Tag Archives: KDDI

Connecting the dots: Why the iPod changed the world?

Via Business Insider.

“You can’t connect the dots looking forward; you can only connect them looking backwards.”
                   Steve Jobs, Stanford Commencement Address, 2005

In 2006 it was clear that mobile phones and MP3 players would converge. Nokia, the smartphone leader at the time, already incorporated mp3 players in their phones. In Japan, KDDI had the most advanced mobile music service in the world, selling millions of songs per month downloaded from mobile phones.

For Apple, the iPod was at risk. At that time the iPod had become the product that had turned around Apple. iPods were more than 50% of Apple’s revenues in 2006 — see chart. Nokia was set to go for the iPod. Apple had to defend. The iPhone development was a matter of survival. Eat or be eaten.

Before the iPhone was unveiled in 2007, anyone would have bet that handset makers (and telcos) were in better place to win the race for the converged phone/MP3 player.
Few would have bet that a company with no experience in mobile would succeed to put a solid product in place so quick. In the early 2000s all main handset makers came from telecom vendors: Nokia, Ericsson, Siemens, Alcatel, Motorola, NEC coped the top of the charts. Even Sony had to join forces with Ericsson to play in the field. Microsoft venture into smartphones had given expensive and unstable smartphones after many years of experience with PDAs.

Then the genius of Steve Jobs made it. Leveraging on Apple’s core competency in making computers, they made a leapfrog. With no legacy to respect, unlike Nokia.

Today the iPhone is more than 50% of Apple’s revenue. It was the stepping stone without which the iPad had not had the form and success it had in changing personal computing forever.

The iPod today is less that 5% of Apple’s revenues. It went from 50% in 2006 to less than 5% in 2012. Had Apple failed to win the battle for the convergent phone/Mp3 player, Apple would have not even survived with a leading product such as the iPod.

It’s the perfect model for a market dominant player to lead disruption. It was the leader in the MP3 segment who drove its cannibalization and won. Cannibalize to survive. Easier said than done.

Connecting the dots
If Jobs wouldn’t have bet on the iPod—which at the time was not an obvious product for a computer maker—, Apple would not have been in such a good position to enter mobile and reinvent it. And without the iPhone experience, the iPad wouldn’t have been the hit that has changed personal computing. In hindsight, without the iPod, the tablet might have not existed as we know it.


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Mobile Music keep growing in Japan

Thanks to KDDI Lismo music service, 90% of the digital music sales in Japan comes from mobile, according to Wireless Watch Japan. The Record Industry Association of Japan (RIAJ) has reported 2007 figures, with total sales increasing for third year in a row, and with an spectacular 91% increase in Mobile Music downloads.

Quoting Music Media Watch, :
“Total music sales for 2007 in Japan came to JPY 466 billion (US $4.66 billion). While CD/DVD sales declined 4% from the previous year, digital downloads jumped up 41% to JPY 75.5 billion (US $755 million), comprising 16% of all music sold in Japan. Mobile downloads accounted for JPY 68 billion (US $680 million), more than 90% of the total figure for digital sales.”

Japan is the biggest mobile music market in the world, fifty times bigger than the German one. This raises 2 questions:

1) Would it be so successful if the RIAJ had imposed a tax on mobile phones to account for (or rather to legitimize) piracy?

2) Will the 3G iPhone be able to grab a significant share of this market? Will the iPhone succeed in Japan?

Operators vs. Media companies

In GigaOM’s guest column, Mr Chetan Sharma writes an interesting article on the battle between operators and media companies to deliver mobile entertainment to the end-user.

Although Media companies are in better position to bring their content over agnostics IP networks – like the ones of mobile operators are becoming-, operators have still powerful arguments to leverage:

1) Billing relationship. Operators have a trusted billing relationship with operators, that puts them in good position to charge for premium content delivered over their networks

2) Customer ownership. Operators have access to plenty of information about their customers behavior. With proper Service Orchestrator software solutions, marketing campaigns can easily be tailored to match each user profile

3) Bundling services. A subscription fee for a mobile TV channel that also give access to a premium website, are easy options to add to the phone bill and give operator more room for promotions and cross-selling.

4) QoS : Quality of Service. With IMS deployed, only the mobile operators can control QoS. A guaranteed QoS enables carrier-grade VoIP and other real-time conversational services, like high definition video calls and video sharing, that Internet players can not deliver with best-effort Internet QoS.Once the operator controls the real-time services, then it is in a strong position to bundle presence, location, user profile and IM with conversational services. Without this bundling, Google, Microsoft and Yahoo are even in better position than operators to provide applications based on presence, location or user profile (including advertisement).

On the content delivery side, similarly the battle is not lost for operators if they show the determination and courage to play their cards. See KDDI example of a music service that competes head to head with iTunes in Japan.

Related articles in tech-talk.biz:

KDDI LISMO: Best Mobile Music Service in the World


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.

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.