eurotechnology.japan.blog

Some of Japan's electrical corporations have remarkably low market capitalizations: General Electric has 1.6 x more sales than Hitachi, but has 13.3 x the market capitalization. Philips has 1/3 x Hitachi's sales, but has 2.2 times higher market cap.

Low market values do not help big recent public share offerings:
Hitachi raising YEN 250.7 Billion (US$ 2.8 Billion),
Toshiba raising YEN 298.7 Billion (US$ 3.3 Billion), and
NEC raising YEN 115.5 Billion (US$ 1.3 Billion).

Low valuations increase the pressure for change in Japan's electrical sector, and the SANYO-Panasonic merger is an indication of changes to come.

In the "post-Galapagos committee" we are working with some of Japan's brightest leaders on understanding the reasons and on how to drive this change.

Benchmarking Japan's electrical companies - Philips= 1/3 x Hitachi's sales and 2.2 x Hitachi's market cap:



GE= 1.6 x Hitachi's sales and 13.3 x Hitachi's market cap



More in our report on Japan's electrical industries.

Labels: galapagos, ge, hitachi, Japan, panasonic, Philips

About 50 million mobile phones equipped with digital terrestrial mobile TV ("oneseg") have been delivered up until today - not counting "oneseg" tuners for PCs, car navigation units and stand-alone units. Comparing this number with reports of mobile TV roll-out in other countries around the world, we conclude that 72.5% of todays mobile phones with mobile TV are in Japan.

How much mobile TV do Japanese people watch on their mobile phones?
In the latest version of our mobile-TV report, we explain in detail our methods to determine that averaged over all of Japan's population of 125 million (including those who don't have a mobile-TV yet), the average viewing time is between 0.4 - 2.3 hours of mobile TV / month. WOW!

Mobile TV 2.0 (OneSeg-2)
Not surprisingly, Japan's media giants are now starting to move, and develop programming specially designed for mobile TV: for example "lunchbox" mobile TV broadcast to mobile phones from 12:00noon - 12:40pm weekdays with news, weather, diet information, summaries of TV shows... it's only a question of weeks or months now in Japan for mobile TV to develop into a totally new advertising and m-commerce medium, and some has started already.

Starting the global mobile internet revolution with i-Mode in February 1999, we can see Japan's leadership emerging in the mobile TV arena. Japan's challenge is to leverage this know-how globally, Japan missed this chance with i-Mode and left the field to iPhone and friends!


72.5% of all mobile phones with digital TV globally are in Japan:
In the same way as with mobile internet (i-mode), Japan is again the global forerunner in mobile TV, together with South Korea.

Labels: business in japan, Japan, media, mobile TV, one-seg

One of our clients in the financial industry asked me several trend questions:

Q1: Biggest surprise in Japan in 2008?

- Collapse of Japan's mobile phone handset market (read our blog). In this context the Japanese telecom equipment makers association invited me to give a presentation, which was booked out 2-3 weeks ahead - about 100 Japanese telecom equipment maker managers attended! The General Affairs Vice-Minister / Secretary of State attended.... ( download my presentation here - in Japanese language: "Paradigm shift and opportunities for Japanese mobile phone makers" )

- The dramatic increase of acquisitions by Japanese companies:

* Panasonic's acquisition of SANYO (read analysis in our blog)
* Nomura's acquisition of a big chunk of Lehman Brothers assets (read about a presentation by Nomura's CEO Kenichi Watanabe)
* SONY's acquisition of the outstanding part of SONY-Bertelsmann music
* TDK's acquisition of Germany's EPCOS
* NTT-Data's acquisition of Germany's Cirquent (BMW's IT company)
* Fujitsu's acquisition of the outstanding 1/2 of Fujitsu-Siemens

Q2: Biggest changes for 2009?

* Hopefully LED/Solid state lighting going mainstream to save energy
* Batteries and solar cells in combination starting to replace petrol for cars
* Solar cell battle (between Q-cells, SHARP and others)

Q3: Key topics in Japanese media for 2009?

* Financial crisis and reviving the economy
* Crisis of the car industry - and car industry's paradigm shift

Labels: Japan, technology, trends

One of the Embassies here in Tokyo asked me to write a report about ICT trends in Japan...

Mobile phone sector
Pushed by the Government the mobile operators changed the business model for mobile phone sales from a straight subsidy model to an installment payment system. As a consequence the mobile phone sales collapsed, creating huge difficulties for Japan's mobile phone makers, but greatly improving the financial results of mobile operators.
An interesting trend is the growth of the "smart-phone" market (Blackberry, HTC-Windows-Mobile phones, iPhone etc.) and mini-PCs, which can be acquired for YEN 1 with subsidy from eMobile.
In this context the Japanese telecom equipment makers association invited me to give a presentation, which was booked out 2-3 weeks ahead - about 100 Japanese telecom equipment maker managers attended! The General Affairs Vice-Minister / Secretary of State attended.... ( download my presentation here - in Japanese language: "Paradigm shift and opportunities for Japanese mobile phone makers" )

Nokia's termination in Japan
On November 27th, 2008, global press announcements announced that NOKIA will stop making mobile phones for Japan's mobile operators with immediate effect. DoCoMo and SoftBank had NOKIA phones in preparation and had already started marketing efforts - these were cancelled a few days after NOKIA's press announcement.
NOKIA had founded the Japan subsidiary on March 3rd, 1989, almost exactly 20 years ago, thus NOKIA has given up entering Japan's mobile phone market after 20 years of efforts. NOKIA will not totally shut down in Japan, NOKIA announced that R&D and procurement will continue, and VERTU announced to enter Japan's market with a mobile vertual network operator (MVNO) model renting network capacity from DoCoMo, and opening own shops.- However the opening of these direct VERTU stores keep being postponed.
NOKIA joins the row of European telecom companies which have given up operations in Japan: Vodafone, Cable & Wireless.

M&A
European company's acquisitions in Japan are currently almost non-existent, including the ICT sector. By far the largest acquisition in Japan by a company from the European/Mediterranian area was not by an EU company, but by the Israeli company Iscar which acquired the Japanese company Tungaloy for around US$ 1 Billion. However, this acquisition was driven by US capital. Read details in our blog here.
In the opposite direction there is a boom of Acquisitions by Japanese companies abroad. For example, TDK acquired the German company EPCOS, Fujitsu acquired the outstanding 1/2 of Fujitsu-Siemens, NTT-Data acquired 72.9% of Cirquent which was a 98% subsidiary of BMW before. SONY acquired the outstanding 1/2 of the SONY-Bertelsmann Music Group from Bertelsmann.
The current trend is definitely a strengthening of Japanese acquisitions in Europe.
The most important issue however are not the acquisition transactions themselves, but the crucial issue will be whether these acquisitions create or destroy value. In many cases the difficulties to overcome "cross-cultural" issues are enormous. Many huge wrecks line the road: Vodafone-Japan, Cable-Wireless-Japan, NOKIA in Japan, or DoCoMo's overseas acquisitions. There are also many success stories - the most impressive and famous one Nissan-Renault, however there are many more. An interesting case in progress is Nippon-Sheet-Glass (now NSG Group)'s acquisition of Pilkington Glass (read about a presentation by NSG's CEO here in our blog).

Labels: ict, Japan, mobile phone, nokia, smart phone, smartphone, trends

NOKIA's Japan subsidiary was founded on April 3, 1989 - almost 20 years ago. On November 27, 2008 NOKIA announced to terminate selling mobile phones to Japan's mobile operators, effectively withdrawing from Japan (except for purchasing, R&D and VERTU).

NOKIA's sales figures in Japan were a well kept secret until last week when several Japanese newspapers wrote that NOKIA sold 200,000 phones during FY 2007: thus NOKIA's market share was 0.39% - after 20 years of market entry efforts.

Considering the disastrous collapse of mobile phone handset sales in Japan, NOKIA's move to quit sales in Japan actually makes a lot of sense. Nothing prevents NOKIA from re-entering Japan again in the future.

Labels: Japan, market share, nokia, sales

Japan's mobile phone sector is admired the world over, and Japanese mobile phones are years ahead the rest of the world regarding functionality. However, Japan's mobile phone industry may be heading for a disaster, similar to the European 3G spectrum license fee disaster which almost bankrupted Europe's mobile phone operators - unless changes are made quickly. Statistics released today show that mobile phone deliveries in October dropped down to 1/4 of steady sales maintained over the last 8 years as the figure below shows.




What is the reason for the disastrous drop in mobile phone deliveries?

Until recently Japan's mobile phone operators subsidized mobile phone handsets. Consumers would typically pay YEN 10,000 (about US$ 100) for handsets with built-in digital TV, GPS, movie camera with auto-focus, electronic money and tickets, QR-code reader, and much more, which cost the operators up to YEN 100,000 (US$ 1000) per handset.
Encouraged by Japan's Government, mobile operators recently switched from the subsidy model to an installment plan, while discounting the monthly usage fees.

While previously consumers put YEN 10,000 (US$ 100) or in some cases YEN 1 (1 cent) on the counter to receive one of the world's most advanced handsets, since a few weeks ago consumers are faced with a 2 year installment purchase contract where they pay the full YEN 60,000 (US$ 600) or YEN 80,000 (US$ 800) for a handset in installments of around YEN 3000 (US$ 30) each month for two years. Not surprisingly handset sales dropped into the cellar as shown above (the figure above actually shows the deliveries from manufacturers to mobile operators, not the actual retail sales).

What are the likely consequences?

1. continuing consolidation of Japan's mobile phone handset makers
   
2. surviving handset makers will push into international markets
   
3. operators will push harder for cheaper handsets
   
4. operators might return to a modified subsidy model
   
5. NOKIA might get another chance in Japan
   

Labels: collapse, disaster, Japan, keitai, mobile phone, sales

presentation by Gerhard Fasol, at the Industry Association of Japanese telecom and networking equipment makers, Friday November 27, 2008, 15:00-16:30

Presentation was fully booked several weeks before the talk, attended by about 100 managers and executives of Japan's telecom equipment makers, and included also the Vice-Minister/Secretary of State of Japan's General Affairs Ministry (MIC), which is responsible for telecom regulation in Japan.

Download the presentation as a pdf-file here (in Japanese language)

Labels: international business, Japan, mic, microsoft, mobile phones, telecom equipment

Opaqueness of Japan's SNS was a point of discussion at the Next Context Conference. When you use Japan's social network systems, instead of portrait photographs and real names in Western SNS, in Japan you'll find that most people use phantasy names and pictures of churches, cats, airplanes, clowns and cartoons instead of passport photographs. Japanese people prefer to keep there privacy intact in this and several other ways. For example mostly you cannot join Japan's SNS unless you are invited in by a friend, and you can't join unless you live in Japan (verified by your Japanese mobile email address).

Looks like Western SNS will have difficulties to thrive in Japan's SNS unless they make some adaptations of their Western functionality for Japan - or unless Japanese people change their preferences.

Labels: facebook, Japan, linkedin, mixi, sns

A few days ago the New Context Conference was held here in Tokyo, mainly about social network systems (SNS), top executives including CEO of LinkedIn, Facebook, and some exciting new photo, video conference and e-learning companies discussed market entry to Japan.

Takeshi Natsuno, one of the three key DoCoMo managers who together started i-Mode and arguably started the world's mobile internet revolution launching i-Mode back in February 1999 gave the keynote discussion. Natsuno shared his very interesting observation, that Japan consists of two markets:

• new Japan = people below 50 years age and


• old Japan = above 50 years age

...and having managed i-Mode (today: 48 million paying subscribers) for almost 10 years Natsuno-san is certainly one of the best to know. (Natsuno-san's main job today is to make Japan's very cute equivalent of YouTube profitable - read more about this in a future issue of our newsletters).

Actually, you'll find a similar observation about old Japan and new Japan in my presentation entitled "New opportunities versus old mistakes: foreign companies in Japan's high-tech markets" which I gave some years ago at Stanford University to faculty, students, alumni and silicon valley managers.- (You can view and download the slides of the presentation below.)



Natsuno-san talking at the New Context conference in Tokyo about old Japan, new Japan, the future of the mobile internet, and the mobile industry. Natsuno-san is one of the three inventors of i-Mode:

Labels: i-mode, imode, Japan, natsuno, sns, takeshi natsuno, youtube

Presentation at the CEATEC Conference, talk NT-13, Meeting Room 302, International Conference Hall, Makuhari Messe, Friday October 3, 2008, 11:00-12:00.

The emergence of iPhone, Android, open-sourcing of Symbian, and the growth of mobile data services are changing the paradigm of the global mobile phone business opening new opportunities for Japanese mobile phone makers. Japan's mobile phone handset makers have missed most opportunities during the first wave of mobile phone opportunities. The developing paradigm change opens new opportunities for Japanese makers. The talk will explain the paradigm shifts and trends of the global mobile phone handset market, and resulting opportunities for Japanese mobile phone makers, and will indicate how these opportunities can actually be realized.

Download the presentation as a pdf-file here (in Japanese language)

Labels: android, Japan, maker, mobile phone, panasonic, sharp

Second generation (2G) phones silently bowed out of Japan's market 8 months ago: the last 2G phones in Japan were shipped in December 2007. KDDI/AU switched off their 2G radio network in March this year, and both DoCoMo and SoftBank announced that they will switch off their slow and expensive 2G networks in the very near future (about 2009). Almost all other countries in the world either depend on legacy 2G networks only, or keep legacy 2G going while building out third generation in parallel. (Today's 3G HSDPA phones transmit data up to 250 times faster than 2G phones did on a good day).




The last 2nd generation (2G) phones shipped in Japan in December 2007. Almost all other countries keep legacy 2G networks running - Japan just switches them off. More in our JCOMM report.

Labels: 2g, 3g, docomo, hsdpa, hspda, Japan, KDDI, mobile phone, softbank

Tetsuzo Matsumoto (Senior Executive Vice-President and Board Member of SOFTBANK MOBILE Corporation),
Gerhard Fasol (CEO, Eurotechnology Japan KK)
and
Dennis Normile (Japan Correspondent of SCIENCE Magazine, and FCCJ)
discuss about the future of Japan's mobile phone market.

"Will the iPhone trigger a turning point in Japan's mobile phone industry?"
(Foreign Correspondents' Club of Japan, Tokyo Wednesday, August 13, 2008, 12:00-14:00)
(Photo: Copyright Foreign Correspondents' Club of Japan, used with permission)

Labels: 3g, apple, iphone, iphone 3G, Japan, softbank

In a terse one-line press announcement "SoftBank today announced it has signed an agreement with Apple to bring the iPhone to Japan later this year". (Of course we are talking about the 3G i-Phone, because Japan has almost switched off the 2G networks, and has essentially stopped selling 2G phones for a couple of years now. The current initial 2G iPhone uses GSM and therefore cannot work in Japan, which has no GSM).

iPhone's main competitors in Japan will be SHARP and KDDI's design series, at least for the forseeable future - an entirely different story than in any other country in the world... read below.



About 25% of the global cellphone market in terms of cash value is in Japan. - Why? Japanese users want a lot more functions (navigation, mobile payment, QR code, mobile shopping, mobile music and video, mobile TV, ...), and are happy to pay much more per phone. Japan is a totally different game: while NOKIA has about 40% of global market, NOKIA's marketshare in Japan is almost zero.

Competing in Japan will be an entirely different story for the iPhone

Japan's cell phone is entirely different than anywhere else in the world - recently some people including Japanese Government officials have used the nickname "Galapagos islands" for Japan's insular and very advanced cellphone market. Indeed, our company in a project for the European Union Government documented in details how Japan's cellphone services are 3-5 years ahead of Europe's, ie a large range of cellphone services common in Japan have not yet been introduced in Europe.

For this reason, while the current 2G iPhone is at the high priced top-end in the US or in Europe, in Japan the 2G iPhone does not even work, because Japan has no GSM and essentially has not been selling any 2G phones any longer for a couple of years now. Many mobile services, which Japanese phone users have become accustomed to, are missing from the current 2G iPhone. Japan therefore will be a benchmark, and we expect that selling the iPhone in Japan together with Japanese customer feedback will help Apple to dramatically accelerate iPhone development. Competing in Japan will make the iPhone stronger we believe.

Labels: cellphone, iphone, Japan, nokia

Presentation at the lunch meeting of the Danish Chamber of Commerce in Japan (DCCJ) on June 4, 2008.

Announcement

Photos of the event

Announcement text:

With the very high EURO and low valuations of many Japanese companies, and with changing attitudes in Japan, now is an excellent time for European companies to start or expand business in Japan.

There are many ways to start or expand business in Japan, and acquiring a Japanese company is one of the paths often selected by European companies to grow in Japan.

Some acquisitions of Japanese companies by European corporations have led to fantastic successes - while others have led to catastrophic failures.
The presentation will discuss the key factors for European companies to succeed in acquiring a Japanese company, and some of the key reasons for failure, based on the speakers 23 years of experience with Japan's high-tech sector.

Labels: acquisitions, business in japan, danish, danmark, dccj, Japan, mergers

SoftBank from 4th to 1st position within less than 12 months... SoftBank's turn-round of x-Vodafone-Japan, went faster than many expected. Within less than 12 months SoftBank went from last place to first place in customer sign-ups, overtaking even KDDI's super-popular AU. Willcom recently suffers from SoftBank's revival, as well as from eMobile's flat rate data services.

Labels: docomo, Japan, KDDI, keitai, mobile phone, ntt, softbank, yahoo keitai

In the last few days NTT, NTT-DoCoMo, KDDI and SoftBank announced their first half financial results. SoftBank and KDDI are the winners both for market share and for profits, while DoCoMo's results and market shares are sinking, and pulling the NTT-Group down at this time. Extrapolation indicates that DoCoMo's net profits may fall into the red about one year from now, drastic action is taken soon.




The thin lines show linear interpolations of quarterly net profit data. Our extrapolation seems to indicate that DoCoMo's net profit might fall into the red towards then end of calender year 2008 unless drastic action is taken. If current trends continue, SoftBank's net profits might exceed DoCoMo's mid-2008. We expect DoCoMo to take dramatic action before this happens.

Labels: docomo, Japan, KDDI, mobile phone, ntt, number portability, softbank, yahoo keitai

Presentation at the Lunch meeting of the Finnish Chamber of Commerce in Japan (FCCJ) on March 16, 2007 at the Westin Hotel, Tokyo.

Find the summary and photos of the meeting here

Download the presentation here

From the Announcement:

In his presentation, Dr. Fasol will explain the essentials of Japan's mobile phone market, why and how it is so different to Europe's. He will also talk about some of the reasons why it is so difficult for European companies to succeed and uncover opportunities and the keys to success for European companies in this important market.

Labels: docomo, handy, Japan, KDDI, keitai, mobile phone, nokia, softbank

Japan's mobile subscriber numbers grew by about 5 million in 2006. Because of the much higher ARPU, Japan's mobile market again grew by a couple of Finlands during 2006. A growing number of people have more than one mobile phone, to take advantage of the best rates, eg for mail, voice and data. We expect growth to continue. Our analysis below shows that KDDI's and AU's gains are a lot larger than a superficial view of the statistics reveals - see our Figure below. Find a detailed review in the latest edition of our JCOMM-Report.




KDDI's subscriber gains during 2006 are much bigger than a superficial analysis reveals (see figure above):

KDDI's AU mobile service gained about 4.2 million new subscribers during 2006 - more than twice as many than DoCoMo's cellular service, which gained about 1.8 million new subscriptions.

Currently, KDDI is shutting down it's TuKa 2G service, and DoCoMo is shutting down it's PHS service. Both services together lost more than 2 million subscribers during 2006 - this is a much larger movement than due to number portability introduced on Oct 24, 2006.

KDDI offers both number portability and mobile email portability, and reports surprise that many former low-end TuKa users moved to top-end high-speed WIN (2.4 Mbps) data services.

For KDDI, enticing TuKa subscribers to move to high-end/high-speed AU services was an excellent preparation for number portability, and helped KDDI win in the first stage.

Labels: au, docomo, Japan, KDDI, mnp, mobile, mobile number portability, subscriber numbers, subscriptions, wireless

Finland's Government R&D and technology agency TEKES engaged our company to prepare input for the planning of TEKES' five year VAMOS project on mobile services.

Download one of our reports entitled "Scenarios for Japan's mobile eco-systems" from the TEKES website

Labels: eco-system, Japan, mobile, tekes, vamos

Presentation at the EU-Japan Center Tokyo and at Stanford University on April 11, 2002 in the SPRING 2002 Seminar/Public Lecture Series
Topics in International Advanced Technology of the US-Asia Technology Management Center.

Labels: bio, Japan, nano, stanford university, technology

Presentation given by Gerhard Fasol, to the Asia/Pacific - Midwest Business Conference
Panel Presentation "E-commerce in Asia", on Wednesday April 10, 2002, 8:00-9:30am, organized by the US Department of Commerce and the Illinois District Export Council.

Labels: chicago, department of commerce, Japan, m-commerce

Full day tutorial by Gerhard Fasol, organized by Seminario Internacional Prisma, held at the Hotel Metropolitan, Lisboa, March 21, 2002.

Attendance: about 50 executives from Portugal's telecom operators, major consulting firms, and IT professionals attended the full day tutorial.

Download and update presentation as a pdf-file

Labels: i-mode, imode, Japan, portugal, wireless business, wireless internet