MMW-113 -- All Eyes on the iPhone

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J@pan Inc Magazine Presents:
M U S I C M E D I A W A T C H
Commentary on Japan's music technology news
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Issue No. 113
Thursday July 5, 2007
Tokyo

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CONTENTS

++ FEATURE: All Eyes on the iPhone

++ NOTEWORTHY NEWS:
** Napster Japan adds Universal to flat-rate mobile service
** Froute starts new mobile music search service
** RIAJ steps up campaign to fight mobile piracy
** Willcom releases new phone with support for Mora, WMA
** Hagiwara and music.jp collaborate on 2GB microSD card

++ FEATURE: All Eyes on the iPhone

There's no escaping the iPhone hypefest this week. Even in Japan,
the debut of the iPhone in the US has been the hot topic of the
month, with up-to-the-minute coverage of iPhone issues, and
reports from Japanese tech journalists who made the trek to the
States to purchase one of the coveted devices. This has been
surprising really, given that Japanese reaction to the iPhone
announcement last January was a bit lukewarm to say the least.
The feeling at the time seemed to be a yawning 'What's the big
deal? We've had all these features on our phones for years now.'
Nobody seemed very impressed at the time, and now that it's clear
the iPhone is a 2G model that can't download songs over the air,
it seems even more irrevelant to Japanese consumers.

So why all the fuss now?

One reason is that the Japanese have been (nearly) as impressed
as the rest of the world with the preview videos on the web
showing the iPhone's slick touch-screen interface and elegant
design. I've heard from several people here that it's the first
foreign-made phone that even 'looks' good enough to use in Japan.
Although much has been made of the fact that the iPhone is
severely lacking in functionality compared to other Japanese
models, there is no question that Apple has once again raised
the bar on simplicity, style, and intuitive user interface
design.

But can the iPhone succeed in Japan, a notoriously difficult
market for foreign phonemakers?

Obviously, the iPhone is no ordinary foreign phone, but it will
probably still require some significant changes in order to
succeed here. In fact, the iPhone that goes on sale in Japan in
2008 is likely to be a noticeably different product from the one
that just hit US stores last weekend.

For starters, it's hard to imagine anyone in this day and age
attempting to release a 2G phone in Japan that can only sideload
music from a PC. And while Japanese iPhone customers might be
willing to forego some of the features that are now standard on
other models, at a minimum they will probably still insist on a
good camera (with video capability), a text input method similar
to that found on current phones, and the ability to choose their
own ringtones. Apple, which has a history of success in Japan, no
doubt realizes all of this, and therefore planned from the
beginning to spend a little more time and effort on the first
Japanese release.

There has also been a lot of speculation as to which local
carrier will be tapped for the Japanese iPhone launch. We're
betting that the honors here will go to SoftBank, which has been
moving agressively over the past year and working hard to reverse
three years worth of damage inflicted by previous owner Vodafone.

Consider:

a) KDDI has already invested heavily in LISMO, its own mobile
music system;
b) NTT DoCoMo has already partnered at various levels with
Napster Japan, Tower Records Japan, Sony and Microsoft;
c) Willcom still has a very small subscriber base

By process of elimination, the only viable candidate appears
to be SoftBank.

There have been rumors about a SoftBank/Apple partnership for
more than a year now, ever since Nihon Keizai Shimbun published
a speculative article (denied by SoftBank) about collaboration
between the two companies on an iPhone for Japan. Shortly
thereafter, SoftBank began a promotional campaign in which they
bundled an iPod Nano with some of their new handsets. More
recently, Yahoo Music, owned by SoftBank, announced last month
a formal tie-up with iTunes Music Store, so that songs listed on
Yahoo Music can be downloaded directly from iTunes.

While SoftBank has been mum on the topic, NTT DoCoMo president
Masao Nakamura actually said in a shareholder's meeting last
month that his company is also interested in a partnership with
Apple on the iPhone. DoCoMo's current partnerships
notwithstanding, it is hard to imagine that Apple would allow the
iPhone to include access to the i-mode menu, or that DoCoMo would
allow a new phone without it. Still, given the opening weekend
success of the iPhone launch, there is speculation that DoCoMo
could also be making a bid to carry the iPhone. It will be
interesting to see just how much influence Apple can wield over
the Japanese carriers, who are very used to exerting tight
control over handset makers.

Even if Apple does manage to attain a strong position with the
carriers though, the company still has its work cut out for it
if it hopes to attain significant iPhone sales here. Japan
currently has over 73 million 3G subscribers, over a third of
whom are on flat-rate data plans. Unlike the US, most mobile
consumers here are accustomed to fast downloads of full-track
music and video without having to pay extra packet charges for
the data. It is a very different environment from the one in
which the iPhone launched a few days ago, and will likely pose
some tough new challenges for Apple when they bring the iPhone
here next year.

++EVENTS
-----------------------Web 2.0 Event----------------------
Tokyo's new community for Web 2.0

Next event July 3 at Fujimamas! Professional podcasting by Terri
MacMillan Mosaic42 and Airline Customer Blog Case study by
Michael Sheetal, Ultra Super New Inc.

All internet and Web 2.0 professionals in Tokyo are invited. Full
details and community SNS at www.tokyo2point0.net

-----------------------Net Tokyo Event----------------------
NetTokyo 2007 – Saturday July 21

NetTokyo is the biggest summer, network-of-networks, networking
event for the Japanese and international community in Tokyo. All
money raised goes to charity. With close to 2 million yen raised
to date we aim to raise at least 1 million more this year!

Join us for a fun, Saturday afternoon of quality networking and
help raise money for four great cause. Full details at
www.nettokyo.jp

Last chance to be a prize or cash sponsor:
http://www.nettokyo.jp/2007/sponsorship_details.php

-------------------- ICA Event - July 19 --------------------

Speaker: Richard S. Keirstead, CTO,
Ascendant Business Solutions K.K.

Topic: The Best of Both Worlds: A Practically Secure Network

Details: Complete event details at http://www.icajapan.jp/
(RSVP Required)
Date: Thursday, July 19, 2007
Time: 6:30 Doors open, Light buffet and Open Bar included
Cost: 3,000 yen (members), 5,500 yen (non-members)
Open to all - location is Ristorante Conca d'Oro

http://www.websanko.com/b_info/akgardencity/details.html
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++ NOTEWORTHY NEWS

** Napster Japan adds Universal to flat-rate mobile service
In brief: Napster Japan has added more than 100,000 songs from
Universal Music to their 'Uta Houdai' flat-rate mobile
subscription service for NTT Docomo. Uta Houdai, currently
available only on the newest DoCoMo series of handsets, has a
fixed fee of JPY 1,980 (US$16.50) per month. With the addition
of Universal, Napster Japan will be able to offer tracks from
artists such as Bon Jovi, U2, and Stevie Wonder.
Source:
http://www.towerrecords.jp/company/pdf/
070620napster_to_go_universal.pdf

** Froute starts new mobile music search service
In brief: Tokyo-based Froute has launhced a new free off-portal
search service for chaku-uta (mastertones), chaku-uta full
(full-tracks) and chaku-melo (polyphonic ringtones). Search
results take users straight to the download page for the desired
song on official music download sites. For the first year, Froute
has set a target of indexing 50 official services and more than
3 million songs.
Source:
http://froute.co.jp/

** RIAJ steps up campaign to fight mobile piracy
In brief: In collaboration with major labels and artists, the
RIAJ has started a new campaign intended to combat illegal music
distribution for mobile phones. The website for the campaign
features anti-piracy messages from five popular Japanese artists,
with more to be added throughout the year. The RIAJ estimates
that more than 287 million music files were downloaded illegally
to mobile phones over the past year.
Source:
http://www.riaj.or.jp/release/2007/pr070619.html

** Willcom releases new phone with support for Mora, WMA
In brief: On June 28, Willcom (Japan's fourth-largest wireless
carrier) released a new phone running Windows Mobile 6 with
support for Label Gate's Mora music download service. The phone
is called 'Advanced/W-ZERO3[es]', and is the latest in Willcom's
W-ZERO3 series. Mora distributes all tracks in WMA format with WM
DRM 10 copyright protection. These are played on the Windows
Media Player Mobile, which comes preinstalled on the phone.
Source:
http://www.willcom-inc.com/ja/corporate/
press/2007/06/28/index.html

** Hagiwara and music.jp collaborate on 2GB microSD card
In brief: Hagiwara Syscom has partnered with music.jp to release
a new 2GB microSD card. The new memory card comes with an access
code that allows the customer to download five chaku-uta
(mastertones) from a music.jp mobile service.
Source:
http://headlines.yahoo.co.jp/hl?a=20070608-00000020-rbb-sci

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