Where the mobile is killing the PC
In Japan, there is only one gadget that counts, reports Sean Dodson
Thursday April 17, 2003
The Guardian
Beneath the dazzling neon of Ginza-dori in the heart of Tokyo, it is Friday evening and the high-rise offices are spilling out their legions of salarymen and women.
A crowd of people gathers at a busy zebra crossing and more than half have their clamshell mobile phones open and are staring intently into their colour screens. Some are reading email, others stock market prices live from the Nikkei Index. Yet more access online fortune-tellers to see what the weekend holds in store.
Eventually, the lights change from green to red and the crowd surges across the road. The majority navigate the crossing looking into their screens rather than at the traffic. There are even a few mobile fanatics left behind, still staring into their screens, seemingly oblivious to the fact that the lights have changed.
The Japanese have a passion for mobiles like nowhere else on earth. Here you can buy phones with two screens, phones with stereo ring-tones, phones that can start your car, phones that send video clips to prove where you are and phones that can spy on your spouse. And when you are caught doing so, there are phones to buy perfume, phones to order flowers and - ultimately - phones to access picture dating services.
It is no surprise that Japan has a reputation for being the most developed mobile phone market in the world. Japan launched 3G (third generation mobile networks) 18 months ago. Picture messaging is two and a half years old. New services such as weather reports, airline reservations and personalised alarm calls are added on a daily basis.
Most subway stations in Tokyo offer mobile coverage and the Shinkansen "bullet train" network even has antennas built into its tunnels. Mobile phones are officially banned from most short train journeys, but the reality is that many passengers spend most of their time playing Java games or downloading horoscopes. As the science fiction writer William Gibson observed: "The Japanese seem to the rest of us to live several measurable clicks down the timeline."
Despite all this, handset sales are actually declining in Japan, after years of sharp rises. The replacement market has shrunk by about 3% over the past two years. New subscriptions have been static for even longer. It is not that the Japanese are losing their appetite for mobile phones, but many are holding on to their handsets during the country's economic downturn.
The Japanese economy is undergoing a prolonged recession, but people keep coming up with new ways to make money from mobile phones. While Europe still struggles to make any profit from the mobile internet, the Japanese market has already created an estimated 70m subscribers for such services.
Mobile data revenue now makes up 20% of the Japanese market, more than twice that of Europe. By far the most popular data service is email. Japan has the short message service (SMS) so popular in Europe, but hardly anyone bothers to use it. Instead, the Japanese use their mobiles to send email, as it allows their messages to reach the wider network of personal computers.
Most of this revolution in wireless communication is thanks to one company. In 1999, NTT DoCoMo launched its i-Mode service, a revolutionary mobile internet to which more than a quarter of the population now subscribes. The younger generation rushed to i-Mode service because they could exchange email from their phones.
"For Japanese vendors, the business structure of the handset market is different from the rest of the world," explains Nahoko Mitsuyama, a mobile phones analyst for Gartner. "In Japan, the mobile operators, especially NTT DoCoMo, lead the development of new handsets. It is the operators that plan new services, not the handset manufacturers. In many ways, all vendors have to do is wait for what NTT DoCoMo is going to say."
But two and half years ago, even DoCoMo failed to foresee the potential of picture messaging. That invention was left to J-Phone, a far smaller network operator now owned by Vodaphone. "The success of picture messaging is in part because we have a unique culture in Japan regarding the small photos, because of the culture of Print Club," says Mitsuyama.
"You can find Print Club camera booths in many corners of major cities and sightseeing spots in Japan. The younger generations, especially high school students, are very fond of Print Club. The quality of photo is very poor but they are still happy to exchange them."
Print Club might have been the stimulus for picture messaging, but it still took nearly two years for the service to take off in Japan. Only in the past six months has picture messaging reached critical mass. NTT DoCoMo, after being initially scornful of picture messaging, began its own service only in the past year.
Videophones were launched in Japan nearly two years ago, when DoCoMo launched its 3G Foma service but, as in the UK, early models have been plagued by a short battery life. The system has also proved expensive and suffered through poor network coverage. All that is improving. Both NEC and Panasonic have recently released better handsets with a longer battery life. Foma now enjoys 91% coverage in Japan and DoCoMo expects 97% coverage by next year.
"I believe it will take over five years to develop a handset which will allow four hours' consecutive usage," admits Ben Nakamura, senior vice president of NEC, Japan's largest handset manufacturer.
Not everyone has waited around for 3G to take off. J-Phone, the third biggest operator in Japan, has 2.3m subscribers for a basic video messaging service that allows users to send a 10-second video clip as an email attachment.
"What drew attention from the public was that we developed a technology that enabled us to provide video before 3G," says Noriko Kajiki, the chief executive of Office Noa, the company that designed the video messaging service. Using the same technology, you can even turn your mobile phone into a basic camcorder. "If you buy a big enough memory card you can store up to two hours of video on a mobile phone," says Kajiki.
Index, one of the biggest content providers in Japan, has 6m subscribers and has seen profits go through the roof in the past couple of years. Subscribers pay £2 per month for an unlimited amount of content, although users still pay a "packet fee" to a network operator to download the data.
"Since last year we have created our first mobile commerce shop. Every day we sell 200 bottles of perfume. Each perfume sells for about $30," says Katsuhisa Oda, general manager of Index. "Everybody has heard of the big brand names but about half of our subscribers live outside the big cities. 90% of our subscribers like to use a cash on delivery service, most are under 20 and it is very difficult for them to get a credit card."
Another service that is growing in Japan is ordering goods via a mobile but getting them delivered to the local convenience store. Index has just launched a robot you can control via your mobile phone. The same system can start your car, open your garage door and buy drinks from vending machines. There are already 300 such vending machines in Tokyo selling soft drinks.
But the success of mobile internet services in Japan is having one unexpected side affect. It is killing the conventional internet. While business users still like to use the PC for email, the younger generation is forgoing the desktop PC for the mobile phone.
Email exchanges between high school students take place almost exclusively via mobiles. Some high school clubs announce their activities via mobile email and some university class cancellation alerts are now delivered in this way.
As Tim Clark, of the University of Southern California, noted recently in the Japanese Media Review: "A surprising number of Japan's high school students graduate without learning how to use a personal computer, let alone the internet. For less than $100 and a few minutes of paperwork, a student can take home a phone and email address from any number of retailers, which are often just a short walk from most train stations. Buying a personal computer means spending $500 or more and making room for the machine in limited space at home."
Sawato Joshi, a business consultant specialising in mobile data services, says that it is not unknown "for some Japanese high school students to replace their mobile phone every three months, so there is always a huge appetite for new features. Screens cannot get any bigger or more colourful, so we believe the next big thing will be stereo sound."
Hi-fi manufacturer Kenwood released the first stereo mobile last year. Other handset manufactures will follow suit later this year.
According to a recent survey commissioned by mobile operator KDDI (Japan's second largest telecommunications company), 80bn yen (£427m) was spent on ring tones and mobile karaoke last year. Downloading karaoke costs as much as a text message and new songs are released every day.
If this market continues to grow at the same rate, it will shortly eclipse the entire Japanese music industry. |
