The Japanese cell phone market is hard to crack for western telecommunication companies. That’s something that also Nokia, the biggest mobile carrier in the world, had to experience and finally pull out of Japan completely in late November 2008.

Japan is the most advanced mobile phone market in the world and the Japanese customers are used to be provided with the latest technology handsets and innovative content on a regular basis. Functionality and usability are on the highest level and every season Japanese can choose out of a huge range of newly designed phones, fulfilling all needs of very specific user groups. The times are long gone when cell phones where mainly communication devices. Most Japanese rarely even use their mobile phones for calling.

Japanese “Keitai” (cell phone) are every day lifestyle items that represent the user’s personality. Japanese literally live with their mobile phones. They wake up in the morning by their phone’s timer, pay their bus or train ticket to school or work with their phone, write SNS and blogs in the train, watch TV in their break times, pay for their lunches or do mobile shopping. On the way home they play mobile games, download music or videos, read the news or surf the mobile internet. Many Japanese even sleep with their phones in their hands.

Japanese have a high brand awareness and interest in quality design and lifestyle products from overseas. Exactly these factors made Apple’s iPod a top seller in Japan. When in July 2008 the iPhone finally arrived to Japan, people build long lines and waited for days in front of the Softbank shops, just to be one of the first to posses an iPhone. In spite of high handset and data plan prices, sales were good for some weeks and people rumored that the iPhone could make it in the Japanese market. Also there is no offical data available, it is said that Softbank sold about 400.000 iPhones in the first 3 weeks. But then, after just some weeks the euphoria was gone and therefore the sales went low. Very low!

The iPhone lacked too much of the standard features of Japanese phones. Beginning with the hardware, the iPhone’s camera has only 2 mega pixels, doesn’t have auto focus and macro functionality, necessary for QR code scanning and the positioning of the camera makes it difficult to make pictures of yourself. Also the screen resolution is way behind the time in Japan, battery life is low and movies can’t be taken. Also incompatibility with flash, which is preinstalled on 90% of Japanese phones (flashlite), the lack of applications in Japanese language, no Emoji (emoticons) support and the missing copy & paste function didn’t appeal to the Japanese customer. Besides false marketing, rumors about broken handsets, guarantee issues and bad service took the rest to make Japanese think the iPhone is no use for the Japanese.

Then Softbank put a lot of effort and money in commercials, increasing the awareness of the iPhone in Japan. Firmware updates fixed some software issues and with the external 1seg adapter lacking hardware features were tried to be fixed. Also iPhone commercials are seen anywhere, nor Softbank nor Apple released any figures or information on iPhone sales in Japan. And that can’t be seen as a sign that the iPhone sells well here. Then on Feb 25th Softbank announced a new campaign called “iPhone for everybody” to increase iPhone Sales in Japan. Starting on Feb 27th, lasting till may 31st, subscribers for a new 2 years contract will get the 8gb iPhone completely for “free”. The 16gb model will be extremely reduced to one eights of the former price of 80.520yen (823$) to 11.520yen (115$). In addition Softbank reduces the prices for flat rate data plans from 5.985yen (62$) to 4.410yen (45$) per month. If this drastic price reductions doesn’t help the iPhone sell in Japan, nothing will. In economic times like these also Japanese consumers, who keep showing a high consumption rate through the long time of recession in Japan, might be finally convinced, attracted by that cheap offer and help the iPhone survive or even boost in Japan. Let’s see what the next month bring.

When the first Flashlite phones came out here in Japan in 2004, most mobile game developers just gave it a merciful smile. Sure not a true competitor in terms of technology and market share compared to for all those thousand of java powered mobile games in the market.

Over 80% of handsets support FLashlite
Looking at what mobile Flash was capable of at that time they might have been right. But time and technology has moved on. By the end of 2007 over 80% of all handset models could run mobile Flash applications and also mobile Flash evolved into a more powerful technology getting closer and closer to its PC based counterpart. DoCoMo in late 2007 launched its first mobile handset series which supports Flashlite 3.0, opening up the mobile platform to a wide range of rich media service.

It beats Java
Most of all mobile Flash has some very important benefits: compared to java, it is rather easy to develop applications for it. (It got easier with each version upgrade) And it can run on a wide set of handsets without the need to adapt it to specific handset models (a big cost factor for java based applications).

We and others love it
MobileGameTown from DeNA, one of Japans most successful mobile services with close to 7 million users relies fully on mobile Flash technology and offers hundreds of free mobile games.

Here at CB we decided in early 2005 that mobile Flash would be the way to go for mobile game development. We did not even want to hassle with java SDKs and endless testing for different handsets. We just wanted to create fun and enjoyable content for the users in a decent timeframe. And the developments in the last 3 years proved that this was the right way to go.

Others get scared
The boom of mobile Flash games even created the first counter measures from the carriers: KDDI au one -Japans second biggest carrier- recently forbid official sites to feature free mobile Flash games as they were afraid it could kill au’s mobile game revenues. (Most of the paid games are using java or BREW technology).

In the past Japans number one carrier DoCoMo relied on Microsoft as well as on its own mobile services to attract and retain users but took a blow, back in 2007, with it’s DoCoMo2.0 campaign.

DoCoMo2.0 – NOT

The campaign, the services and the handsets did not excite Japanese consumer at all. Users were expecting a “web2.0″ concept but that was far from reality: The “2.0″ concept was about having 2 separate mobile numbers/mail addresses on one singe SIM card plus some small features like movement sensors and music download.

So if this is what DoCoMo2.0 was about then how will DoCoMo3.0 look like? 3 phone numbers on one SIM card? Not quite. The carrier was eager and willing enough to learn from its mistakes and made a big step from its closed ecosystem into the arms of the current online superpower: Google.

Getting in bed with Google

Early this year DoCoMo announced a long term strategic partnership with Google. This not only included the launch of Android devices lates this year but also the tight integration of Googles services in DoCoMos mobile ecosystem. KDDI already struck a small deal with Google a few years ago to integrate Google search on its carrier deck but this deal now goes far beyond that.

“Googlomo” mobile

DoCoMo will integrate services such as Youtube, Google maps, Google calendar Gmail, Picasa into its ecosystem and also provide them preinstalled on their mobile handsets. While Youtube and Google maps already have been launched on the i-mode platform the rest will follow later this year.

The future of mobile advertising

One even more interesting point is the integration of Googles AdWords system into the carriers deck. To top this Google will also offer display ads on DoCoMos services. So in a way Google will become the main ad service for DoCoMos platform.

All in all this is the first time for Google to fully roll out their scope of services to a mobile platform. And this platform is very big: DoCoMo has an installed user base of around 48 million mobile internet users. Over 80% of these users are 3G and 3.5G users. So this will be the big “real-life” test for Googles mobile future and the future of mobile advertisement.

The future of web2.0?

If you take into account that Japanese handsets are one of the most advanced handsets in the world today featuring GPS, RFID, WVGA screens and high-speed internet then this will might be the start of a new era which goes beyond what we have experienced as “web2.0″ in the past.

I posted this story on my personal blog about 6 month ago and decided to also post it here and update it a little as this topic is becoming more and more mainstream

SNS in Japan

Mixi is Japans most popular SNS service with a claimed market share of close to 70%. When conversation in the media come to SNS, Mixi is also the most mentioned Social Network Service. Mixi had around around 12 million in January 2008 a quite impressive number achieved in less than 3 years. After going public the stock value doubled within 12 hours. Mixi turned into the Japanese showcase for 2.0 success. So far the good part. But looking a bit deeper into the service reveals that the glory days of rising users numbers seem to reached its limit sooner or later. More and more users move and will move away from Mixi looking for alternatives. The reasons: too much little time, too much advertisement, too little added value.

Heavy Competition
Competitors like Gree, Mobage, S!Town and others offered a wide range of feature right from the start: the possibility to upload and watch videos, other platforms allow users to play games, listen to the playlists of people in their network, locate friends using GPS or even enter into mobile 3D worlds.

Mixi tried to keep-up by introducing video and music functions a few month ago but still Mixi stays what it is: a pure SNS service with some extra services attached to it.

The New Breed
If sheer user number speak for themselves then these two example can show where developments are going:

MobileGameTown (MoBaGe) by DeNA combines casual mobile games and SNS services. Just within less than 6 month registrations surpassed 6.5 million and they are still growing. And different from Mixi (which is web and mobile based) MoBaGe is only available on the mobile phone

“Maho no Island” is a mobile novel platform which allows users to write their own novels on the mobile phone and submit it to the site. The site offers thousands of novels written by users. They even published a book featuring some of the novels and it sold over millions of copies and made it into the best seller charts in Japan. Maho no Island also offers SNS functionalities to its 5.7 million mobile users.

Beyond SNS
All of these services did not start as a SNS service but they offered a unique value on its own with SNS as an added value to its users. And this is where the trend goes.

For example LISMO, KDDI AU’s mobile music service started to offer a function called “Utatomo” in 2006 for finding people with similar interests based on a users individual play list and their general interests helping the company to increase their overall music sales by 15%.

Conclusion
The time of SNS only services will soon be over. (Expect for maybe specific B2B or special interest SNS offers). In the future a SNS service will not be able to survive simply by providing a social networking functionality as a core service. Instead SNS functions will become part of other services helping to drive personalization (through the data gathered), drive loyalty and in the end to drive sales and generate revenue.

Japan (and maybe Korea) is the leading high tech mobile countries on this planet. Different from other countries, in Japan the mobile phone, not the PC, is the device of choice for internet access. Now Over 80 million users access the internet through their mobile phones.

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