Japan Sets Standard for How People Use Net on
Cellphones
USA Today
July 7, 2000
Look around this city for a minute and a dozen people
--all staring at their mobile phone screens -- come into focus.
Takoryo Horii, 26, an office assistant, reads the
headline news. Yurino Akamime, 19, taps short e-mails. Kouchi Kanda, 25, a
waiter, kills time looking for a better job on the Internet postings
accessed via phone.
''It's communication anytime, anywhere,'' Akamime says.
Japan loves fads -- 7-inch platform shoes, mechanical
pets and Hello Kitty, to name a few. But after lagging the USA by years in
use of the Internet, Japan now leads in what could be the next big thing:
the marriage of the Internet with mobile devices, including phones. Japan
has more Internet-enabled cellular phones than the rest of the world
combined, analysts estimate. Its wireless giant, NTT DoCoMo, boasts the
world's largest Internet-cellular phone network. And Japanese consumers
are providing clues to the wireless world on what people do with cellular
phones.
''Everyone is watching DoCoMo,'' says Takakuni Kuki,
general manager of NEC's mobile network division.
More specifically, everyone is watching DoCoMo's i-mode
service, launched last year. In just 16 months, 7.8 million subscribers
have signed on. (It took America Online at least five years to get that
many subscribers.)
I-mode lets Japanese consumers access the Internet from
anywhere -- street, home, school or office. That isn't unique. Consumers
in parts of Europe, the USA and Hong Kong are starting to do the same.
But i-mode stands out as the first to go mass market.
''It is arguably the first successful wireless data service in the
world,'' says Ross O'Brien, telecom analyst at Pyramid Research in Hong
Kong.
Outside the train station in Tokyo's hip district of
Shibuya, nearly everyone clasps a mobile phone. One-third are likely to be
i-mode phones. For 21-year-old Tokyo waitress Rie Arai, i-mode is her only
access to the Internet and e-mail. ''I cannot live without it,'' she says.
That surprises even DoCoMo. It intended i-mode as more
of a pilot project to test future demand than anything else. But so many
people subscribed, ''We saw we could make a viable business,'' says DoCoMo
President Keiji Tachikawa.
What a lark. Merrill Lynch in Tokyo expects i-mode
revenue to hit $2 billion in fiscal 2000, accounting for about 5% of
DoCoMo's revenue. DoCoMo's stock, even after the global tech rout this
spring, has more than tripled since i-mode's launch. In April, i-mode had
to stop advertising to discourage new subscribers until its network could
be beefed up to handle them.
Whether i-mode's success can be duplicated in other
countries remains to be seen. The Japanese have a special affection for
cellular phones. They decorate them with stickers and knickknacks. Some
even wear them around their necks. ''It's fashion,'' Miho Tokunaga, 18,
says.
Japanese consumers are also likely to:
* Have lower expectations for the Net. Only about 15% of
Japanese access the Net via PCs. So they aren't as accustomed to the
big-screen experience as are Americans. ''Many people look at little
phones and say, 'Thank you, but that is not what I'm used to,' '' says Ted
Darcie, vice president of wireless research at AT&T Labs. Sending
e-mail is especially challenging. A three-syllable word requires about 15
taps on the phone keypad.
* Pay more for Net access via PCs and thus be open to
other options. Japan's Internet costs, while decreasing, are high. Just to
get a home telephone line costs $700. Internet access costs $20 a month
plus $2 an hour. (In the USA, unlimited access runs about $20 a month.) In
contrast, it can cost as little as $28 to get a cellular connection in
Japan. I-mode users pay for the amount of information received, not the
time spent online. The average i-mode bill runs $15 to $21 a month, DoCoMo
says. On top of that, users pay their regular charges to use the phone for
talking.
* Suffer great inconveniences. Most Japanese banks and
ATMs are closed at night and on weekends. That makes online banking
helpful. Most Tokyo streets lack names, so residents fax maps to each
other to give directions. With i-mode, maps can be downloaded onto phones.
There is no room to read newspapers on packed commuter trains, but people
can write e-mail or play video games.
* Love to be entertained. Other than e-mail, i-mode's
most popular service is the downloading of cartoon characters to decorate
phone screens. Toymaker Bandai charges 1 million people $1 a month for
such cartoons -- and DoCoMo racks up revenue every time a cartoon is
downloaded. ''Japan has these amazing followings that may not take off
elsewhere,'' says Curtis Sasaki, a director of product marketing for Sun
Microsystems, which is working to put Java on i-mode phones to improve
data delivery and security.
Untapped potential
Business uses are catching on, too. Sapporo beer
messages sales people via i-mode to alert them to customer calls. Tens of
thousands of users forward their office e-mail to their i-mode phones.
More is in the works. Microsoft and DoCoMo recently
started working on wireless software applications for Japanese business
users.
Getting other companies interested in i-mode has been
key, says Tim Clark, Internet analyst with Web Connection in Tokyo. About
15,000 Japanese Internet sites have been designed especially for the i-mode
network. Japan Airlines, for instance, sells about 20,000 domestic tickets
a month to i-mode users.
Video-game maker Hudson charges i-mode users $3 a month
to download simple video games. DoCoMo collects the $3 from the 30,000
subscribers as part of the regular monthly cellular telephone bill and
kicks 91% of it back to Hudson. That enables Hudson to sell cheap services
to a lot of consumers as opposed to expensive services to a few. ''I-mode
is a small business with big potential,'' says Hudson sales manager
Haruhiko Ikeda.
Companies like Hudson can easily offer i-mode content.
The sites are written using a version of HTML, the computer language that
most Internet sites are already written in. Other Internet cellphone
networks decided several years ago to use WAP, or Wireless Application
Protocol. WAP translates HTML into content geared for cellphone screens.
But the Internet site supplying content needs a WAP-enabled server to do
so. Momentum is building behind WAP and more sites are coming online every
day, but content providers had been slow to do WAP because there were few
WAP phones, while phone makers waited for more content.
Eventually, i-mode and WAP standards may converge,
Tachikawa says, and DoCoMo will lose the early advantage.
That isn't the only challenge facing DoCoMo. The mobile
Internet is the rage. Within six years, about 700 million people will
reach the Internet by mobile devices vs. 500 million by fixed-line devices
like PCs, estimates London-based consulting firm Ovum. That's why so many
companies, including Vodafone AirTouch, AT&T, Sonera Oyj of Finland,
Sprint PCS, Nokia, Vivendi of France and Motorola, are pushing
technologies and content that meld mobile devices and the Internet.
DoCoMo, too, hopes to expand its presence by sharing its
i-mode expertise with others. Not only does DoCoMo know how to run mobile
networks, but it also has experience managing, a rare combination. So far,
it has taken a 19% stake in Hutchinson Telecom in Hong Kong, which
launched a service similar to i-mode in May. DoCoMo is buying a 15% stake
in Dutch cellular operator KPN Communications. It won't comment on reports
that it is negotiating with Canada's Telesystems International Wireless,
South Korea's SK Telecom and the USA's VoiceStream Wireless.
All of the companies are preparing for the near future
when wireless data networks zip up to 200 times faster than they do today.
At a research center near Tokyo, 700 DoCoMo engineers
toil at devices to use that speed. The future, according to DoCoMo, is one
in which cars involved in accidents automatically inform insurance agents
of damages, kids wear devices that warn drivers that they're crossing the
street and pets can't get lost.
Already, Japanese consumers can buy P-Doco, a $150
device to go on Fido's collar and transmit his location to a PC or fax.
''If we only focus on humans, we limit our market,''
says DoCoMo's Tachikawa. ''We are targeting anything mobile, anything
movable.''
[END]