Strategies Of The Three Major Carriers In Japan:
==========
A rare peek under the bed?
Time to put the lie to FOMA and JPhone?
LOL!
==========
NTT DoCoMo Puts Emphasis on Cell Phones with a Built-in Camera
December 24, 2002 (TOKYO) -- The strategies of the three major cell phone carriers in Japan can be seen from the semiannual financial settlements in 2002.
As the cell phone market becomes saturated, every carrier is focusing on cell phones with a built-in camera, which can increase data communications charges. None of the carriers is aggressively emphasizing third-generation cell phones.
The catchy "Sha-Mail," by J-Phone Co., Ltd. has boosted the market of cell phones with a built-in camera and shaken the strategies of competitors, but it also is clear that no carrier has yet to find the killer apps, other than camera-equipped cell phones.
Scenario for FOMA Deployment Needs Revision
At the conference of the semiannual financial settlement of NTT DoCoMo Inc., Keiji Tachikawa, president of the company, claimed, "Our main focus for a while is the second-generation (2G) cell phones with a built-in cameras, rather than FOMA, the third-generation (3G) cell phone service." The company took back its original strategy that it would encourage its users to shift to FOMA as soon as possible.
FOMA has many functions that the 2G services don't offer, such as a video phone function and high-speed data communications of up to 384kbps. However, the service is still not in the stage that many users get attracted to, since some aspects of the service, like narrow service areas and short battery life, are inferior to that of the 2G's. Then the camera-equipped cell phone boom started, which drew the attention of users much more than FOMA.
The FOMA subscribers that NTT DoCoMo acquired in the first half of the fiscal year are fewer than 50,000, and the total number of subscribers is still 142,400 as of the end of October. The targeted number of subscribers by the end of fiscal 2002 that NTT DoCoMo expected was 1,380,000, but the number had to be drastically revised downward to 320,000, which is less than one fourth of the original targeted number.
The company first held the policy that, "the camera-equipped cell phone will be for the FOMA only," but it had completely changed its plan and started selling the "251i," the cell phone with a built-in camera, which became a big hit. It has shipped 2.5 million units in the five months since its launch. This situation led DoCoMo to choose "the camera-equipped handsets that sell, rather than the FOMA sets that don't sell."
Camera-Equipped Handsets Have Higher Average User Revenue
Since the number of cell phone subscribers has exceeded 72 million in Japan, the growth of the market is now slower than before. With the decrease of voice communication as the market becomes mature, the average revenue per user (ARPU) also is decreasing (see the graph). The revenue for cell phone carriers may keep falling if they don't take any measures.
Under such circumstances, the handset with built-in camera is the big contributor for the income that all carriers have long waited for, because the users with a camera-equipped handset usually have a higher ARPU.
Take NTT DoCoMo for example. The average packet that the users with a camera-equipped handset use is about 430 packets a day. The average packet that the common i-mode users use is about 225 packets a day, so the packet that the camera-equipped handset holders use is about 1.9 times higher than i-mode users.
If the ARPU is to go up, the company will think more aggressively about building the camera into the handsets. NTT DoCoMo originally had only one camera-equipped model, the 251i, but changed its plan to build the camera into its best-selling models, the 50x series, as well. The "504iS" series went on sale in November (photo).
Darryl E. Green, president of J-Phone, which started the handsets with a built-in camera, said, "Thanks to the Sha-Mail and Movie Sha-Mail services, the data communication is in quite good condition. We will keep focusing on this field." The share of the handsets that support Sha-Mail and Movie Sha-Mail services reached about 54 percent of all J-Phone handsets, and the ARPU of the users with this kind of handset is about 1.1 to 1.4 times more than the average users.
On Dec. 20, J-Phone started its 3G service in a W-CDMA system, the same system as NTT DoCoMo's FOMA. The main focus of the company, however, is probably the 2G handsets for some time. "The number of users for the 3G phones won't grow until August 2003, when the area and the usability of the service will reach the same level of the 2G's. The number of subscribers will remain about tens of thousands or so in 2003," said Green.
Au Comes into the Match with Its Video Service
Au started its 3G service, the "CDMA2000 1x," in April, and is beefing up its lineups of handsets with a built-in camera. Since about 40 percent of the 3G CDMA2000 1x users purchase the camera-equipped cell phones, "most of the handsets that we release in the future will have a built-in camera," said Tadashi Onodera, president of KDDI Corp.
The company will emphasize Movie Mail-enabled handsets, which allow users to send and receive video e-mail. The amount of data being exchanged becomes larger than usual when sending video e-mails, and the revenue of data communication increases as more users use this service.
The CDMA2000 1x service enables high-speed data communication of up to 144kbps, which is an advantage in exchanging video files. The CDMA2000 1x service competes well with the 2G service when it comes to the service areas and the price of the handsets. With 2.4Mbps of speed, the "1xEV-DO (1x evolution-data only)," the new specification for the high-speed data communication will be introduced in the fall of 2003, which allows lower data communication charges and brings new demand for the service.
Half of the six handsets that au released for this holiday shopping season support Movie Mail, and all the handsets that the company releases in the future are to support this service.
In addition, the Movie Mail, which originally allowed the exchange of the video data among the handsets that support the service or between the handsets and PCs, can be referred from handsets of other companies' in the near future. This service will be the extension of the "Photo Mail Service," the data conversion service for still pictures that the company has been offering since October. The new service will start sometime in December for free.
Who is to Come up with 'Post-Camera Features'
All three carriers announced their strategies that are camera-focused, but looking from the other side, it shows that there is no source of big revenue other than from the camera-equipped handsets as the market matures.
However, the cycle of replacement for cell phones is usually one-and-one-half years. Once the handsets with a built-in camera diffuse into the market, the camera won't be the killer app that could increase subscribers or revenue any longer. Who will become the market leader will depend on whether any one of the carriers is able to bring out the next hit while the power of camera is still effective.
neasia.nikkeibp.com
==========
As it pours money into wCDMA infrastructure, how long can DoCoMo continue to blame its failure on "narrow service areas"? What of the new and improved handsets? Yet DoCoMo sticks FOMA in the closet.
"The number of users for the (JPhone) 3G phones won't grow until August 2003, when the area and the usability of the service will reach the same level of the 2G's.
August 2003?
LOL!
"The main focus of the company (JPhone), however, is probably the 2G handsets for some time."
The number of (3G) subscribers will remain about tens of thousands or so in 2003," said Green.
My... |
