Wednesday, July 5, 2006

Tomorrow’s mobile services today


The range of advanced mobile applications in Japan is as congested as Tokyo rush hour. Content development is faster than a speeding bullet train and new services arrive with the same anticipation as the cherry blossom season.

Wednesday, May 24, 2006

Where else would you use your mobile phone to turn on your DVD recorder or pay for your train tickets? Where else but the cutting-edge capital of the mobile world.

If there is one word of Japanese you should know, it is ke-tai (mobile). Formerly known as keitai denwai (mobile phone), the abbreviation is significant to understanding the country's mobile phone culture.

"In Europe, a mobile phone is still a phone," says Ericsson's Atsuhiko Ohkita, senior market analyst in Tokyo. "In Japan, the ke-tai means web access, e-mail, games, and so on – that's the definition. Voice is just a very small part of the handset's function."  

The handset is a social necessity and fashion accessory, especially among Japan's mobile trendsetters – teenagers, particularly girls. Every year, new, must-have models with increasingly sophisticated capabilities are churned out, snapped up, and sold out. "Most handsets have a shelf life of one year," Ohkita says. "When a new phone is launched, the price of the previous year's model is almost zero."

This annual cycle fuels the Japanese appetite for the latest hi-tech services and the speed with which they are delivered. Indeed, the unique make-up of Japan's mobile market helps to explain why the business of advanced mobile applications is booming.

In Japan, operators design service-compatible handsets, and their unique capabilities become the selling point – the internet phone, the camera phone, the music phone, and so on. This synchronized development spans back to the beginnings of Japan's mobile revolution.

"In 1993, operator NTT DoCoMo developed the PDC standard and took control of terminal development at the same time" Ohkita says.

This trend has continued with KDDI and Vodafone KK's arrival to the Japanese market. "Operators continue to have control in Japan today and compete over services rather than price, which is more common in Europe and the US. The need to launch new services as soon as possible means development is much faster than GSM."

The Japanese are more advanced than their global peers when it comes to mobile application development and service adoption. But the size of the gap largely depends on the user group.

Ohkita says: "The difference between high-end users in Japan and Europe is perhaps less than a year. But on average, there is a gap of about two to three years. Low-end European users still only use voice and SMS, and don't want to try web access." 

The Japanese, however, were already mobile-internet friendly back in 1999. The introduction of i-mode – an NTT DoCoMo service – introduced the possibility of e-mail, information, and entertainment in one handy gadget. The i-mode service was one of the first mobile data services of its kind.

"Fixed internet access wasn't popular at that time in Japan and there was a problem with compatible SMS solutions between operators," Ohkita says.

As a result, the Japanese turned to i-mode for a convenient alternative. "It was simple to start with but subscribers were satisfied," Ohkita says. "Perhaps users elsewhere have expected too much from mobile internet." 

The i-mode service set the precedent and heralded a virtually seamless integration of the mobile into everyday life. It has greatly impacted on the way Japanese subscribers interact with their handset today.

"In Japan, 75 percent of the most popular mobile content is pure entertainment – games and music – while 25 percent is known as 'save time' content," Ohkita says.

Music and finance are the present drivers in the maze of Japan's mobile application industry and are currently top of the hottest content list.

Japan is one of the strongest markets in the world for mobile music. The ringtone download craze took off when KDDI's Chaka-Uta download service was launched in 2002. Meanwhile, full-track music downloads have been eating up packet bandwidth ever since its big brother, Chaka-Uta Full, was introduced in 2004. These services, among others, have become the talk of developers and music to the ears of subscribers and operators alike.

Financially, small change became big business when operators cashed in on the mobile wallet phone concept. NTT DoCoMo's i-mode FeliCa wallet phone service launched in 2005 and was enhanced in 2006 with the launch of the DCMX credit card phone.

KDDI is currently taking banking to the next mobile level. Japan's first internet-based bank exclusively designed for handset users is expected to start operating in early 2007, offering money transfer, payment options, and other financial services.

"In three or four years, it is quite possible that ATMs will disappear in Japan," Ohkita says. He also predicts that the Japanese high-street bank could eventually become obsolete.

Indeed, Japan's future is mobile and the handset is well on its way to becoming the one multi-functioning key to everything in life, including the front door of your house.

By Christine Demsteader

Last published May 24, 2006

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