Is 3G a Dog or a Demon - Hints from 7 Years of 3G Hype in Asia. Presentation for keynote at Mobility World Congress in Beijing (Nov 2008).

1. Is 3G a DOG or a DEMON?
Learning from 7 years of 3G spin in Asia
Benjamin Joffe, CEO | +8* | www.plus8star.com
Mobility World Congress | Beijing | November 2008

2. Introduction

3. 3G penetration in Japan and Korea
is over 70%; it is <0.1% in China

4. 100%
80%
USA
60%
3G users
40%
Chin Japa
20% a n
0%
0% 20% 40% 60% 80%
% of Internet connections measured above 5Mbps
(Source: Akamai)

5. #2 economy, #1 mobile society
#1 mobile & Internet population
#1 digital society

6. Japan stopped selling 2G
in 2007

7. DOG or DEMON
?

9. Demons?

10. TD: 2001 all over again?
=?
TD-SCDMA Phone W-CDMA (r.99) Phone
Motorola, 2008 Panasonic, 2001

11. Video phone

13. Mobile payment

14. Contactless
(and networkless)

15. Mobile TV

16. Terrestrial or
Satellite Broadcast

17. Learning #1
Most talked-about services
don’t need 3G

18. We are sorry for telecom operators
who made the mistake of 3G,
but it’s not our fault!
Martin Varsavsky
CEO, FON
(world’s largest WiFi network operator)

19. For operators, 3G is essentially a
waste of money.
Unfortunately, there is no
coming back
Top executive at one of the most innovative European Telecom operators
(Very familiar with Asian markets)

20. Alternate definition

21. Games
3G Girls
Gambling

22. Games
3G Girls
Gambling

23. Mobile Content

24. Carriers
content

25. Official content
Carriers
content

26. Mobile content
Official content
Carriers
content

27. PC content
Mobile content
Official content
Carriers
content

28. PC content
Mobile content
Official content
Carriers
content
Blue ocean of offline world
“lifestyle infrastructure”

29. Dogs?

30. Mobile music

31. More music is sold “online” than
“offline” in China and Korea

32. Ringback tones were created in
Korea in 2001
They reached 30% penetration in
less than 2 years

33. 90% of digital music
sold in Japan is mobile

34. Digital music revenues in Japan
Source: Infinity Venture Partners, 2008

35. KDDI Mobile Music
1 song = 3 USD

36. KDDI Mobile Music
10% content fee = 0.3 USD

37. KDDI Mobile Music | Direct Effect
100 million songs
Total = 300 million USD
KDDI = 30 million USD

38. KDDI Mobile Music | Indirect Effect
#1
Monthly growth index
1.50
New subs share /
Market share Ring songs
December 2002 Full Song Downloads
November 2004
1.00
0.50
0.00
Nov-01
Nov-02
Nov-03
Nov-04
Nov-05
Nov-06
May-01
May-02
May-03
May-04
May-05
May-06
Aug-01
Feb-02
Aug-02
Feb-03
Aug-03
Feb-04
Aug-04
Feb-05
Aug-05
Feb-06
Aug-06
-0.50
Source: Telecommunications Carriers Association, 2007

39. KDDI Mobile Music | Indirect Effect
#1
x2 new subscribers
KDDI = +400 million USD / YEAR

40. KDDI Mobile Music | Indirect Effect
#2
Data ARPU boost
KDDI = +800 million USD / YEAR

41. TOTAL
Content Providers = 270 million USD
KDDI Content Fee = 30 million USD
KDDI New Subs = 400 million USD
KDDI ARPU Boost = 800 million USD
TOTAL KDDI = 1.2 billion USD / YEAR

42. Learning #1
Content Providers Market Services
& Educate Users

43. Learning #2
Indirect Benefits >> Direct Benefits

44. Learning #3
Ecosystem Growing

45. or

47. KDDI’s Double Flat Fee
(May 2005)
40 USD
10 USD
1.5 MB 6.5 MB~

48. Mobile TV

49. Koreans now spend more time on
the Internet than watching TV

50. Mobile TV penetration in Japan
and Korea is over 30%

52. 37 million mobile TV phones were
sold by June 2008 in Japan
Mobile TV started in May 2006

53. In Japan over 70% of new handsets
are mobile TV-enabled

54. Mobile advertising

55. The mobile ad market in Japan was
over 700 million USD in 2007

56. Have you seen this before?

57. QR code in a train station
with directions to a hotel
QR code on a web page
QR code printed on chocolate

58. TV ad
for a show’s website
Train ad Magazine ad
for job portal for cosmetics
Newspaper ad
for health product

59. Blyk?
(Guess what Blyk benchmarked?)

60. Beyond mobile advertising
Mobile Commerce

61. Moba-Oku (DeNA)
Mobile Auctions
1. Take pic
2. Select category
3. Enter info
4. Check
5. Done!

62. Over 6 billion USD in 2007
Size of M-commerce market by year
(billion USD)
14
12
10
8
6 10.6
12.3
4 9
6 7.4
5.6
2 2.6
4.1
1.7
0
2003 2004 2005 2006 2007 2008 2009 2010 2011
(F) (F) (F) (F)

63. Japan’s m-commerce
=
2x mobile content
=
10x mobile advertising
=
China’s e-commerce

64. Mobile books

65. Several best-selling novels in Japan
were written on mobile phones

66. One full bookshelf
for mobile novels
at Kinokuniya,
Japan’s largest
bookstores chain!

67. The two volumes of
this book “Koi Sora”
(“Loving sky – story
of a love without
gentleness”) sold…

68. “Koi Sora” sold over 2 million
volumes (8 EUR / book)

69. Even on TV!

70. Digital books: Internet vs. Mobile
Flat-fee data plans
are introduced
Source: Infinity Venture Partners, 2008

71. Mobile Social Networks

72. “Social Networking
Is Not a Business”
(but it might be soon)
MIT Technology Review
July/August 2008

74. Build communities
with matching games
Attract user
with free games
Chat Avatars
BBS Journal Clubs
Get new users with
Word-of-mouth

76. Starting date
2004 1997 1999 2004 2006

77. Registered users
60 mln 500 mln 20 mln 14 mln 10 mln

78. Country’s Internet users
60 mln 500 mln 20 mln 14 mln n.a.
200 mln 220 mln 35 mln 90 mln 90 mln

79. Starting date (mobile)
2007 2000 2004 2006 2006

80. Mobile users (est.)
3 mln 50 mln 6 mln 10 mln 10 mln

81. Country’s mobile users
3 mln 50 mln 6 mln 10 mln 10 mln
255 mln 580 mln 45 mln 100 mln 100 mln

82. Revenues 2007 (USD)
150 mln 520 mln ~200 mln 100 mln 150 mln

83. Profit 2007 (USD)
(50 mln) 225 mln ~100 mln 35 mln ~60 mln

84. Average Revenue From Users
~0% 87% 80% 5% 50%

86. Impression unit price
PC
Mobile
April 2005 April 2006 April 2007 May 2008

87. 2008 Trends

88. Mobile Service Trends: Japan
Mobile TV service “One Seg”
Twist screen
with data menu overlay
Decorated and animated mobile
Internet browsing (left)
messaging

89. Mobile Service Trends: Korea
Mobile TV Mobile web browsing service
Video phone call Mobile widget

91. Conclusion

92. Mobile lifestyle
infrastructure

93. All Media Converge to
Mobile

94. 3G
+
Flat-fee data

95. For content, media and advertising:
New service & revenue models

96. For mobile carriers:
indirect effects of innovations

97. Thanks!

98. About +8*

99. There are more ideas
outside your country
than inside
Tom Kelley
CEO, IDEO
The 10 faces of Innovation

100. “Innovation Arbitrage”
• About us
– +8* | Plus Eight Star is the leading cross-market and cross-cultural consultancy in Asia.
– We provide local expertise & global perspective on mobile and Internet innovation from
China, Japan and South Korea to add value to and accelerate the development of our
clients’ businesses.
• Our services
– Analysis of proven best practices and business models from Asia
– Other services: executive study trips, market entry strategy, M&A advisory, partners
identification, negotiation support.
• Founder & CEO: Benjamin Joffe
– 9 years experience with mobile & Internet in Asia
– Selected among “China’s Top 100 mobile industry influencers” in 2007
– Regular speaker at events on mobile and Internet in Asia
– Fluent in English, Japanese, French with working knowledge of Mandarin, Korean and
Spanish

101. Selected References
• Adidas | E-commerce strategy for China, Japan & Korea
• Bouygues Telecom | Cases studies of leading Asian Web 2.0 services
and virtual worlds
• Deutsche Telekom / T-Online | Benchmark of Korean mobile & Internet
convergence strategies
• Hemisphere | Analysis of mobile marketing best practices in Japan and
South Korea (Hemisphere is a leading digital advertising agency),
analysis of leading social platforms (SNS, virtual worlds, online games).
• Microsoft | Analysis of Japan’s key players and market catalysts for
mobile commerce market positioning in China
• DeNA | Case studies of the best practices of leading social networks in
China and South Korea (DeNA operates Mobile Game Town, Japan’s
leading mobile SNS service)
• China Mobile | Benchmark of Korean leading online communities
• Sands Capital Management | Evaluation of China’s investment
opportunities in social networks in China

102. Social Work
• Mobile Monday
– Founder of the Mobile Monday forum in Beijing since 2006 (3,000+
members, 23 events, over 80 presentations).
• Media
– Monthly column on Asian innovation for Asian Business Leaders (one of
the leading Chinese business magazines), numerous interviews in
international media.
• Events
– Regular keynote speaker and moderator at Internet, Telecom, Media and
Investment events
e.g. ITU Asia, Asia Venture Capital Forum, China Mobility International Summit,
O’Reilly’s Graphing Social Patterns, Red Herring Asia, Media 08 Conference,
Wireless Developer Forum, Open Web Asia, XMediaLab, Mobile Monday Global
Summit, etc.)

103. Contact Us
www.plus8star.com
benjamin@plus8star.com
benjamin0123 +81 | Japan
+82 | Korea
http://twitter.com/plus8star +86 | China
Telecom & Internet
www.linkedin.com/in/benjaminjoffe + Added Value
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