re: Smart Cards in Japan (Disruptve Technology Report)
>> Viewpoint: On Smart Cards And Creating Disruptive Technologies
Daniel Scuka
Wireless Watch
Issue No. 51
April 8, 2002
Tokyo
Jeff Funk, associate professor at Kobe University and one of the most knowledgeable of the Japan wireless hands, has released a report looking at issues related to mobile ecommerce in Japan.
We think the paper, entitled "From Ticket Reservations to Phones as Tickets and Money: New Applications for the Mobile Internet in the Japanese Market" is required reading for those interested in this space and his conclusions are, perhaps, somewhat surprising (access a copy via the link at end of this post).
The background is NTT DoCoMo's April 1 announcement that it will use Sony's electronic money (Edy) in upcoming phones -- a major event in the Japanese and worldwide mobile Internet, as Funk rightly characterizes it. Funk explains that Japanese consumers will be able to use their phones to make purchases under 3,000 yen simply by passing their handsets over an IC (integrated circuit) card reader.
This is the first embodiment of the much-touted 'phone as wallet' paradigm that we've been hearing about for several years, and with DoCoMo pushing it, it's bound to be big.
The report examines the Japanese market from a broad perspective and looks at the simultaneous efforts to use IC cards as tickets and money and to include such IC card functions in phones. Of course, smart cards have come a long way in the past few years, and it's now possible to provide a smart card that embodies a complete execution environment, such as the UIM card made by Gemplus and included on DoCoMo's FOMA phones (see link below to our interview with Gemplus).
Funk explains: "As firms improve the processing and short-distance communication capabilities in IC cards, new applications such as train, concert, movie and other tickets become possible." (Did someone say "802.11(b)?")
He also points out that the 'value of a network' concept -- the idea that any network becomes more valuable as the number of nodes on the network increases -- is a key factor in the growth and adoption of smart-card-based ecommerce systems, since many players (licensed- and non-licensed-spectrum network operators, handset makers, merchants, banks, financial clearing houses et cetera) have to cooperate to make it work.
"Communication technologies such as telephones, email and the PC and mobile Internet are prime examples of products that exhibit network effects. The early success of entertainment content in NTT DoCoMo's i-mode service in mid-1999 led to the emergence of positive feedback between these entertainment contents and young users. Subsequently, this positive feedback was extended to phones through the interaction between color displays and color contents," writes Funk, surmising that the more people who have and use IC card-equipped terminals (phones and, presumably, PDAs), the more firms will want to accept them as tickets and money.
Similarly, the more places where these IC cards can be used, the more people will be interested in acquiring and using such IC cards and phones that contain the IC card functions. These points may not be new, but with DoCoMo's recent Edy announcement, Funk's paper is a rather timely read.
The paper also concludes that smart card deployment is another example of a disruptive technology and Funk says that the mobile Internet itself is disruptive for firms that provide content for the PC Internet because it offers greater portability (more reach) but smaller screens (less richness) than the PC Internet.
Surprisingly, he thinks that smart cards will also be disruptive for service providers and phone manufacturers who have traditionally focused on business users. "This makes the mobile Internet more disruptive to Western than Japanese service providers since Western service providers (due to the importance of roaming) and manufacturers have historically focused on business users."
Even with i-mode more than three years old, the Japanese carriers suffering from marginal subscriber effects in data ARPU and US and European industries catching up fast in the enterprise application space, Japan's mobile Internet industry can still spawn disruptive technologies that can catch overseas players napping. <<
"From Ticket Reservations to Phones as Tickets and Money: New Applications for the Mobile Internet in the Japanese Market"
Download here:
japaninc.com
- Eric - |
