KDDI to launch BREW service in Japan
Japan's No.2 cell phone carrier eyes corporate users
By Mariko Ando, CBS.MarketWatch.com
Last Update: 8:02 AM ET Jan. 29, 2003
TOKYO (CBS.MW) -- KDDI, Japan's second-largest cell phone operator, announced plans on Wednesday to launch new cell-phone services next month using Qualcomm's software-downloading technology.
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Using such technology, KDDI (KDDIF: news, chart, profile) will also start offering services targeting corporate customers, aiming to double its corporate subscriber base.
The application-downloading technology, called Binary Runtime Environment for Wireless (BREW), makes it possible for users to customize their cell phones by allowing them to download applications such as games, ring tones and entertainment on to their cell phones via the Internet.
KDDI said the country's first BREW-equipped handsets, manufactured by Toshiba (TOSBF: news, chart, profile), will hit store shelves by late February. The company hopes BREW-equipped handsets to eventually account for about 70 percent of its total annual handset sales of 10 million units.
Following the announcement, KDDI's shares (JP:9433: news, chart, profile) rose 1,000 yen, or 0.3 percent, to close at 362,000 yen. The shares have risen nearly 46 percent in the last 12 months.
Analysts said KDDI's shares are likely to outperform the market in the next 12 months, citing the company's strength in the third-generation cell phone business in Japan.
Unlike bigger rival NTT DoCoMo (DCM: news, chart, profile), KDDI is seeing a sharp rise in subscriber numbers for its 3G services.
KDDI, which launched its 3G service in April 2002 using Qualcomm's (QCOM: news, chart, profile) CDMA2000 1x technology, has attracted over 5 million subscribers for its service. DoCoMo which uses the W-CDMA (wideband code division multiple access) standard for its 3G service, meanwhile, last year cut the subscriber target to 320,000 for March this year, down from a target of 1.38 million set at the launch in October 2001.
"KDDI, so far, has been stepping ahead of DoCoMo because of a popularity for its services, such as 'Chaku Uta (ring song)' service. Also, it's cheaper and easer for KDDI than it is for DoCoMo to upgrade their services to 3G from 2G because of the technology issues," said Motoharu Sone, a telecom analyst from UFJ Institute of Research.
Sone, who gave an "outperform" rating for shares of KDDI, expects the company's shares to jump as high as 490,000 in the next 6 to 12 months.
KDDI to offer corporate BREW service
Eyeing more corporate customers, KDDI said it will offer "BREW Business Profile" services from the spring. The service will enable company employees to access and download data from company networks using BREW-equipped cell phone handsets.
KDDI is currently co-operating with IBM Japan, a Japanese unit of International Business Machines (IBM: news, chart, profile), to develop the system, said the company.
"In general, more than 80 percent of subscribers for the cell phone services are individual users at this moment, and for us (KDDI), individual users account for more than 90 percent," said KDDI President Tadashi Onodera at the press conference.
"Corporate users only account about 5 percent for our service, but we want to double the number.... There definitely a substantial room left for growth in corporate customers. And the study shows that corporate users' ARPU (average revenue per unit) is higher that those of individual users'," he said.
KDDI said the company will also set up a working group with South Korea's KTF, China Unicom (CHU: news, chart, profile), and Qualcomm in March to promote BREW technology.
Mariko Ando is a Tokyo-based reporter for CBS MarketWatch.com. |
