Cellular Technologies and Japanese Market Forces

interviewed by Wm. Auckerman

Olav Stang: The major product we are selling today is the phone, and some products we consider as accessories to the phone. On the computing side, we have had the PCMCIA card here for a year-and-a-half. We've recently launched a new phone with a data product called Soft Data, which is the first one in Japan that runs the software in the laptop and doesn't require a PCMCIA card. That frees the laptop's card slot for other purposes. It uses the RS-232 interface and a cable that is delivered with the phone to run the connection.

Olli-Pekka Lintula: Soft Data is equivalent to a "soft" modem in the Windows 95 software architecture. It supplies the necessary command interface and interpretation that will accommodate the needs of a communication software package with the network infrastructure. So, in this case, the infrastructure is the PDC data network. It looks just like a normal modem would look to the application software by taking advantage of the Windows 95 virtual communications port architecture.

The beauty, especially for travelers, is the reduction of power consumption. Laptop manufacturers are focusing on increasing functionality at the expense of power management. The power management issues are very important in our business. According to our latest tests, the battery life is increased by over 50% in certain cases when using the Soft Data instead of the PC Card.

One interesting point is the fact that the bottom connector and the bottom interface in our phones have been designed to fit the computing protocols, from many years ago. So it is logically compatible with the asynchronous communications port, which makes the integration of the phone and phone functionality communications features very easy with the computing applications and hardware. That's one example of how computer telephony integration (CTI) is progressing from our perspective.

Is there anything distinctive about Nokia's phones?

Stang: We have a pretty distinctive user interface, with two "soft keys." The function of these keys varies depending on where you are in the menu. This makes it very easy to navigate around all the functionality. That's very different from the Japanese concept; Japanese phones still mostly use the function/number type of user interface. In addition to the design; we're now bringing out some nice colored covers; that will certainly stand out here in Japan.

How would you characterize the Japanese wireless market?

Lintula: The wireless market here is a very big market when you look at the numbers: the penetration and the number of subscribers. As such, it is very important. And the distinctive characteristics from the technology side make it a very interesting market for data services.

The interaction of PIAFS [PHS Internet Access Forum Standard], the fast cordless data protocol, actually makes Japan the leading market in the area of mobile computing applications and network services fulfilling these needs. In other markets, other technologies will accommodate similar speed and capacity structures next year; but when you look at '97, Japanese companies have brought to the local PHS [personal handyphone system] market the most interesting products first. We expect the Japanese market to be a leading market for mobile computing for the two years.

What are the major technological driving forces?

Lintula: Comparing the three "continents," the US has been the leading market for mobile computing for all of the existence of that kind of market, while Europe has been the leading market for mobile technology, and digital cellular in particular. Where Japan is leading is the area of personal multimedia development. Now, technological phenomena such as DVD [digital versatile disc] and game technologies are being brought into the hands of mobile customers as well. It is too early to start speculating what the end result will be, but that is the area of technical and application development that is specific to Japan.

What are the main obstacles to market development?

Lintula: A global phenomenon is the distribution of mobile communications, or wireless digital cellular communications. In all the parts of the world, practically, the distribution is led by operators and the need for fulfilling the really fast-growing market in voice communications. But Japan's subsidy structure makes it quite difficult for computer companies to step into the value chain for building and distributing for mobile computing customers.

This is nothing special to Japan; these are the most difficult areas to overcome in all the markets.

Aren't wireless costs for the end-user higher in Japan?

Lintula: Not any more. The situation has changed dramatically in the past few months, and the per-minute wireless charge is on par with the rest of the world. It is a bit more expensive than using land-line communications, but that hasn't stopped Japan's mobile computing users from using the applications and services when they are needed. A specialty for Japan, for example, is a new service launched by NTT DoCoMo, whereby an e-mail can be sent for 10 yen. That makes it a very cheap, very low cost service.

So, the cost barrier has now been removed from the equation.

What about transmission speed? Doesn't PHS support faster data transmission than cellular?

Lintula: PIAFS specifies a 32-kilobit data channel, although the payload capacity is a little bit less than 30 kilobits. DoCoMo, however, launched a packet data service in May that provides 28.8-kilobit service in the central Kanto area, so in that sense the speed and performance delivered over digital cellular is comparable to PHS. No dramatic difference exists there.

The coverage of the PDS packet data service is to be expanded during the latter part of this year and early part of next year. When that transition period is over, both of the networks will provide sufficient capacity for mobile computing.

What kind of technological opportunities does Japan represent for Nokia?

Stang: The evolution of network services is the fastest thing. Of course, CDM development is progressing, and we are taking part in that. Then there is the PHS data service, and PDC data service. So this market provides the best, the fastest network services for personal multimedia applications and terminals.

We believe that by being active here, you can be active in the rest of the world using similar services and providing similar terminals. That is the value we see in being present and active in Japan.

Lintula: What is happening here at the moment is fast adaption of Internet technologies applied over different wireless infrastructures. It's a very equivalent process to adapting everything else from outside Japan to Japanese culture, and Japanese society at large. The good parts, and the basic principles, are modified to fit the local needs. I expect this to lead to very interesting consequences and concepts in the next two to three years.

The Internet has caught the attention of people here, and now all the industries (both manufacturing and service providers) are looking at how to adapt these technologies not as such, but with a local twist. Since we have seen Japanese industries be successful in many entertainment markets, and very technological markets, the same thing will almost certainly happen in the area of the Internet. So wireless Internet is an opportunity over here, and how well we can work together with the local players will decide where the global standards come from.

Can you sum up Nokia's philosophy?

Lintula: I'll end with the slogan of the company "Nokia: Connecting People." Mobile data is about connecting people more than connecting computers. I believe that will create a dramatic difference in the terminals, and in the services, while we work our way through the evolution of the steps of utilizing multimedia technologies in a mobile environment. It is giving people the pleasure, safety, and confidence to be in touch with people the way they want and when they want.