NTT DoCoMo in jeopardy - Japan's largest mobile carrier and the ghost of old AT&T Wireless

NTT DoCoMo still has more than 50% market share in terms of the cummulative number of subscribers in Japan, but has been forced to sit at the second place in monthly subscriber acquisition number, after KDDI, for consecutive 10 months until April. May number was announced today, which was even more disappointing for DoCoMo - now they are at the bottom.  Softbank (former Vodafone Japan) won the top position for the first time with 162,400 new subs, while KDDI got 138,500 and DoCoMo mere 82,700.

Source:  TCA (English version)

DoCoMo started to run a new campaign called "DoCoMo 2.0" with the release of FOMA904i series, featuring several popular TV/movie celebs in its new TV CM, but that campaign is drawing a harsh criticizm in Japanese blogosphere, that there is no substance despite of its glitzy appearance.  The only major new feature is that a user can load two phone numbers and two mobile mail address on one handset, so s/he can use one handset for both private and business use.  Apparently, it was not appealing enough to convince people to come back to DoCoMo, after they are branded as the biggest loser in mobile number portability (MNP) battle that started last October in Japan.  Looking at May figure, the campaign is even backfiring them.

Mr. Takeshi Natsuno, a flamboyant and charismatic figure of the DoCoMo's successful i-Mode team, was as confident as usual at the product launch event, but I am afraid his focus and DoCoMo's focus on the real needs of their users are getting blur right now. 

I have lots of friends in DoCoMo, so I am really concerned that some of them may be now haunted by the ghost of old AT&T Wireless - not the new one that used to be Cingular, but the original one - which went under after the MNP was implemented in the U.S.  I hope they get back on their focus before it is too late.

"You are 21% similar to Tom Cruise"!!?? - Japan's another wacky mobile service

Another new and wacky service in Japanese mobile scene is making a big splash.  I mean, HUGE splash.  Huger than "Mobaga Town".  This time, it is called "Kao Cheki" (means "face check-y") provided by J-Magic.

All you have to do is to take a photo of yourself with a camera phone, and send it over to "Kao Cheki" site.  Then you get a message to your cell phone with the result of your face analysis - which celebrity (currently mostly actors/actresses) you look similar.  According to a user blog, the analysis reads kinda like "you have 21% similarity to Tom Cruise"(!).  The service is free to users.

The service started on April 26, 2007, and by one month later, the number of cummulative user reached 15 million.  Japan's hottest mobile service "Mobaga Town" has 5 million registered users,  and this 15 million is not a regular registered users, so they are different numbers, but still 15 million in one months is a HUGE number, even in Japanese standard.  The service expanded virally through blogs, SNS and direct word of mouth.

The point here is that you can laugh at it with your friends.  You can also interpret it in different ways.  "Wow, I look like Tom Cruise!" or "But only 21%!" or "Well it is better than nothing" or whatever you like.  It is no question a great topic generator in bars.

So, you might ask, it must be another horoscope with no scientific background, isn't it?  Well, in fact, it isn't.  The service use "Face Sensing Engine" developed by Oki Electric Industry - although to me, the results sound totally random.

J-Magic is currently expanding the celebrity face database to include more celebs in comedy, sports and others.  They are also trying to come up with business model (sounds familiar?) by partnering with a mobile search company.

Source:  CNET Japan

Why do geeks love ninjas?

My geeky son's recent favorite shows are "Mythbusters" on Discovery Channel, and "Ask a Ninja" podcast.  Recently, "Mythbusters" aired an episode about ninja myths, with Ask a Ninja Ninja appearing briefly, so he was totally electrified with it.

Ninjas and geeks have lots of things in common - or rather say, the only major difference between them is that geeks don't assassin people.  They both are highly-trained professionals, their main mission is to collect and manage information (including "hacking"), they work behind-the-scenes most of the time, they form closely knit communities, and they are mysterious and powerful.  Ninjas used various proprietary technology, such as engineering special weapons or whipping up secret poison or medicine.

Unlike the public image in the U.S., ninjas usually don't fight - their techniques, known as "ninjutsu", are oriented towards running away.  Occasionally, they may get a mission to assassin someone or to guard VIPs, but most of the time, they just collect information.  According to Japanese Wikipedia, ninjas even worked to take people's opinion polls in the peacetime.

So, are you a ninja-wannabe geek?  Well, there are two major ninja clan's hometowns in Japan, Koga and Iga, both located deep in the mountains between Nagoya and Kyoto.  They have the real ninja houses, one-day ninja training courses, ninja museums and all kinds of other ninja attractions.  In Koga, they will hold "All Japan Ninja Championship" in October, incluing events like shuriken throwing, walking on the water with mizugumo, jumping over the fence and others. 

Oh, and by the way, in Mythbusters, "walking on the water with mizugumo" was busted (meaning "it is a myth - not a fact"), but they use a long supporting stick in this competition and you are actually supposed to do it.  So, Adam-san and Jamie-san, would you like to try it again?

Koga Ninpou no Sato
Koga Ninja Championship
Iga Ninja no Sato

Japan's latest fasion - mobile SNS

In Tokyo, Mixi is already yesterday's news.  Just as in anywhere else, SNS fashion trend has already moved on to someone else.  The talk on the street today is Mobaga (pronounced "mow-baa-gay" - short for "mobile game") Town. 

Mobaga Town is a mobile-only SNS site that combines free games, customizable avatars, chats, customizable mails, etc., free to users and supported by advertisement, run by a company called DeNA.  Sounds generic, doesn't it?  Well, if you are a PC net user, it certainly does.  Not in this little mobile town.

It started off as a teen-oriented free game + SNS site in February, 2006.  According to Yuka Okada's interview with Isao Moriyasu, mobile business executive at DeNA, in last December for ITmedia News (and by the way, she usually writes great interview articles with IT people in Japan), Moriyasu believes that the key was "high-quality games" even though they are free, and "brand-new type service on mobile net" for mobile-only generation.

He says that PC users are accustomed to high quality games on PC, and SNS type services also are already commodities on PC.  But in Japan, there are some 19 million users who only use mobile devices for net access, vs. 16 million PC-only users, and for these 19 million (mostly teen and early 20's), free high-quality games and SNS service were totally awakening experience.

Now Mobaga boasts over 5 million registered users, with increase of 1 million every other month pace, and 420 page views per day, according to company's 1st quarter financial announcement.  DeNA has already recognized the limitation of teen-only market niche, and has expanded their target to wider young adult population in recent months, by adding more UGC-type applications, and looks like it is paying off; On Feb. 1, teens made up 62% of its users, but by May 10, teen portion has shrunk to 53%, and 20's/30's users increased from 38% to 47%. 

On the same day, mixi also announced their user number, and it states 9.83 million users, still way ahead of Mobaga, but analysts and bloggers pose questions about the decrease of "active" users among them, and the pace of its growth, in comparison to Mobaga's spectacular momentum.

It may only be a special case in Japanese market environment, but certainly is an interesting case study of SNS market place.

American or Continental?

No, I am not talking about breakfast menu.  It is about mobile strategy.

I have always felt a bit awkward with the growth prediction of different segments of mobile industry by big-name industry consultants, such as Yankee Group, Gartner Group or Ovum.  It applies to lots of things - handsets, smartphone, mobile music, mobile games, etc., etc., etc.

I recently realized that it is because their brains are European-flavored, while mine is totally American-oriented.  Their clients seem to be mostly European companies, I don't know why, and naturally, their analytical framework is European-style.

When it comes to mobile, Europeans are standard-driven.  All European (and most of the rest of the world) use GSM and its successors, so the handset vendors can have the economy of scale - but in other words, you have to be a big player to compete in this world.  Common denominator way of data communication is SMS/messaging.  None of the carrier has the majority power, so it is in a way democratic, but chaotic, as nobody is responsible about the compatibility.  Major European vendors, Ericsson and Nokia, are in the center of this world.  Those big-name consultants think that is the way the world should be, and individual company's strategy should be attuned to this wild West world.  Among major American carriers, AT&T belongs to this camp.

On the other hand, another major US carrier Verizon has a different perspective of the world.  There, Verizon stands at the center of the world, with a strong support by Qualcomm.  They have created their own little ecosystem.  It is based on CDMA and Brew, so the vendors can only sell this kind of handsets or service to Verizon, you have to follow their policy, and the entrance exam is as rigorous as Tokyo University.  However, once you are admitted into that ecosystem club, they support you well, and pay you well.  Verizon/Qualcomm team asks for higher prices from customers, but they promise the higher quality.  Handset price competition is not as fierce here, and BREW ("GetItNow") service claims the highest share among mobile gaming.  It is, in a way, "Apple iTunes + iPod" style ecosystem business model.  You can be a small but nimble player and still can survive in this world.  This strategy has become even more effective in recent years, when the wireless industry has been consolidated and Verizon has become the large portion of the US market.  In Japan, the largest wireless carrier NTT DoCoMo has run the country in a similar way for a long time, although recently, they have been chased to the corner by another Verizon-style competitor KDDI.

In my mind, VZ-Apple style ecosystem is a great business strategy, with a higher and stable margin potential, as long as you can successfully execute it.  It has some cost disadvantage, but can be justified by the higher margin.  If you are a vendor to wireless carriers, it is a matter of which you choose and how you optimize yourself to each style.

So, if you are a small and nimble player, don't believe in big name wireless industry consultants.  I mean, they are not lying or anything, but are only talking about the half of the reality.

So, you might ask, what about Sprint?  Well, they are stuck in the swamp between the two world.  That is only a small part of their problems, though.

Shameless optimism of Silicon Valley

I just finished writing an article about "Web2.0EXPO", held last week in San Francisco, for Internet Magazine Japan.

One thing that struck me at the EXPO was the high level of collective optimism in the venue, and even more than that, the degree of surprise and envy that my friends from Japan expressed to such optimism in Silicon Valley.  It was interesting - I met quite a few friends, and all of them said the same thing.  They envy us.

I wrote in the article, among other things, that such shameless optimism is exactly the tradition of San Francisco Bay Area, since 1849.  In addition, in Web2.0 world, another local tradition of utopian community, reminiscence of hippy era, is largely blended into it.

It is easy to talk about Web2.0 with all sorts of sarcasm, but as one of my Japanese friend put it, "optimistic people always win.  They are psychologically healthy bunch, and that creates the power."  If you can choose, take the optimist side, particularly in this Silicon Valley Web2.0 world.

It is much more fun, at least.

Correlations between good-looking bunch and Web2.0

I was attending Web2.0EXPO in San Francisco earlier this week. Roaming around on the floors in Moscone West, I noticed that the ratio of good looking guys is unproportionately high compared to other tech conventions I have ever gone to. I happen to be a woman and genetically more interested in men, so the fact caught my eyes, but I also noticed, after finding out this fact, that there are also unproportionate number of women, particularly fashionable and good looking women, as well.

I casually wrote this finding on my Japanese blog, and got a comment that it is because lots of Web2.0 guys are from media and advertisement industry, not from tech industry per se. That sounds like a very legitimate explanation. In addition, low age level also helps. It is a striking difference from CTIA, the cell phone show that I just attended at the end of March.

Chad Hurley of YouTube, Kevin Rose and Jay Adelson of Digg/Revision 3, John Battelle and many other guys on the keynote stage at the EXPO are all somewhat media type people. Alas, so it probably is still the case that all geeks are not born equal.

Anyway, the point here is that Web2.0 world seems to be quickly shifting from the original geek paradise to the flashy media world, not entirely unlike Hollywood or Madison Avenue, just as the previous generation of geek world, currently known as Web1.0, was quickly reduced down to souped up catalog sales channel of sock puppets of the world.

I acknowledge that the source of revenue is important to extend these wonderful activities into mass and to keep them going. And it is also wonderful to see such a large number of nice looking young folks on the show floor. And I know some people lament this transformation of "community feel" - where the old small community was pure and motivated to make the world a better place, but the new folks are simply trying to make a quick money.

I am mixed.  I am just trying to grasp and embrace the reality of the period.

Beginning of the end of wireless era?

This year's CTIA looks somewhat less flashy to me, with few big name keynotes and no major technological topic.  Sure, the exhibit hall is huge and number of attendees will probably be the record, again.  Carriers are profitable, hansets are sexier than ever.  Things are good in the industry.  Right?

The less flashy nature of the show may be simply because of consolidation of the industry.  There are less number of large customers, so less actual business is generated in the show. 

But seeing what has been going on in Japan, where wireless market is more saturated, I can't help but feeling it is the beginning of the end of the great wireless standard era. 

Wireless remain the center pillar of the carriers for sometime in the future, but it won't be the growth engine in the developed countries anymore.  That is not just due to the low growth on the  number of subscribers.  It is also due to the lack of major cost structure breakthrough in the network. 

Periods of telecom bonanza have been always supported by the technological revolution that drastically reduce the cost of network.  At&t breakup and internet boom were made possible by the advancement of fiber optic, and this current wireless era by digital transition.

Now the voice capacity per spectrum has pretty much hit the ceiling, and the high speed data is not cheap enough to satisfy the web2.0 crowd.

It has been 10 years since digital one rate that marked the digital transition in the us, and it should be the time to move on, but no major cost  breakthrough is in sight.

I may be just a pessimist.  I hope so.  But I may have to prepare myself for the coming change.

Why things are not so easy for ad-supported Web2.0ers outside of US

I found this article quite interesting - from my point of view, at least, when there is a big battle going on between Japanese TV stations and YouTube.

Some Web 2.0 startups have unusual problem: too many customers

Japanese consumers are quite Web2.0-savvy. They love to write blogs and upload photos from their phones. According to Technorati, Japanese holds the largest share in blog language in the world. Large portion of YouTube users (2.12million Japanese users vs. 7.76million US users in March 2006, according to Internet Watch) live in Japan, and upload their favorite anime or comedy clips from their TV recordings. Japanese TV stations and rights holders organization JASRAC have been taking a hard-nosed approach all along against YouTube, demanding them to take down nearly 30,000 video clips last October. Japanese government officials are scratching their heads how to regulate this chaos.

YouTube is probably not happy that so many "non-revenue generating customers", according to the above article, are eating up their bandwidth like a termite attack. And by the way, there is no realistic alternative to YouTube among Japanese domestic service. Nobody is brave enough to start such an evil project that is sure to be shot down from the back. Poor Japanese users are welcome by nobody in this world.

So anyway, the point is, even in this land of rising sun and sophisticated Internet users, in general, purely ad-supported Web2.0 services are hard to succeed. Japanese Internet Giant Rakuten is an e-commerce company, who has actually transformed into a sort of financial institutions through numerous acquisitions. Yahoo Japan collects fees from auction and premium services, in addition to advertisement. Mobile contents mogul Index has been comfortably paid in mobile walled garden paradise.

Why? One reason is the potential advertisement market.  According to AdAge, in 2004, US total ad market was $264 billion, nearly 7 times of Japanese market ($38 billion). My friend in Japanese ad industry says the number seems low, probably due to the different definition, but still the number she knows is approximately 1/5 of US market. And by the way, population in Japan is 1/2 of US. And by the way, Japan still is the No.2 ad market in the world, with No. 3 UK mere $18 billion, and others are even much less. U.S. has a huge competitive advantage in ad-supported Web2.0 world. That is for sure.

(Illustration by ju-goya)

SNS as a fasion

I wrote a few days ago about the decline of Japanese biggest SNS, Mixi. I guess it is not unique to Japan, after all. This morning, San Francisco Chronicle writes about the early signs of "diaspora" from MySpace.

San Francisco Chronicle article

It is not that MySpace will go down, but looks like it will "peak out" before long. Hearing comments from "This Week In Tech" podcast, they were talking about their young daughters don't do MySpace anymore, because it is "so 20 minutes ago". Just as people migrated from Friendster to Orkut to MySpace, they may eventually migrate to Facebook or Ning or whatever new, when it is out of fashion.

If SNS is a fad like clothes and shoes, then these new sites have to make money quickly while it is fresh. Their ability to quickly gather advertisers will be critical for their survival.

(Photo by sorayui via morguefile.com)