********************************************************** Japan Internet Report No. 49 June/July 2000 ********************************************************** In this month's issue: - Internet booms in Korea; wireless access doesn't - Intriguing i-mode items and the real meaning of WAP - Interview with Ray Tsuchiyama of Tegic - Japanese Internet career opportunities - Dotcom reality check seminar in Tokyo - Web surfing by voice, in France ********************************************************** Internet booms in Korea; wireless access doesn't Korea is unquestionably the nation that most resembles Japan - not only linguistically, but in the way consumers think and go about their daily lives. Thus it's no surprise that Internet-related venture activity between Japan and Korea is booming; it's far easier to bring a Japanese model into the Korean market, or vice versa, than it is to bring a U.S. model to Japan, or vice versa. In fact, we believe that many Japanese consumer-oriented Internet application and service models can work almost as-is simply translated into Korean, with a fraction of the localization effort required when going from the U.S. to Japan. With that (and Korean barbecue) in mind, TWC/TKAI staff made the journey from Tokyo recently. Following are comments from Dan Tochen: "Chatted with some Korean Internet professionals while visiting Seoul a few weeks ago. The most surprising thing they told me was that in sharp contrast to Japan, in Korea cellular Internet access is not very popular. They were frankly dismissive, explaining that high connection charges and small displays and keypads have discouraged widespread adoption. It seems that unlike Japan, where a large segment of the population still resists using desktops and prefers to go online with more familiar cellular phones, Koreans tend to be comfortable with desktop and laptop computers, and are less willing to accept the compromises inherent to surfing the Internet with currently available portable devices. There's no question that the PC-based Internet is booming in Korea -every bank I saw in Seoul prominently displayed its URL, and the Lotte department store, one of Seoul's largest, prints its URL on display windows underneath the logo. If I needed more evidence of the prevalence of Internet use in Korea, it was supplied by the Seoul police. Taking a taxi to Kyongbuk Palace in downtown Seoul, I passed a small park where riot police were assembling in preparation for a demonstration. They pulled up in white buses with wire grills protecting the windows and the Seoul Metropolitan Police Agency URL<www.smpa.go.kr> on the side in 12 inch letters (30 centimeters for metric readers). I was impressed when I took a look at the site - the Shockwave animation on the top page outdoes many of the commercial sites I've seen in either English or Japanese, let alone government sites. After seeing URLs all over town, I wasn't surprised when my contacts told me that Korea now holds more domain names than any other country in the world except the U.S. Moreover, although Korea has only a bit more than one third of Japan's population, depending on whose statistics you believe, on a per-capita basis it has an Internet penetration rate anywhere from a third again to twice as high as that of Japan. This is a market to watch." ********************************************************** Intriguing i-mode items and the real meaning of WAP Orders placed from i-mode handsets now account for 25% of all online retail securities transactions at DLJDirect, according to the company. That's up from 10% late last year... - DoCoMo's packet revenues for the year through March 2000 were 38.5 billion yen (about U.S. $356 million). Almost all of this from its i-mode service... - Sakura Bank, which plans to launch an Internet bank this summer with partners including Sumitomo Bank, Fujitsu, Tokyo Electric Power Company, and NTT DoCoMo, plans to focus on cellular telephone users rather than PC users. Its rationale? Privacy, for one. The Japanese workspace is not a very private place, and no one wants to expose his bank balance on a desktop screen in full view of coworkers. The cellular handset, on the other hand, offers the user far more privacy and TPO ("time, place, and opportunity") for transactions, as they say in Japan. And the small screen size is no problem, since most banking transactions involve submitting only relatively short strings of numbers... - Palm made somewhat of a splash here with its market entry announcement, but as one DoCoMo insider says, "Japan is not a PDA market." I don't think he's just toeing the company line, either. There are a lot of good reasons why PDA usage here is very limited... The real meaning of WAP, according to one industry observer, is "Wrong Approach to Portability." There's a great write-up about this acronym at <http://www.useit.com/alertbox/20000709.html>... For more on cellular, read on for our interview with Ray Tsuchiyama of Tegic. ********************************************************** Interview with Ray Tsuchiyama of Tegic Ray Tsuchiyama is a true Tokyo-based cellular meister. He heads up Japan operations for Tegic Communications, a company that provides T9 Text Input software, a critical component of the wireless "infrastructure" that relatively few people know about. We enjoyed online and offline meetings with Ray to compile this interview. - Japan has more than ten times as many Internet-enabled cellular users as the entire rest of the world combined. What factors account for this, in your view? The development of i-mode, WAP, and other Internet-enabled cell phones in Japan is due to a combination of factors: the continuing "spectrum congestion" in PDC networks, which acted as a catalyst for Japanese mobile Internet carriers, the high NTT land-line charges (which make wireless Internet usage seem not that expensive), and Japanese users' interest in information, especially in option-rich urban environments (entertainment, finance, restaurants, etc.). Internet-enabled i-mode phones are also simple for consumers to use, utilizing menu-driven programs - a prepackaged way to access Web sites. - Why haven't WAP markets experienced the tremendous growth in cellular-based Internet usage that we've seen in Japan? Growth in the WAP market has been constrained by the technology's inability to handle high-quality images, and by growth in the dedicated Internet access market (which may be addressed by the advent of GPRS). Furthermore, WAP has always been a GSM-focused phenomenon, so most application development/marketing efforts have targeted Europe and a number of Asian countries, like Taiwan and Hong Kong; Japan, on the other hand, is a nation dominated by PDC networks. NTT DoCoMo adopted Compact HTML with the vision that i-mode-compatible versions of Web sites could be created simply by using their existing HTML code. Interestingly, the major wireless Internet breakthrough occurred several years ago when a small Japanese engineering firm, Access, released a paper entitled "How-To to Create Mobile Internet Web Pages" at the World Wide Web consortium held at the Massachusetts Institute of Technology. The paper served as a major impetus to programmers and, in summary, led to the development of standardized pgramming tools. (It has since been published as a book.) - What is the outlook for WAP in Japan in your view? This is a complex issue, as i-mode has done so well in Japan and shown technical and marketing superiority, offering virtually dedicated Internet access and an abundance of Web sites. This may change since GPRS, too, allows for the former; the latter, however, is an issue that will need to be dealt with. - What will be the biggest effect of the introduction of third-generation services in Japan next year? What third-generation applications do you see becoming popular in Japan? I see mobile telephones able to support convenient e-mail and Web-browsing applications growing even more popular in the coming year. I am still not sure about video over cell phones, but am positive that "i-mode"-type data searches will be very popular. The convergence of PC-style instant messaging and wireless phones, too, will become a "killer" application. The longer-range application of local-language database queries will also become a terrific application- but this requires the development of easier-to-use Japanese text input techniques. - Give us a quick overview of what Tegic does. What is T-9's current position in the market, and what is your strategy going forward? Tegic Communications was founded in 1995 to develop and market communication technologies for the telecommunications and computing industries, and was acquired by America Online, Inc. (NYSE: AOL) in December 1999. Tegic Communications is headquartered in Seattle and has offices in Tokyo and Hong Kong. Tegic's flagship product is T9 Text Input, the leading alphabet-based and Chinese and Japanese character-based text input software. T9 Text Input technology has been licensed to major consumer electronics and communications equipment manufacturers representing more than 90 percent of annual wireless phone production worldwide. By incorporating T9 Text Input into mobile communications products, companies are solving the fundamental problem of how to quickly and easily type and send messages. Although each key on a telephone keypad can be interpreted in multiple ways - a single press on the "5"key could be "J," "K," or "L" - T9 Text Input uses an internal database to automatically scan possible variations to determine the correct word. For example, entering the word "call" into a mobile phone will take just four key presses with T9 Text Input rather than ten key presses required by conventional "multi-tap" text entry. More than 40 different consumer electronics devices including mobile phones, personal digital assistants, and MP3 devices, have integrated T9 Text Input software. The software is available and in use in every major European and Asian language including Chinese, Danish, Dutch, English, Finnish, French, German, Italian, Japanese, Korean (Hangul), Norwegian, Portuguese, Spanish and Swedish. Additional language support is continuously expanding. Current licensees include Nokia, Ericsson, Motorola, Benefon, Hyundai, Bosch, Denso, Fujitsu, LG Information & Communications, Maxon, Memory Corporation, Mitsubishi, NEC, NeoPoint, Optimay, Panasonic, Philips, Qualcomm, Sagem, Samsung, Sanyo, Shintom, Siemens, Sony, Telit, and Voxson. The company has worldwide patents, both issued and pending, on T9 Text Input technology. Tegic has had tremendous success in licensing T9 to major Japanese cell phone exporters. Over the next year I see Japanese T9 in the Japanese domestic market as our major challenge. The average Japanese cell phone user is more sophisticated in cell phone usage than Europeans and Americans, and we need to study cell phone trend-leaders, like young people, and how they use text input, messaging, and other applications. We may still see big changes in this very fast-moving market. Yet the major issue of Japanese text input difficulty still remains, and we are optimistic that Japanese T9 will address this problem. Ray Tsuchiyama Director - Business Development (Japan) Tegic Communications 3-7-1, Nishi-Shinjuku N30F Shinjuku-ku, Tokyo 163-1030 Japan Tel: 81-3-5326-3687 Fax: 81-3-5326-3001 Email: ray@tegic.com http://www.tegic.com ********************************************************** Japanese Internet career opportunities We're looking for folks to join us on our mission to become the leading e-business solutions provider in Asia. Tokyo-based opportunities are available for: - Developers - Technical Solution Integration Director We are particularly interested in individuals with strong sector-specific experience outside of the Internet industry proper. Please see <www.twc-asia.com>, then contact <masako.nakamura@twc-jp.com> with a brief letter of introduction and resume. ********************************************************** Dotcom reality check seminar in Tokyo We are going to do a "Dotcom reality check" seminar in Tokyo on the evening of August 3, sharing our experience bringing Promotions.com into the Japanese market. Call the American Electronics Association in Tokyo at 3237-7195 if you are interested in attending. Promotions.com's Japanese language service has been up and running in test mode since June 15, attracting more than 27,000 registered users so far. The full-fledged commercial service, which involves ASP-like presentation of sophisticated permission-based online marketing solutions, is slated for launch this fall. Those interested in the service itself can call Hiroshi Hanamoto in Japanese at 03-3797-6903. ********************************************************** Web surfing by voice, in France Last month I spent three days in Evian, France, on the shores of Lake Geneva, at the invitation of Lucent Technologies. What a place! It's been awhile since I've been in a location so beautiful and so dedicated to relaxation and rejuvenation. Coming from Tokyo, initially I found myself somewhat at a loss as to how to deal with an (albeit limited) block of leisure time and lots of open, green space. Fortunately that feeling passed quickly, and besides, there was work to do. There is tremendous interest throughout Europe in Japan's Internet-enabled cellular telephone market. That's what led to my participation in the Lucent pow wow. But for me, the most powerful presentation during the two-day session was Lucent's voice-enabled service offering that enables consumers to use ordinary telephones to navigate Web sites, have e-mail messages, stock prices, or news items read to them (!), and otherwise use any telephone to surf, navigate, and enjoy the Internet. Lucent technology makes this type of usage possible for any Web site that is VoiceXML-enabled. Pretty amazing stuff - and something that would make a lot of sense here in Japan. But back to France for a minute. I didn't realize that Evian water, renowned for its curative properties, is available from a public spigot, free of charge to anyone passing by. They say that drinking and bathing in it cures all sorts of ills, and I'll be darned if I didn't feel a whole lot better after those three days... So good, in fact, that I had to take my summer vacation last month, resulting in a one-month JIR transmission lag. It's been a hectic summer, but I'll try to keep up to the usual once per month schedule going forward. Cheers to all! ********************************************************** Tim Clark Editor To subscribe or unsubscribe to JIR, send any message to: subscribejir@tkai.com unsubscribejir@tkai.com Copyright 2002 by Ion Global All rights reserved ---------------------------------------------------------- Ion Global a chinadotcom company http://www.tkai.com/ http://www.jir.net/ Tokyo Tel. (813) 5464-0384 Fax 5464-0387 U.S. Tel. (503) 235-4433 Fax 235-4422 ----------------------------------------------------------