2003.3.25
Mobile Internet in Japan
K.Tomisawa
Professor
Faculty of Management
Dohto University
1. Content of today’s presentation
* As you know in Japan, cellular phone, especially mobile Internet in which “imode” is a representative example, has developed to the extent unprecedented in
the world.
* Today, I would like to speak more concretely about how mobile Internet is used
in Japan, and also I would like to mention problems that might arise in the future
development of mobile Internet.
2. Mobile Internet has promoted the Internet use in Japan
* According to the report by MPHPT (Ministry of Public Management, Home
Affairs,Posts and Telecommunications), population of Internet users in Japan is
69 million and a percentage of users per population is 54.5%.
* Characteristic of Japan is that there are both PC and cellular phone users.
* Of 69 million users:
57 million uses PC.
28 million uses cellular phone.
Number of users who use both PC and cellular phone is deducted.
( In addition, the number of users who use TV or game machine is 4 million. )
* Last year there were 48 million PC users, an increase of 9 million.
And there were 25 million cellular phone users, which is an increase of only 3
million.
* However, the number of people under contract is 60 million so this number may be
too small: there are many users who are not consciously aware of using Internet.
* There are some scholars who think over use of mobile Internet is a problem.
PC Internet is active, and people send messages or gather information they seek
from a treasury of universal knowledge. On the contrary, mobile Internet is a
passive activity as people only consume given information. Furthermore,
contents of use such as ringtone melodies or games, some think are of low taste.
* Whether it is good or not, the following is the reality.
* Students only have a cellular phone as they do not have a contract for immobile,
residential phone: many students then do not use PC Internet.
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* It can be said that mobile Internet is inferior in active gathering of information;
however, its users come close to having an ubiquitous experience. ( It has become a
daily scene to see users use cellular phone like a remote control, and quickly do what
they want. )
3. Mobile scene in Japan
* The number of users of cellular phone service has increased with digitalization
and with a reasonable cost. And recently, mobile Internet has promoted the
Internet use.
* Worldwide, Japan and Korea are advanced countries in mobile Internet.
* Nowadays, cellular phone has changed from a phone placed over an ear to a phone
placed in front of a face.
* On a train ride in Tokyo, one will find four or five people out of ten concentrating
checking emails.
4. Success of Docomo’s strategy
* Docomo’s share is about 60 percent.
Other two companies follow Docomo’s strategy. Recently, these two companies
have begun to show distinct features. ( For example, J-phone (Vodafone) has become
known for picture mail, KDDI is characterized by cdma system such as GPS and
data rapidity.)
* Factors of Docomo’s success (There are four factors).
① Careful selection of contents(Official contents) → Docomo collects the charge of
official contents together with its telephone charges.
Docomo manages the portal site.
*Docomo excludes trouble sites such as adult sites and selects only good contents.
( At the beginning, success was uncertain, so Docomo requested to offer contents.)
*As for official contents, information charge is less than 300 yen and charges with its
telephone charge.
( With PC Internet, a method to collect small charges was not found so only
advertisement models are being charged.)
*The Docomo list links which show contents on the first page (portal site).
(Searching by genre through several stages, users can be guided to their own site. )
② Docomo did not advertise “Internet connectivity”, but it appealed “what can be
done”.
*(With signing, user can use immediately without troublesome setup.)
③ Using packet switching service.
* ( Charging occurs only when information is being sent, so it can always be use
connected. A person can use whenever needed, and can know and respond
immediately upon arrival. )
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④ Communication careers plan devices and sell them as their own brand.
*Risk is low, so consequently manufacturers have developed and are developing
new functional devices and placing them on a market.
*( In Europe, manufacturers sell devices so they take on risks; therefore, it is not
easy to market new devices unless investment is completely depreciated.)
*In order to widen share, communication careers offer sales promotion premium to
dealers and return premium from communication charge. As were able to get
new functional devices at a low price.
( Communications charge is relatively high).
5. The highly functional devices have been introduced into the market timed with
the progress of user’s literacy→Expansion of market share
*Improvement of user’s literacy
*Many people are using email (from text to picture-mail, and moving further to
movie-mail. ).
*Gather web information ( browsing weather forecast, train schedule ).
*Download contents (ringtone melodies, wall papers, games) →Not only for
enjoyment, but also use for differentiation or as communication tools.
* Coupon, prize ( stand to gain)
* Using Web (shopping, auction, reservation, banking ) →payment
*Using Web (linkage with company’s DB)
*Highly functional
* Liquid-crystal color screen ( from monochrome to sixty six thousand colors),
polyphonic ringtones (from three tones to sixty four tones), camera (three
hundred and ten pixels) , Java, GPS, 3D, infrared rays and so on.)
* Beautiful color, beautiful sound, photo shooting, direction finder, high security,
and short distance communication.
*Speed up ( from 9.6 Kbps to 28.8, and 3G )
→Thanks to these, various functions are now possible, and business use has become
expanded.
6. Diversification of Mobile Business
① Pay contents ( ringtone melodies, wall papers, games, news, etc.)
② Mobile commerce
( Two types: Completed type, Store-guided type- booking by mobile and
receiving and using at shop )
③ Mobile advertisement (banner, mail, prize, coupon)
④ Solution Business ( support companies’ usage of mobile Internet)
* A new strategy of content providers ( peak of demand, peak of unit price) = Foray
into solution business plus overseas strategy
* For example, an airline company site is free and is a mobile commerce. For an
airline company, this is one channel of sales and also one means of promotion.
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7. Interactive mass-media
* Media features of mobile Internet
1 60 million users ( mass-media )
2 Carry-on 24 hours (portable)
3 Connects a specific person ( personal)
4 Interactive
5 Continuous connection, immediate response( real time)
×Unfit for hierarchical information retrieval
×Difficult to input ( Choosing is OK, but inputting a long URL is
difficult )
*Letters and telephones are personal and one-way media: TV and mobile Internet
can appeal to large numbers so in this sense it is a mass-media. However, TV
is one-way and mobile Internet is interactive.
*Time zone in which a cellular phone or PHS is within a meter away: 70 percent
in a daytime and 40 percent in a nighttime.
*Time zone in which people can browse (check) Galliver( used car ) site: lunch time
and at night. But in some cases, daytime and business hours as well. Screen
is small so it can be seen secretly.
( Suitable for private matters such as consumer loans, hair-care, selling and
buying of stock, and hotel reservation.)
.
* Compare with mobile Internet, PC’s screen is big and input is easy. ( suitable for
searching information.) However, there are some demerits such as difficult
initial setting, slow start, too heavy, quick battery run down, uncertain privacy,
and a separate telephone function. )
* In particular, for young people, a cellular phone is integrated part of self,
so upon receiving emails, response is immediate. These people have a
habit of doing everything through phone. For example, meeting spot is
searched by map; information is inputted by camera instead of pencil note
taking; favorite shops’ URL is book marked when reading a magazine; and
when desire, call is made by using Phone function…
8. Media-mix ( Function that applies interactive mass-media features)
* Mobile Internet has lens like effect. With only mass media, information diffuses
so whether it is reached or not is unknown. However, in combining mobile Internet,
it is possible to communicate interactively with people who respond to mass media.
This is Media mix.
*Newspaper advertisement +URL
Company examples such as a car shop, hair-care counseling company and
consumer loans company;
Company advertises its mobile site URL in the newspaper.→Consumer who
is interested in the theme bookmarks the URL. →In a free time, after finding
the nearest shop from the mobile site, the customer makes a telephone call or
visits there.
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*Acom (mobile cashing): Acom advertises its mobile site URL on TV or on a
train. Customer who wants to borrow money applies for borrowing through the
mobile site. Upon passing the examination, customer can borrow money from
the shop immediately.
*Mobile commerce (linkage with magazine)
* Chibi Gather (mobile commerce; 100 million yen sales a month through the
mobile site.): Not only is the company successful at selling goods through the
mobile site; in addition, the company has a linkages with a well-known
magazine, and two pages of this magazine are used for a mobile mail order.
*Mobile campaign (linkage with package)
* Fire (Fire is Kirin beverage’s canned coffee ) : In Fire’s campaign, a serial
number is marked on each can. Consumer enters the campaign site, inputs the
number, and plays a card game at the site. Winner of the game receives a
prize. Loser though can challenge many times by buying a canned coffee.
Consumer can access the campaign site form PC Internet and mobile Internet.
Over half used the Mobile Internet access. Around 1 million people
participated, but since some people participated number of times, the number
of participation was much more-about 20 million.
*Declining of portal site’s strength of official contents ( from several dozen sites to 25
hundred sites ) → Customer guidance is not always provided. →Media-mix is more
effective. ( Guided to sites by using simple URL, simple number and attachments
linkage by URL.)
*When registering as a member, companies can send greatly prized information
through mails or mail magazines. Aftermath of annoying mails, companies
hesitate to send mails. But some companies who send mails say it is more effective
than PC. Example: Tsutaya on-line (multimedia site)
* When liking mobile sites user can bookmark. Example: Yokohama intercontinental
hotel. ( A person can reserve room at low rates after 20:00 of that day. )
9. Fields of using mobile Internet for companies
( Mobile Internet is not almighty. For office work, PC Internet is more convenient. )
1 Catching elusive consumers. ( sales channel, method of sales promotion: immediate
response, can appeal to large numbers )
* Convenience store, LAWSON has established the “Mysterious Lawson Division”.
In this division, users become division members as monitors for developing new
sandwiches. Members can send opinions or ideas to the division through a cellular
phone.
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Supporting working people under mobile environment
* Support sales person ( Access to company’s DB, checking stock, checking client
information )
: Tokyo Marine and Fire Insurance Company, Limited. ( on the spot contract
renewal ; immediate informing of a car model and other data at the
occurrence of accident. )
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* Contacts of industries where members are scattered. ( acceptance, schedule
adjustments and contact)
:Twomix ( acoustic service for events)
* Use information technology of Mobile-shops
: Koro-chan (franchise chain store; croquette shop) ( shipping and receiving
orders of materials, contact with head quarter over sales trend)
* Raise operating efficiency rate of truck
: Direct a car near customers by using GPS
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People or things at some distance
:Coco-secom ( GPS confirms location of the lost, wandering old people, or
stolen car. )
:Supervision of distant places
10. Distinctiveness of the cellular phone industry of Japan
* Vertical-integrated business model developed by mobile communication carriers
( This is the factor of success)
* Different from PC Internet, different from European models →There is a demand
towards openness.
* Classification of product by architecture ( The degree of interdependence of a part
design ×cooperation beyond companies )
* The world of PC and PC Internet is a modular type-open.
* The world of cars and mobile Internet is an integral type- closed.
* Depends on a technology change or a market preference ( If you request Fine, it
becomes an integral-type.)
* MPHPT carved every layer of the model. ( Environment is improved, but there is no
effectiveness.: Perhaps this maybe due to market characteristic.)
* The portal site is opened. (Only KDDI). : Easy entry of content providers.
* Internet connectivity information is opened. : Easy entry for ISP ( Only Docomo:
NTT data has entered.)
* Wholesale selling of cellular phone: Environment is improved for entry of MVNO.
× Portability of a telephone number is a left behind subject. ( SIM lock) :Carving
between telecommunication service and a device layer: Easy entry of brand
manufacturers.
11. Will business use of mobile Internet be expanded?
*Future expectations. ( The efficiency of sales person and information reception is not
developing. )
*Dislike without ever having tried it. ( Mobile Internet is recognized as children’s
toys. →But now, most adults are also users. )
( PC and mobile Internet users have different lifestyles).
*Security issues ( necessity to carve out public DB )
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* Sales division desires to use mobile Internet. However, division in charge of
mobile Internet has not been established. (This is because System division takes
charge of computer systems, and General affairs division takes charge of
telephones.) →Therefore, it is difficult have mobile Internet for an entire
company: Division that needs it the most have begun to use first.
* Divided by each communication carrier. ( Company employees already have
various devices, so as a whole, companies must decide on one cellular phone
company and provide the device, or companies must respond to every company
and all their models.
*Every year, many new models are introduced, so it is difficult to prepare for
them. )
*The development of solution business ( Gather together security, different carriers
and so on and take care of them .)
* MVNO ( Flexible cost structure in accordance with using: 24 hours unmeter
plan, business hour plan, charges by the second plan. )
*System Integrator provides the system including mobile.
* Move towards high performance 3G.
* Can Docomo, by itself, expand the demand of FOMA ?
*At the moment, cdma 2000 1x sweeps the board.
Reference;
1. K. Tomisawa “Mobile Business White Paper 2002” ( coauthored ) Shoeisha
2. K. Tomisawa ‘Maturing of the Industry Has Begun to Wrench Open the Vertical-Integrated Business Model
Developed by Mobile Communication Carriers’ “AURORA” No.7, Dohto University, Mar. 2003
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