Gave talk organized by the Asia Pacific Technology Network (APTN) at the beautiful house of the Daiwa Anglo-Japanese Foundation near Regents Park in London, title “The strengths of Japan’s post-Vodafone telecoms sector: opportunities for foreign companies and investors”
Agenda:
Japan’s mobile communications markets – overview and key players
When European’s and Japanese talk about “Broad Band” they don’t mean the same thing. Status of FTTH and wireless broadband in Japan today vs Europe’s situation
Japan’s mobile telecommunications market: no GSM and no SMS, but a lot more
In his presentation, Dr. Fasol will explain the essentials of Japan’s mobile phone market, why and how it is so different to Europe’s. He will also talk about some of the reasons why it is so difficult for European companies to succeed and uncover opportunities and the keys to success for European companies in this important market.
Title: “Japan’s Mobile Phone Industry and u-Japan”
Date and Time: Thursday, 12th October 2006, 17:00-19:00
Location: Main Conference Room 4F, EU-Japan Centre for Industrial Cooperation, Tokyo
Agenda:
Japan’s mobile phone and broad-band markets are about 3-6 years ahead of Europe: new services are typically invented or first brought to market in Japan, 3-6 years earlier than in Europe. Internet in Japan is generally much faster and much cheaper than in Europe. For this reason and because of it’s size, Japan’s telecom markets are full of opportunities for European companies with the right products and the right strategy, and for investors with the necessary knowledge.
Japan’s mobile phone industry is notoriously difficult to understand for Europeans because it’s market logic is very different from Europe’s, and because the pace of innovation and structural change is much faster, and because of the language barriers.
This talk will explain the driving forces behind recent dramatic changes in Japan’s mobile telecom sector, and will explain new changes that the “ubiquitous-Japan” (“u-Japan”) policy will bring in the near future.
Do you need to know what Europe’s mobile phone and internet markets will look like in 2010 or 2015? – Come to this talk and you will get a good look into Europe’s IT future about 5 years ahead, as well as Japan’s telecom markets today.
Background
Following Vodafone’s decision to end business in Japan and the announcement of the sale of Vodafone-Japan to SoftBank, this author has been asked to brief the Technology Attaches of the 25 EU Embassies in Tokyo on Japan’s mobile phone and telecom sector.
The EU Technology Attaches were particularly interested in the impact on Europe by the termination of by far the biggest ever European investment in Japan. Clearly it is also important to determine, what other European companies can learn from Vodafone’s experience.
Eurotechnology Japan KK has been awarded a contract by the European Union to benchmark Japan’s telecom sector vs EU and make recommendations.
There is a lot of discussions about whether Steve jobs is going to announce an iPhone or iPod-Phone at the Apple Computer Developer’s Conference in SF – according to the headline report on Saturday May 13th, 2006 in Nihon Keizai Shinbun ( the world’s largest business daily ) it’s already known since May this year that Apple and SoftBank are developing such a joint mobile phone with iPod and iTunes functions.
On March 17 SoftBank announced the full acquisition of Vodafone’s Japan subsidiary – the former J-Phone – jointly with YAHOO-Japan as a co-investor – so with about 15 million mobile subscribers in the world’s most advanced mobile market (Japan), SoftBank/Apple will have the firepower to make such a phone a success, provided it’s tuned to Japanese consumers’ needs and dreams – my guess is that it probably will be.
By pure coincidence, the Apple/SoftBank headlines appeared one or two days after DoCoMo and Microsoft announced a music cooperation.
Apple/SoftBank iPod mobile phones coupled to iTunes could have quite a lot of impact on Japan’s music industry: about 20% of Japan’s music sales are to mobile phones. Of all music downloads in Japan about 6% are fixed line internet downloads, and 94% are music downloads to mobile phones: internet music downloads are almost neglibile in comparison to mobile phone music downloads.
Therefore even if iTunes has a huge market share in the fixed line internet world, iTunes cannot have much impact in Japan overall if limited to fixed line internet downloads. iTunes downloads to mobile phones will change the business models of Japan’s music industry – at the moment music downloads to mobile phones cost a lot more than iTunes downloads. An iPod/iTunes music store could reshape the mobile music market in Japan.
Briefing the EU Attaches at the EU Embassy in Tokyo about the reasons behind Vodafone’s departure from Japan
The deeper reasons and background on why Vodafone failed in Japan
Today (March 23, 2006) I was invited to brief the Technology Attaches of the Embassies of the 25 European Union countries here in Tokyo about Japan’s telecommunications sector (both fixed net and wireless) in a one hour presentation + discussion. I had offered several alternative topics and the conference of EU Technology Attaches selected the most provocative title I had offered:
Vodafone KK’s Chairman and former NTT-DoCoMo Vice-President Tsuda, who had worked 34 years at NTT and DoCoMo (and who resigned from his Vodafone-Japan CEO position a few weeks after being head-hunted), said in a recent interview with Bloomberg that “Japan is way ahead in 3G”. – therefore, although this title is clearly provocative, it’s clearly worthwhile examining this question. With the sale of Vodafone KK to SoftBank last week, the timing of this briefing was particularly interesting. My presentation discussed the following questions:
Is Japan ahead of Europe in Telecommunications?
Why?
What is the impact?
Is this important?
What Europe can do to catch up
Read our report on Japan’s telecom sector to understand more
Japan’s top three mobile operators DoCoMo, KDDI and Vodafone announced plans to invest about US$ 15 billion during FY 2005 (April 2005 – March 2006):
Infrastructure investments (capex) by Japan’s mobile phone operators – Vodafone’s investments were systematically reduced and are by far the lowest of Japan’s three large operators
March is the month when new subscriptions peak in Japan. During March 2005 around one million new subscribers signed up for mobile services in Japan, the net gain (new subscriptions minus cancellations) was 930,500. New subscribers were shared as follows between carriers:
Vodafone announced a new method to calculate numbers. Without this new way of calculating, Vodafone’s loss would have been: -58,400
Net growth (loss) of subscribers per month for Japan’s mobile operators – Vodafone drops into the red, losing subscribers despite a new way of counting them
Net growth (loss) of mobile internet subscribers (i-Mode, EZweb and Vodafone Live!): since Vodafone renamed Jsky to Vodafone Live!, its rapidly losing market share
Japan’s mobile subscriber numbers for Feb 2005 came out yesterday…
DoCoMo is ahead again after a soft period on the strength of services and handsets, and KDDI/AU is still going strong driven by the designer series, good tariffs/discounts, music, WIN etc.
Willcom (the former DDI-Pocket) is strengthening under new management, new name and new campaigns and network upgrades, TuKa is falling back after it’s great “TuKa-S” success… and Vodafone succeeded to stabilize subscriber losses somewhat which is a mild step in the right direction and might be the first indication of Mr Tsuda’s influence…
Stimulated by the needs of our customers, who need to roll out services across the networks in Japan, we have started market surveys, interviewing mobile phone customers of all kinds on Tokyo’s streets in “focus groups”, as we do when required for our customers to get a feel for the market. I always make a point to take part personally in such consumer research, and often do some myself. In the case of mobile phone habits, the first approach at interviewing just reflects back the messages of the commercials and publicity campaigns. Only in-depth interviewing and discussion then reveals the real thoughts which are normally quite different. We learnt a lot about what average Japanese consumers think about DoCoMo, AU and Vodafone, building up a good picture. But the numbers also tell a clear story:
Subscriber net growth/loss for Japan’s mobile phone and PHS operators
The following figure compares Sales (Financial year ending March 31, 2004), Net profits after taxes(Financial year ending March 31, 2004), and market capitalization (as of February 17, 2005) for DoCoMo, KDDI and Vodafone (in each case consolidated for the global company):
Sales, net income and market cap for docomo, KDDI and Vodafone for the financial year 2004
