Tag Archives: Japan

What’s behind Mobile Payment success in Asia?

When you look to Asia to replicate the success of Mobile Payments compared to other regions, you need to know what is behind. The success comes from two totally disparate markets that have little in common among themselves, and with the western world.

1. Emerging Countries.
A few years ago I visited a good customer in Cambodia. They were the leading mobile operator in country and we were discussing the upgrade of the Prepaid platform we provided. I was surprised when our country manager took me to meet the CFO and not the CTO or CIO. Why was the Prepaid platform under the management of  Finance? The CFO himself answered: The country had a total of 40.000 bank accounts, while they already had 2 million prepaid mobile users and growing. In Cambodia everyone had a mobile phone, but only a few of them could afford a bank account. Their Prepaid Accounts had transformed into Mobile Wallets.  People had started to use Airtime Transfers as a method of payment. The mobile operator was also becoming a new sort of ‘bank.’  The technical solution was based on simple USSD transactions.

The story shows that a large number of Prepaid users with ARPU‘s under $10/month will make the statistics to Mobile Payment users.

2. Japan.
I lived a few months in Tokyo. A few days after you land you realize you need a Suica card. The Suica card is a RFID wallet card that is ultra convenient when you use the wonderful railway and metro system in Tokyo. Taxis are very expensive and having a car too. Soon you notice everyone has one Suica card, only if to use the public transport system.

With eveyone carrying a Suica card, you understand why most convenient stores and any merchant that receives small payments in cash accepts it.

On the other side, the handset ecosystem in Japan is totally different from the rest of the World.  The handsets that Docomo and KDDI provides are still specific for Japan (only after iPhone 4, Apple is making significant inroads in market share). Therefore for phones to support Suica, it was only a matter of Docomo and KDDI agreeing with Suica to link their balances.

In short…
Mobile Wallets in emerging market are filling a need we might not have in western countries.

You can learn from Japan experience. Just be aware it is a market with many specificities, and that a big driver for adoption was the wide use of public transport.

key-facts-about-mobile-payments
You will find more statistics at Statista

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In CommunicAsia 2009: Making Mobile TV Work

communicasia2009

It is more than one motnh ago that I was in CommunicAsia  for a Mobile TV panel. Here are the main points we discussed about how to make the business case for Mobile TV work.

  • Free-to-Air channels are a must to drive adoption of Mobile TV into the mainstream, as Japan One Seg, Korea T-DMB and even the DVB-H Italian case show. More than 20 million Japanese watch TV on a phone. As of today, 85 % of the new handsets sold in Japan have a One Seg tuner. Even the iPhone has an One Seg tuner accesory (see picture)
  • “Free” creates a large audience that can be monetized through subscriptions, advertisement and transactions (VOD, Catch-up TV, cross-selling). It is the economics of free, common in Internet and Software, applied to Mobile TV.
  • There is a need for a next-gen Mobile TV that puts together Broadcast and Unicast technologies. Broadcast enables FTA channels at zero marginal cost (it is the same cost to serve one customer than one million) and it is efficient for premium mass audience channels like sports channels. Meantime, Unicast provides unlimited number of channels for premium, niche/long tail, VOD and catch-up TV that can be monetize as subscriptions or pay-per-download. The 3G network also enables interactive services, like EPGs, audience monitoring, interactive ads, or interactions with social network (see what my friend watch, or “watch and chat”), that give extra chance for monetization.
  • Focus on high-end devices, like iPhone or ones with TV tuners. Early adopters of these devices are the same early adopters that will watch TV on a mobile. It is a waste to support a large number of mid-range or low-end devices. Mobile TV has not crossed the chasm yet.

1seg-iphone1

Some other curious facts and learning from the Japanese One Seg: Mobile TV experience:

NHK Study: Where people watch mobile TV?
1) At home in a room wo TV 38%, 2) At work/school 26%, 3)While bathing 24% – On train goes in 7th place (17%) tied with at home in a room with a TV!
=>  There are more use cases than just watching TV on the train…

DIMSDRIVE research for Japan:
What people like about Mobile TV: 1) Anywhere, 2) free, 3) simple
What they do not like: 1) Battery, 2) don’t need to watch TV outside, 3) do not want to watch TV on a phone

Japan: Mobile Phones and Fashion

Softbank spring collection

Each season Mobile Operators in Japan present their new handsets, often developed in exclusive by Japanese vendors as Hitachi, Sanyo, Panasonic or Kyocera.

See these articles with details on the latest models announced by KDDI and Softbank: KDDI spring’08 phones and Softbank 2008 Spring Collection.

It is interesting how Japanese operators manage the release of handsets with a seasonal renewal, like in the fashion industry. Not only that, but the handset as a fashion  item is becoming a reality: e.g. Softbank has reached an agreement with Tiffany’s for exclusive designs.

If this trend goes on, I wouldn’t be surprised to see soon mobile phones being presented in a runway as a fashion show.

Is this an specific behavior in Japan? or just an anticipation in Japan of what is coming for the rest of the world?

KDDI LISMO: Best Mobile Music Service in the World

KDDI Neon KDDI au

Few people are aware about the huge success that KDDI, #2 mobile operator in Japan, has achieved in selling music to mobile phones. LISMO is the name of the music service available to KDDI au subscribers, that offers song downloads over the air.

In a press release back in February 2007, KDDI already announced that they have exceeded 100 Million song downloads, since the EZ “Chaku-Uta Full” full track download was launched in November 2004.

The following table shows the remarkable growth:

KDDI and Sony announced in October 2007 that LISMO will now enable ‘Chaku-uta Full’ files downloaded to au mobile phones to be transferred to Sony audio equipment via a new ‘LISMO Port’ PC software. It is to work with Sony Walkman and with Sony Net Juke, HDD Stereo System. The service is named ‘au x Sony MUSIC PROJECT’. The intention is to make the protected music available to other devices than the au phones, in response to international music labels embracing DRM-free downloads.

The move also highlights how Sony and KDDI defend from the imminent iPhone assault to Japan. KDDI has a portfolio of music phones quite impressive, that will give a tough battle to iPhone. Sony may have lost the worldwide battle for mp3 players to Apple but, in cooperation with KDDI, might still resist in its domestic market. 3G iPhone in Japan will also be required to download songs over the air, to compete with KDDI service and devices.

KDDI LISMO shows how an operator with determination and courage is able to provide mobile entertainment without giving away the Service and Customer ownership, as AT&T’s has done with the iPhone and Verizon Wireless with the MTV/RealNetworks Rhapsody music service. Even NTT DoCoMo, number one operator in Japan, has been unable to replicate KDDI success after seeking agreements with Napster and Microsoft.

Well done KDDI. Keep giving example to other mobile operators.

Will iPhone succeed in Japan?

No doubt, iPod is extremely successful in Japan, being one of the top selling iTunes stores. When iTunes Japan opened in August 2005, it sold one million songs in four days!! No wonder why the price of iPod in Japan is lower than in many other markets. The Japanese do download songs legally.

Some reports say that iPhone will be launched in Japan brought by Disney, as an MVNO over the Softbank network. See the story.

Mickey Mouse MVNO would bring content from Disney to the iPhone, in what could be a very compelling offer.

iPhone support for UMTS (3G) will be a pre-requisite to launch in Japan. With the Japanese obsession for clamshell phones, will iPhone surrender to Japanese habits, or will Apple succeed also in transforming the mobile phone market in Japan?

Apple already transformed the music industry. It seems easier to convince Japanese users of the advantages of a touch screen

Japanese ebooks on mobile handsets

TechCrunch reported a few days ago the success of “mobile phone ebooks” in Japan. See article

I often fly to Tokyo for work. People there commute mainly on train. Japan has the best railway system in the world. Trains are so punctual you can actually use them to set your watch time.

It is considered impolite – and it is forbidden- to speak on the phone in trains, buses or restaurants. Yet, around 80% of the people in a wagon are using their clam shell phones, mainly for email. SMS is not common and it is replaced by email, which Japanese access more often on their handsets than on PC.

With so much time spent in commuting, the mobile phone becomes a Personal Entertainment device – email, imode, games, music, and BOOKS as reported by TC!!.
KDDI, second mobile operator, sells millions of songs every month directly to the phones of their customers, being the main competitor to iTunes in Japan.

You can also find people in the train watching TV on their phones, not only unicast, but broadcast too. Technicians installing TV at home, will use the TV in their handsets to check channel reception.

In summary, Japan is very special in their habits. Successful concepts in Japan, may not be exportable. e.g. imode did not quite succeed overseas.

Japan, Globalization and Telecoms

Shinjuku Harajuku Akihabara

I have been in Tokyo this week, almost 2 years after I spent a few months living there.

The Telecom market has evolved specially in mobile, with eMobile as a new 3G player and with Vodafone, unable to cope with the specificities of the market, selling their Japanese operations to Softbank.

Japanese are still addict to emailing with their phone while in the train. Around 80% of the passengers in a given wagon will have their clam shell handset open and will be thumbing intensively on the phone keyboard.

What is new is that you start to see people watching TV on their handsets.

What is not new, is that no one has any phone conversation while in the train (or while in restaurants) as they consider it impolite.

Japan has always been an example of one of the few developed countries where Globalization has had less impact, specially in habits and culture.

Except for Starbucks, McDonalds, Luois Vuitton, Baseball and iPod few overseas concepts have succeed in Japan. What is more, Japanese could argue that they have influenced more the World with their culture, than the World has influenced them: Karate, Karaoke, Sushi, Toyota, Manga as well as PS3, Nintendo, Sony Walkman… One of Japanese frustrations is not to have invented the iPod themselves.

But no wonder that globalization is impacting Japan, specially in the corporate arena. As The Economist published last week, Japanese companies are incorporating western business concepts to the Japanese style what made them so successful in the 80s.

The Telecom industry also give us an example of how globalization is difficult to resist.

Japan was the first country to go 3G, but NTT Docomo made it so specific, that only japanese vendors (NEC and Fujitsu) would cope with the market adaptations.

In recent years, new entrants (eMobile and Softbank) are relying on overseas vendors and on international standards, so that they can benefit from global economies of scale and have better equipment costs than what NTT or KDDI get from Japanese vendors with almost no presence outside of Japan.