What changed after 3G was introduced and became a massive success in Japan.

1. Changes in Japan’s mobile ecosystem
Benjamin Joffe, CEO | +8* Plus Eight Star | 2009.3

2. Introduction
Mobile & Internet © Copyrights 2009. All rights reserved. www.plus8star.com
Business Consulting

3. Benjamin Joffe
ベンジャミン
벤자민
本杰明

5. 4 years
1 year
4 years

6. www.plus8star.com

7. Cross-Market Consulting
Telecom & Internet Innovation
China | Japan | South Korea

8. 26 events | 98 speakers | 3,296 members | 1,440 companies

9. Overview
Mobile & Internet © Copyrights 2009. All rights reserved. www.plus8star.com
Business Consulting

10. What changed in the past 2 years
1. For mobile operators
2. For handset manufacturers
3. For ARPU & Price plans
– Parenthesis: SMS vs. IP
– Parenthesis: i-mode vs. iPhone
4. For mobile content
5. Conclusions

11. What changed for mobile operators
Mobile & Internet © Copyrights 2009. All rights reserved. www.plus8star.com
Business Consulting

12. Mature mobile market
Total = 106.5 mln users (+5 mln yoy)
1,288,300
1%
30,619,700 Total
29%
54,322,500
51%
20,251,200
19%
Docomo Softbank AU EMOBILE
Source: Telecommunication Carrier Association, March 2009

13. Handset market
Lower subsidies lead to less sales
1Q09
Source: Operators, March 2009

14. Market shares: 2G phasing out
Total = 8.6 million users
328,500
4%
2,227,400 2G
26%
6,033,400
70%
Docomo Softbank AU
Source: Telecommunication Carrier Association, March 2009

15. Japan stopped selling 2G
in 2007

16. Market shares: 3G for all
Total = 97.9 mln users
1,288,300
1%
30,291,200 3G
31%
48,289,100
49%
18,023,800
19%
Docomo Softbank AU EMOBILE
Source: Telecommunication Carrier Association, March 2009

17. 3G (and more) for all
92% market penetration
2G % 3G %
89% 89% 92%
99% 100%
11% 11% 8%
1% 0%
Docomo Softbank AU EMOBILE TOTAL
Source: Telecommunication Carrier Association, March 2009

18. 3G penetration in Japan is
>90%

19. But of course it is not the end…
LTE @ Docomo
Source: Docomo, 2009

20. LTE @ Docomo (300Mbps DL)
starts next year
Source: Docomo, 2009

21. LTE @ KDDI
(“3.9G”)
Source: KDDI, 2009

22. Surprise!
Mobile WiMAX getting started
• UQ WiMAX
– Consortium of 6
companies
• KDDI | 32.26%
• Intel | 17.65%
• East Japan Railway | 17.65%
• Kyocera | 17.65%
• Daiwa Securities | 9.80%
• Tokyo-Mitsubishi UFJ | 5%

23. UQ WiMAX Service
• Overview
– Service start 2009.7
– 35 EUR / month
– 40 Mbps DL / 10 Mbps UL
• Deployment
– 5,000 test users
– 500 base stations
– Plans for 20,000 BS
– 90% population coverage by 2012

24. What changed for ARPU & price plans
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Business Consulting

25. Net additions history
“White Plan” effect
15 million “White Plans”
“White Plan”
Source: Operators, March 2009

26. Net additions 2008
Aggressive pricing paying off
Source: Operators, 2009

27. Softbank
Shifting costs and aggressive pricing
Lower costs
Aggressive pricing on voice
and monthly charges
Data ARPU is 44%
(decrease of basic charges)

28. KDDI’s Double Flat Fee
(introduced in May 2005)
40 USD
10 USD
1.5 MB 6.5 MB~

29. Flat-rate data
From mobile only to full web
• Docomo: 36% (17 mln – 2008.12)
– i-mode only / full browser / PC data access
• KDDI: 72% (21.8 mln – 2009.12)

30. Softbank
Towards the “mobile Internet machine”

31. Mobile widgets
Source: Operators, February 2009

32. “au” by KDDI
Data ARPU is 38% overall

33. Docomo
• Various discount plans
– Family
– Data plans
• 100% HSDPA population coverage
• Segmentation: Style / Smart / Prime / Pro
– Touch screens
– Smartphones
• Credit business DCMX
– 9 million members; 400,000 iD terminals installed

34. Parenthesis: SMS vs. IP
Mobile & Internet © Copyrights 2009. All rights reserved. www.plus8star.com
Business Consulting

35. Data revenues 2008
Most Western
mobile carriers
Data ARPU % 20% 40%
SMS share 50% 5%
90% profit margin
“Real” data 50% 95%

36. SMS = Candles
Brighter Last longer Smell good

37. IP = Electricity

38. Parenthesis: i-mode and iPhone
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Business Consulting

41. Social games
&
iPhone games

42. Mobile ecosystems

43. Technical specs
Content selection
Content distribution
Pricing system
Payment system
User Experience

44. iPhone vs. i-mode
Ecosystem iPhone NTT DoCoMo
Users 10 million? 55 million
Content 20,000 apps? XXX publishers
Rev share 30% 10%
Mystery %
Data 100%

45. 48 million
i-mode users
Applications!
(January 2001)
87.7%
3G users

46. What changed for mobile content
Mobile & Internet © Copyrights 2009. All rights reserved. www.plus8star.com
Business Consulting

47. Mobile Ecosystem
TOTAL
Million USD
11.6 billion USD
12,000
Commerce >
10,000
Content 4,301
8,000
3,720
6,000 3,200
4,000 2,645 7,347
5,714
2,167
1,822
2,000 4,139
2,634
1,736
1,212
0
2002 2003 2004 2005 2006 2007
Commerce Content
Source: Japan Mobile Content Forum, 2008

48. Content
40 USD / user / year
Commerce
70 USD / user / year

49. Mobile Content
Million USD TOTAL
4.3 billion USD
Full songs >
5,000
Ring tones
4,000
1,140
849
231
3,000 585
252
240
500
862
2,000 229 760
598
465
417 192 419
571
156 204
274 771
28 1,091
204
1,000 1
1,186
1,119 1,065
972 856
568
0
2002 2003 2004 2005 2006 2007
Ring tones Full songs Mobile games Mobile books
Fortune telling Screensavers Others
Source: Japan Mobile Content Forum, 2008

50. Flat-rate data: 2004
What happened since?

51. Awesome
Irrelevant? Great ?! Good So-so ?
Million USD
2004 2007
1,186
1,140
1,200 1,091
1,000
862
800
568
600 500
419
400
229231
225
204 185
200 108
0
0

52. What changed for mobile music
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Business Consulting

53. Million USD
2004 2007
1,186
1,140
1,200 1,091
1,000
862
800
568
600 500
419
400
229231
225
204 185
200 108
0
0

54. 90% of digital music
sold in Japan is mobile

55. Digital music revenues in Japan
Source: Infinity Venture Partners, 2008

56. What changed for mobile games
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Business Consulting

57. Million USD
2004 2007
1,186
1,140
1,200 1,091
1,000
862
800
568
600 500
419
400
229231
225
204 185
200 108
0
0

58. What changed for mobile social networks
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Business Consulting

60. Registered users
MANY
MOBILE MOBILE
ONLY!
SOME
MOBILE
175 mln 16.3 mln 8 mln
12 mln

61. Some ads
SNS
+
Free games
+
Homepage Virtual goods

63. Revenues 2008 (Est. $US)
350 mln 60 mln
200 mln
120 mln

64. Profit margin (Est.)
31%
- X? 40% 63%

65. Average Revenue From Users (E)
ARFU
10%? 5%? 75% 75%

66. Market Capitalization ($US)
(March 2009)
3-15 bln? 504 mln 1.4 bln 1.2 bln
REAL MARKET CAPS BASED ON
STOCK PRICE

67. What changed for mobile books
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Business Consulting

68. Digital books: Internet vs. Mobile
Flat-fee data plans
are introduced
Source: Infinity Venture Partners, 2008

69. Several best-selling novels in Japan in
2007 were written on mobile phones

70. One full bookshelf
for mobile novels at
Kinokuniya, Japan’s
largest bookstores
chain!

71. The two volumes of
this book “Koi zora”
(“Loving sky”) sold…

72. “Koi zora” sold over 2 million copies
(10 USD / book)
The paper version a
“by-product” of the
mobile version!

73. Even on TV!

74. What changed for mobile TV
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Business Consulting

75. Mobile TV penetration is over 47%
50 million handsets (2006.4 - Now)

76. Business model? It’s free!
Users are happy (it’s free!)
Broadcasters have more reach (1 TV per person)
Advertisers get more mileage (same price)
Manufacturers sell mobiles (must have feature)
Leaves out… mobile operators
Thanks to Guillaume & Pierre for their views on this 

77. Experiment: TV + mobile coupons
• Broadcast ads, text & images with TV content
• Use of the mobile coupon service Toruca
Source: IT Media, 2008.03.05

78. And also…
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Business Consulting

79. Mobile advertising
Mobile search
Mobile commerce
are still doing well and growing

80. Conclusions
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Business Consulting

81. 1.
3G + Flat-rate
will open new doors

82. 2.
As markets converge,
some of Japan’s lessons
are even more relevant

83. 3.
With current 3G, 3G+ penetration
With flat rate data
With 4G coming
With mobile TV widespread
Japan’s advance is unlikely to fade

84. About +8*

85. There are more ideas
outside your country
than inside
Tom Kelley
CEO, IDEO
The 10 faces of Innovation

86. “Innovation Arbitrage”
• About us
– +8* | Plus Eight Star is the leading cross-market and cross-cultural consultancy in Asia.
– We provide local expertise & global perspective on mobile and Internet innovation from
China, Japan and South Korea to add value to and accelerate the development of our
clients’ businesses.
• Our services
– Analysis of proven best practices and business models from Asia
– Other services: executive study trips, market entry strategy, M&A advisory, partners
identification, negotiation support.
• Founder & CEO: Benjamin Joffe
– 9 years experience with mobile & Internet in Asia
– Selected among “China’s Top 100 mobile industry influencers” in 2007
– Regular speaker at events on mobile and Internet in Asia
– Fluent in English, Japanese, French with working knowledge of Mandarin, Korean and
Spanish

87. Selected References
• Adidas | E-commerce strategy for China, Japan & Korea
• Bouygues Telecom | Cases studies of leading Asian Web 2.0 services
and virtual worlds
• Deutsche Telekom / T-Online | Benchmark of Korean mobile & Internet
convergence strategies
• Hemisphere | Analysis of mobile marketing best practices in Japan and
South Korea (Hemisphere is a leading digital advertising agency),
analysis of leading social platforms (SNS, virtual worlds, online games).
• Microsoft | Analysis of Japan’s key players and market catalysts for
mobile commerce market positioning in China
• DeNA | Case studies of the best practices of leading social networks in
China and South Korea (DeNA operates Mobile Game Town, Japan’s
leading mobile SNS service)
• China Mobile | Benchmark of Korean leading online communities
• Sands Capital Management | Evaluation of investment opportunities in
social networks in China

88. Social Contribution
• Mobile Monday
– Founder of the Mobile Monday forum in Beijing since 2006 (3,000+
members, 26 events, 98 presentations).
• Media
– Monthly column on Asian innovation for Asian Business Leaders (one of
the leading Chinese business magazines), numerous interviews in
international media.
• Events
– Regular keynote speaker and moderator at Internet, Telecom, Media and
Investment events
e.g. Ad-Tech, eComm, ITU Asia, Asia Venture Capital Forum, China Mobility
International Summit, O’Reilly’s Graphing Social Patterns, Red Herring Asia, Media
08 Conference, Wireless Developer Forum, Open Web Asia, XMediaLab, Mobile
Monday Global Summit, etc.

89. Contact Us
www.plus8star.com
benjamin@plus8star.com
+81 | Japan
benjamin0123 +82 | Korea
+86 | China
http://twitter.com/plus8star
Telecom & Internet
www.linkedin.com/in/benjaminjoffe
+ Added Value
www.slideshare.net/plus8star * High quality