Tech Mom Version E

Willcom heading to legal procedure and Japan's spectrum policy is questioned

Nikkei reports that Willcom, Japan's No. 4 mobile carrier after NTT DoCoMo, au and Softbank, is going into a legal procedure similar to Chapter 11.  (Not exactly Chapter 11, as it is handled outside of the court, but still there will be a legal outside supervisor for their restructure.)

Willcom provides PHS (Personal Handiphone Service) system, which utilizes "half-duplex" type air interface and is used only in Japan and China.  It was originally conceived as an extension of cordless phone and as cheaper alternative to full cellular phones, but as cellular phone system got bigger and took on the economy of scale, the system lost the advantage.  A long, long time ago, it was.  And as the digital cellular system has been converged to 2 systems (GSM and CDMA, and eventually to one, LTE, in near future), PHS has become just another local, proprietary, limited technology.

But they survived.  When their price advantage in voice disappeared, they pushed the high-speed wireless data service.  It caught on to a niche but stable group of high-end data users.

That was a fine survival strategy for a niche player.  But the things got a strange turn when the government made 2.5GHz spectrum available in 2007.  Two licenses was made available, and Willcom got one of them in the "beauty contest" with its plan of "Next Generation PHS", XGP.  (The other was taken by UQ communications, KDDI-backed WiMAX carrier.)

There was another group backed by NTT, much more financially solid player, applied for the license, but Willcom was chosen.  The unwritten reason was rumored to be that their "PHS-XGP" technology was "made in Japan" and that the government wanted to push the in-house technology globally.

But looking at the situation from non-partial point of view, there was absolutely NO possibility that XGP would become the global standard at that time.  None.  Zilch.  Even the people at Willcom was not believing in it.  I think it was just a totally political decision.

So Willcom was burdened to deploy XGP by the government (the planned investment is estimated as 140 billion yen) even though they have 130 billion yen debt and their PHS subscriber is in steady decline.　　Now Willcom is short of money, but nobody wants to put more capital under the current economy.

In a way, I believe that Willcom itself is the victim of the unrealistic government expectation.

Now, there is a debate that Japan should introduce spectrum auction system.  Opposition says that auction system may give the license to unqualified parties just because of the sum of money.  But as in this case, the government officials actually gave the license to an unqualified party for a non-business reason.  In Japan's telecom industry, spectrum policy will be a tough issue for the new Hatoyama government.

Michi

LA fire may destroy TV/radio/cell phone towers

Mount Wilson Observatory Director Hal McAlister said Monday in an ongoing blog that the U.S. Forest Service informed him that passage of the fire across Mount Wilson was imminent. The USFS also said firefighters would battle the blaze from the air rather than on the ground.

via news.cnet.com

The wildfire in Los Angeles area is approaching Mt. Wilson, where many radio wave towers are concentrated. That means TV, radio and cellular phone connections in the nearby area may be lost.

So I learned the name "Mount Wilson" with this fire. I have to remember that.

Michi

NEC, Hitachi, Casio in Handset Merger Talks - WSJ.com

Dow Jones Reprints: This copy is for your personal, non-commercial use only.

via online.wsj.com NEC, Hitachi, Casio in Handset Merger Talks

This is the "official article" on Wall Street Journal about NEC/Casio/Hitachi possible merger.

Michi

NEC to combine mobile handset business with Casio Hitachi

Breaking news - Yomiuri newspaper reports that NEC is considering merging their mobile handset business with Casio Hitachi, although no source is specified and the article sounds speculative. Japan's largest handset vendor is Sharp with 22% market share, second is Panasonic with 17%. If NEC (12%) gets together with Casio (5%) and Hitachi (4%), then they jumps up to the second position. Casio and Hitachi have already set up a joint venture Casio Hitachi, and NEC is reported to invest into this JV, holds more than 50% and combines their production facility. Panasonic, by the way, has acquired the handset business from Sanyo recently. NEC is a major vendor to DoCoMo/W-CDMA, and Casio Hitachi is KDDI/CDMA camp, so the combination makes much more sense than NEC-Panasonic talk about combining their development platform together - which was on the news some time ago, and I don't what happened to it after that. I have been advocating that Japanese vendors have to consolidate QUICKLY. Better late than never!! Michi

Japan's desruptive mobile carrier "E-Mobile"

I am at Wireless Japan conference in Tokyo.  It is my second time here, and instantly noticed that the number of booths has shrunk quite a bit this year than before, due to the bad economy.  Hearing the presentations of the top Japanese carriers is as gloomy as the number of attendance.

The only executives who provided bright spots were DoCoMo, the top carrier, and the underdog E-Mobile.  DoCoMo is the Japanese version of Verizon.  With its strong network and more than 50% market share, and now with more focused strategy, they are stably strong.  They are doing everything you can think of, because they can afford anything.  That was expected.

Less boring is the story about E-Mobile.  They started as a subsidiary of eAccess, ADSL startup, who is considered the only successful Japanese venture in telecommunication, and raised money mostly from foreign investors, such as Goldman Sachs, Temasec (Singapore), and Hong Kong strategic investors.  The company is headed by a foreigner (Eric Gan, COO) so are the majority of the board members.

E-Mobile started the service in 2007, and currently has almost 1.5 Million subscribers.  Although the accumulated number of subs is miniscule compared to major carriers (DoCoMo has 50 Million), but in terms of net sub increase share, E-Mobile holds more than 1/4, and is at the top for the first half of 2009.  So-called Lehman Shock in fall 09 did not affect their growth pace at all.

Their technology is not anything unique - just an ordinary 3G.  What makes them unique is that their service is maximized for data service.  They have develped much smaller and cheaper base station (1/10 of investment, lower running cost), proviced by Ericsson and Huawei (instead of tranditional Japanese vendors).  They have procured cheap "net books" originally from Taiwan and started selling with subsidy, just as the mobile handsets.  "Net book" bundle strategy was hugely successful, and now that Japanese vendors have started to produce, net books accounts for 1/4 of total notebook PC sales in Japan.

Their base package is 1,000 yen per month minimum, and the new "light" plan even goes down to 580 yen if you don't use the data.  With such light starting point, most users (90%) only use data (although they DO have voice package, with MVNO arrangement), which means the users have a separate mobile phone.  They are introducing 21Mbps service in August, so you can ditch the landline ADSL altogether.

Their largest weak point is coverage, but because they only serve data customers, poor coverage in rural area is not as costly as others.  I tried their USB dangle at my parents' home in Tokyo suburb, and had no problem using it - easy to set up, and fast enough for basic net usage.  They have prepaid plan, too, so if you visit Tokyo for business frequently, you can buy the dangle and pay only for the days you use.

After 2 years of service, their existance is still quite small among Japanese big 3 carriers, but they are the typical "desruptive" technology, defined in Christensen's "Innovator's Dilenma".  They are still a private company and is not announcing the financials, but looks riding along to a pernament existance in Japan - and personally, I am looking forward to seeing such international innovator making it in Japan, and will potentially change its rather closed and slow-moving culture.

Michi

Japan's Mobile WiMax starts on Feb. 26

UQ Communications, a group company of KDDI, will start providing Japan's first mobile WiMax service "UQ WiMax" in Tokyo, Yokohama and Kawasaki on February 26, 2009.  They will eventually expand the service through Tokyo-Nagoya-Osaka corridor.  The article reports that they will focus the coverage in major train stations.

The service plan will be 4480 yen (approx. $45) flat per month, and the maximum downward speed will be 40Mbps, upward 10Mbps.

CNET Japan 2/3/2009

They will provide free trial service until June 30.

Globally, WiMax has shrunk down to a niche service for emerging countries lately, but UQ has to start the service because of their oblitagion to the government as a spectrum licensee.  With the economic environment as grim in Japan as everywhere else, it is a tough start for UQ.

But you never know.  Things sometimes work differently in Japan.  I never expected E-Mobile does such a good job getting people to use their "Net Books" (small and cheap wireless-net-enabled PC, which is provided for free to users with carrier's subsidy), so it may be another case.

Anyway, I HAVE to get there before 6/30 to try it out for free myself.

Michi

Gphone vs. iPhone - the concept behind Android

I got hold of the first Android phone - T-Mobile G1 - last night in San Francisco, where the "pre-sale" was held from 6pm.

Without too much going into the technical details, here is my impression about G1.

1. Form factor:  I am in strong belief that the form factor is the #1 key for success for mass-oriented mobile phone.  With Andy Rubin, former Danger guy, in the helm, G1 definitely has inherited the cool "smell" of Sidekick that appeals to the young folks.  (Although the hardware is made by HTC, I heard from the industry source that Google had a lot to say about the hardware design.)  It was much sleeker than I thought, and feel how the screen opens up - a bit to the side and up - is "Sidekick"-like "fun" factor.
2. Cloud factor:  Smartphone market is exploding this year, and with the entry of Apple and Google, the main focus of smartphone market is how it relates to "cloud computing".  In that sense, iPhone is "Web1.0" handset whereas Android is "Web2.0".  iPhone is basically a beautiful "viewer" of the contents, including iTunes contents and website.  With iPhone, you can buy the professionally made contents and see it on the phone, whereas with G1, the screen is much smaller and less beautiful, Android market is not developed yet, YouTube doesn't work very well, but it is much easier to input text and make phone calls.  It is very true to the basic "mobile phone" function, which may also be the DNA of Sidekick.  It also is still "work in process", as open source OS, so it may get better over the years, but at this moment, iPhone looks much more "complete product".  With all its power and shortcomings combined, G1 is the "Web2.0" type handset.

I will probably come up with other stuff, but here is my brief impression about G1.

Michi

Cellular 25 in Chicago

I just came back from "Cellular 25" party in Chicago.  The event marks the start of Wireless History Foundation, on the day that the first mobile phone service started in Chicago 25 years ago Oct. 13.

It was a fun night, with lots of industry insider attending (500 people).  It was also encouraging for me that the foundation was headed by Arlene Harris, well-known female entrepreneur in wireless, and is backed by lots of women in the industry.  They gave me lots of inspiration.

Michi

My comment on "iPhone sales slow in Japan" article

Wall Street Journal's Yukari Iwatani wrote an interesting article yesterday, regarding the slow sales pace of iPhone by Softbank Mobile in Japan.

WSJ article on iPhone 9/15/2008

The article was translated into Japanese and is getting lots of social bookmark and comments back in Japan.

IT Pro article 9/16/2008

I think what is to blame here is the outrageous media hype.  Everything that is mentioned here is no secret to Japanese users and industry people.  Before the release, media hyped that Apple is SO special that it WILL be a huge hit, even though you cannot use emoticons or one-seg (satellite TV) or mobile wallet or anything.  It was just not the case.  That is all.

iPhone is and will remain as a niche product, even though a sizable niche, in the U.S., Europe or in Japan.

U.S. soil was cultivated enough before iPhone release with smartphone market development after 2004.  Japan did not have that background.  People there are also used to using number keys for typing in text.  They are already so fast in doing so, just as a fierce samurai with his quick sword skill, so they would rather not give up this habit and skill to flat, touch screen interface.

It will just take more time for learning curve in Japan.  It is still too early to judge.

Michi

Why US mobile contents business is STILL not successful

I am at CTIA - the mobile phone conference - in Las Vegas, and on Monday, there was a pre-show event called "Mobile Entertainment Live". I have been involved in the mobile contents industry for the past several years, and am quite disappointed that people are still complaining about the same things.

There was even a panel designed to "complain" all the problems that the contents providers face, repeating their same mantra to blame phone carriers, rights holders (such as music labels and movie studios) and everybody else.

In my eyes, though, they are missing an important point - "women". 

I recently talked to a guy from RockYou, one of the top Facebook application providers, and he mentioned that their CEO reads teen girl's magazines to come up with new ideas, because they have the biggest "viral" power to spread their application. Sure enough, Web2.0 community understands it. So they are successful.

Even in Japan, the land of male-centric society, mobile contents industry has plethora of female entrepreneurs, most notably Tomoko Namba of DeNA (provider of ad-supported game/SNS service Mobaga Town) and Yoshimi Ogawa of Index (the pioneer of i-mode contents). And their main customers also are young women. They love to communicate, have fun together, and listen to their friends. Great customers for mobile contents.

Here at CTIA, in the US, the land of the free and where women are supposed to be better situated in business than their across-the-pacific neighbor, the place is just full of men. Women are often ignored both as providers and as customers, even in "that" mobile contents segment. They talk about sports, hip-hop and shooting games - so much focusing on 18-and-older male audience.

5 years, and nothing has changed. You guys just don't understand your potential customers. And that is the formula for failure. Stop complaining and do something about it.