April 2006.

Softbank's acquisition of Vodafone Japan was a smart move as it
enabled the company to make a head start in the Japanese market.
It had already acquired a license to start mobile services, but
it would have taken much longer and be much riskier to grow its
business to the current level. Softbank successfully refinanced
1.45 trillion yen (about 12 billion US dollars). In October 2006,
Vodafone was re-branded to Softbank. In the 12 months following
the acquisition Softbank added 850 thousand net subscribers—about
four times the number achieved by Vodafone in the previous year.
Through aggressive TV commercials, the Softbank Mobile image was
strengthened. Furthermore, 35 new handset models were launched
featuring a rich color line up. All sounding familiar?

As we expected, Softbank introduced lower pricing plans. After
some misleading advertisements that had to be corrected,
Softbank finally got it right with the 'White Plan'. For a
monthly 980 yen, domestic voice calls are free between Softbank
mobile users from 1AM to 9PM—the highest traffic on the voice
network is between 9PM and 1AM. Domestic calls other than those
cost 21 yen per 30 seconds. More than 5 million subscribers
(almost one-third) are now on the White Plan.

Though the negative brand image and subscribers trends could be
reversed, Softbank's average revenue per user (ARPU) numbers are
still decreasing according to their annual report—a result of the
ever decreasing tariffs. Current voice ARPU accounts for 3,830
yen per month while data ARPU is almost constant at 1,380 yen.
The strategy is to use the synergy from the group companies like
Yahoo! Japan to offer new premium services while keeping the
basic charges low. Furthermore, it is integrating the core
network from Softbank Mobile, Yahoo! BB broadband and its
fixed-line operator to enable convergence of service and billing.
Softbank gives itself 5 years to grow its customer base and
service offering, before it starts harvesting within 10 years—a
similar scenario as with Yahoo! BB which is finally churning out
profit. A long time horizon—stay tuned.

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-----------------------Web 2.0 Event----------------------
Tokyo's new community for Web 2.0

Next event July 3 at Fujimamas! Professional podcasting by Terri
MacMillan Mosaic42 and Airline Customer Blog Case study by
Michael Sheetal, Ultra Super New Inc.

All internet and Web 2.0 professionals in Tokyo are invited. Full
details and community SNS at www.tokyo2point0.net

-----------------------Net Tokyo Event----------------------
NetTokyo 2007 – Saturday July 21

NetTokyo is the biggest summer, network-of-networks, networking
event for the Japanese and international community in Tokyo. All
money raised goes to charity. With close to 2 million yen raised
to date we aim to raise at least 1 million more this year!

Join us for a fun, Saturday afternoon of quality networking and
help raise money for four great cause. Full details at

Last chance to be a prize or cash sponsor:

-------------------- ICA Event - July 19 --------------------

Speaker: Richard S. Keirstead, CTO,
Ascendant Business Solutions K.K.

Topic: The Best of Both Worlds: A Practically Secure Network

Details: Complete event details at http://www.icajapan.jp/
(RSVP Required)
Date: Thursday, July 19, 2007
Time: 6:30 Doors open, Light buffet and Open Bar included
Cost: 3,000 yen (members), 5,500 yen (non-members)
Open to all - location is Ristorante Conca d'Oro