adrian van meerbeeck

The Japanese Mobile Internet Market Opportunities for international mobile content players

Colombia 3.0 – Oct. 26, 2012

Adrian Van Meerbeeck VP, Strategy and Research, NTT DOCOMO USA

The Japanese Mobile Market

2

Overview of the Japanese Mobile Market: The Size

•  The Japanese Mobile market is one of the most important in the world. •  The Japanese are outspending the Americans by almost 80% (per capita).

Source: Public sources from each company 3

188

139

USA (big 4) Japan

Revenues 2011 ($ billions)

70.2 63.2

33.7

20.6

53.0

Verizon W. AT&T W. Sprint/Nextel T-Mobile DOCOMO

Revenues 2011 ($ billions)

Overview of the Japanese Mobile Market: Subscribers

•  The main carriers in Japan are DOCOMO, au (KDDI) and Softbank Mobile. •  DOCOMO has by far the largest share of subscribers.


- 10.00 20.00 30.00 40.00 50.00 60.00 70.00

2008 2009 2010 2011 DOCOMO 54.60 56.08 58.01 60.13 au 30.84 31.87 33.00 35.11 SoftBank Mobile 20.63 21.88 25.41 28.95

Number of Subscriptions (fiscal year)

DOCOMO, 47%

Market Share of Subscriptions (2011)

Overview of the Japanese Mobile Market: Revenues


0.0

1000.0

2000.0

3000.0

4000.0

5000.0

2010 2011 DOCOMO 4224.3 4240.0 au 2590.7 2727.0 SoftBank Mobile 1944.5 2144.8

Revenues (Yen billions)

DOCOMO 47%

Market Share: Revenue 2011

Overview of the Japanese Mobile Market: ARPU

•  Aggregate ARPU in Japan remains one of the highest in the world. •  In 2011 the average ARPU in Japan was close to 60 USD.


-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2008 2009 2010 2011 DOCOMO 5,710 5,350 5,070 4,870 au 5,800 5,410 4,940 4,510 SoftBank Mobile 4,070 4,070 4,210 4,150

Aggregate ARPU (Yen)

Overview of the Japanese Mobile Market: ARPU (data)

Data ARPU has continued to grow steadily – now represents over half of the aggregate ARPU.


-

500

1,000

1,500

2,000

2,500

3,000

2008 2009 2010 2011 DOCOMO 2,380 2,450 2,540 2,670 au 2,210 2,280 2,320 2,490 SoftBank Mobile 1,740 2,020 2,310 2,510

Packet ARPU (Yen)

Handset Sales in Japan

•  The Japanese handset market had reached a mature phase several years ago but the introduction of smartphones in the last couple of years seems to be injecting some new vitality.

•  2011 saw a 20% increase in overall sales.


39.36 37.37 40.87

48.1

20.13 18.04 19.06 22.09

2008 2009 2010 2011

Handset Sales (million units)

Total Sales (DOCOMO+au+SoftBank) DOCOMO

Japan: Smartphone Shipments

Sales of smartphones have grown ten-fold, from 2.3 million in 2009 to over 24 million in 2011.

Source: MM Research Institute Ltd 9 Note: Japanese fiscal year is Apr 1 to Mar 31

0.3

4.9

16.7

1.7 3.2

7.3

0.4 0.4 0.2 2.3

8.5

24.2

FY 2009 FY 2010 FY 2011

Japan Smartphone Shipments (million units)

Android iPhone Other Total

Android vs. iPhone in Japan

Android market share jumped from around 11% of the Japanese smartphone market in FY 2009 to over 69% in FY 2011.

Source: MM Research Institute Ltd 10

Share of Shipments by OS

Android vs. iPhone in Japan

Android is the dominant OS in Japan with over 60% of market share.

Source: comScore MobiLens 11

61.00%

33.00%

5.70%

0.30%

61.40%

34.20%

3.90% 0.50%

Android Apple Microsoft Other

Top Smartphone Platforms: Share (%) of Smartphone Subscribers

3 Month Avg. Ending Nov. 2011 3 Month Avg. Ending Feb. 2012

% of data service to total ARPU:

0%

10%

20%

30%

40%

50%

1999 2001 2003 2005 2007 2009 2011 (fiscal year)

USA (Verizon Wireless)

(Launched Oct. 2001)

Europe (Vodafone)

(Launched Feb 1999)

52.8% (FY2011/1Q)

37.1% (FY2010/3Q)

(FY2010/3Q)

Japan

30.0%

32.5% (FY2010/3Q)

Korea (KT)

* ARPU: Average Revenue Per Unit per month/subscriber

Japan: Data Contribution to Total Revenues

12

Japan leads the world in terms of data contribution to total revenues due to early introduction of i-mode and other advanced services.

% of 3G Subs to Total User Base

Forecast

日本

アメリカ・カナダ

東南アジア

西ヨーロッパ

0% 20% 40% 60% 80%

100% 120%

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Source: Wireless Intelligence

* Southeast Asia: Malaysia, Thailand, Vietnam and the Philippines

Japan

West Europe

USA/Canada

Southeast Asia

3G adoption in Japan/North America/Western Europe and Southeast Asia (2003-2013)

Japan leads the world in the adoption of third-generation (3G) services

Japan: Highest 3G adoption in the world

13

Global Mobile Media: Revenues

Global consumers are spending $ 26 billions in apps.

Source: Strategy Analytics Global Media Forecast 2012 14

82,805

26,121 16,026

2,837

7,311

2,898

327

726

Data plans / web browsing

Applications & Games

Music Video

Global 2012 Mobile Media Revenues ($ millions)

Advertiser Spend Consumer Spend

17.0% 13.4%

85.4%

20.3% 14.1%

107.4%

22.1% 15.5%

128.9%

Total Market Consumer Spend Advertising Revenue

Year-on-year Mobile Media Market Growth: 2011-2012

Global Major Western Europe US

Japan’s Mobile Business Market

•  The Japanese Mobile Content is one of the largest in the world. •  It was worth $6.2 billion in 2009 – even before the introduction of smartphones.

Source: Ministry of Internal Affairs and Communication (Japan) & Strategy Analytics 15

260.30 315.00 366.60 427.20 483.50 552.50 259.30

407.40 564.10

732.90 868.90

969.10

2004 2005 2006 2007 2008 2009

Japanese Mobile Business Market (Yen billions)

Mobile Content Market Mobile Commerce Market

6.2 6.7

US Consumer Spending in Apps (2012)

Japan Consumer Spending in Mobile Content (2009)

Mobile Media Market: US vs. Japan ($ billions)

Revenues: Increased Interest on Japan by Developers.

Source: AppBrain

While the majority of apps are still made (and sold) in USA, Japan (¥) has already caught up with the Eurozone market (three times as large as Japan in subscriber base).

16

NTT DOCOMO Inc.

17

NTT DOCOMO: Handset Sales

•  In the last years the number of handsets sales at DOCOMO has fluctuated between 18-22 million units - roughly half of the entire Japan sales.

•  In 2011 there was a significant increase in sales helped by the introduction of smartphones.

Source: NTT DOCOMO 18

20.13

18.04 19.06

22.09

2008 2009 2010 2011

DOCOMO Total Handset Sales (million units)

NTT DOCOMO: Smartphones

•  Steady growth of smartphone sales since the introduction in 2010. •  In 2012, 55% of the entire handsets sold to DOCOMO customers will be

smartphones and almost 60% will be Xi (LTE) devices. Source: NTT DOCOMO 19

2.52 7.54 5.50

1.28 7.50

2010 2011 2012 (planned)

DOCOMO Smartphone Sales (million units)

FOMA smartphones Xi smartphones

Smartphones,55%,

2012,(forecast),,(13,million,Smartphones),

Smartphones,40%,

2011,,(8.82,million,Smartphones),

Smartphones,13%,

2010,(2.52,million,Smartphones),

2012 Summer smartphones

AQUOS PHONE sv

SH-10D

AQUOS PHONE ZETA

SH-09D ELUGA power

P-07D

Optimus Vu L-06D

(L-06D JOJO)

REGZA PHONE T-02D

ELUGA V P-06D

Optimus it L-05D

AQUOS PHONE st SH-07D

ANTEPRIMA F-09D Xperia SX

SO-05D ARROWS Me

F-11D

Jul. 13

Released Jun. 28 Jul. 26 Jul. 20

XPERIA GX SO-04D

Jun. 29

Jun. 30 Jun. 27 Jul. 12 Released Jun. 7

GALAXY S III SC-06D

ARROWS X F-10D

MEDIAS X N-07D

・ Released a total of 17 models of smartphones/tablets, overwhelming the offerings of the competitors

・ 11 models are Xi LTE-enabled, and many are equipped with popular features, such as waterproof casing, Osaifu-Keitai e-wallet, one-seg TV, infrared data exchange and other features

docomo tablet

Raku Raku smartphone F-12D

ELUGA Live™ P-08D

docomo tablet

docomo Rak

Raku Phone series

DOCOMO Smartphones/Tablets Lineup

20

0

200

400

600

800

1000

１Ｑ２Ｑ３Ｑ４Ｑ１Ｑ４Ｑ

(Million subs)

0.12

Xi subscriptions

0.39

1.14

2.22

Over 10.00 million

3.32

FY2011 FY2012

Xi Coverage expansion plan

112.5MBps 75Mbps MAX throughput

2010 2011 2012

１２月

2013 2014

Prefectural capital-size cities

Local cities

　Major cities

All municipalities

Mar. 31, 2015: Approx.

50,000 BTSsApprox. 98%

Mar. 31, 2013: Approx.

21,000 BTSsApprox. 70%

Jun. 30, 2012: Approx. 9,800 BTSs Population coverage:

Approx. 32% Launched Xi LTE service

Dec.

・ Xi subscriptions grew steadily to 3.32 million as of Jun. 30, 2012 ・ Making steady progress in coverage expansion, aiming to complete installation of cumulative 21,000 Xi base stations by Mar. 31, 2013

10.00

8.00

6.00

4.00

2.00

DOCOMO: Xi Area Expansion Plans

21

DOCOMO: Evolution of Smartphone Services

Source: NTT DOCOMO 22

•  The dmenu portal site provides a wide range of apps and other content from diverse providers, as well as enriched versions of DOCOMO’s popular i-mode™ content, optimized for easy-to-use smartphone interfaces.

•  The dmarket content store offers a wealth of other content, including movies, music, e-books and Android™ applications

•  DOCOMO’s smartphones also have access to a variety of other DOCOMO services, such as i-concier™ for push-based concierge-like personal assistance, ‘NOTTV’ a multimedia broadcasting station for smartphones and many more.

•  VIDEO store and ANIME stores recording favorable increase in subscriptions and transaction volume

•  Plan to introduce multi-device support from August 2012

dmarket

VIDEO Store

BOOK Store

MUSIC Store

Apps & Review

New stores to be added in the future Shopping Gaming

ANIME Store

Unlimited access to over 5,000 video titles for a flat monthly rate of \525 No. of subs topped 2.0 million on July 21, 2012

Distributes approx. 43,000 popular titles from various publishers

Acquired approx. 50,000 subs after “Music Store Selection” launch in July 2012 Offering unlimited access to selected 50 programs from approx. 1 million songs for \315/month.

Introduces selected applications that are fun and convenient from Google Play

Acquired approx. 40,000 subs after service launch in July 2012. Unlimited access to approx. 500 titles, 8,000 episodes of ANIME content for \420/month

・・・

0

10

20

30

40

50

３Ｑ４Ｑ１Ｑ

(Billions of yen) Growth of dmarket transactions

FY2011 FY2012

5.0

4.0

3.0

2.0

1.0

23

DOCOMO: Enrichment of ‘dmarket’.

・ Received 3.00 million downloads and approx. 130 million accesses in about 5 months after service launch.* Improved convenience with the addition of knowledge Q&A function in June 2012

・ Aim to apply voice agent function to e-commerce services of “dmarket” in the future

Network cloud

Intention analysis engine

Voice recognition

engine

Voice command

Handset operation/ content display

Operated by

voice comm

and

Phone

Alarm

Memo

Scheduler

Camera

Music player

Mail

Timer

Content displayed

by voice comm

and

Area guide

Train transfer

Tweets

Recipe info

Weather

Photo content

Map

News

Video content

Music content

Book/comic

Apps

Knowledge Q&A

Gaming content

New

* As of July 25, 2012

Cloud-based Services: ‘Shabette Concier’.

24

•  Launched “Mail Hon’yaku Concier” text translation service in June 2012 •  Received 100,000 downloads and approx. 1.50 million accesses in approx. 2 months after launch*

Mail Hon’yaku Concier

Machine translation function

Network cloud

Mail

SNS

Japanese English Korean Chinese

Create message in Japanese Confirm message in native language

誕生日おめでとう

생일 축하합니다

생일 축하합니다

誕生日おめでとうございます

*As of July 23, 2012

Cloud-based Services: ‘Mail Honyaku Concier’.

25

・ Trial service of “Translator Phone” supporting translation between Japanese and 10 foreign languages in progress since June, aiming for full-commercial introduction in autumn 2012

・ Recorded 220,000 accesses in approx. 2 months after launch*

Translator Phone

Japanese Foreign language

Mother (Japanese)

Host family and Maki

Translator Phone function

マキの母親です。娘がお世話になっています。

I am MAKI’s mother. Thank you for taking care of my daughter.

Network Cloud

Translation

【Supported languages】 Nov. 2011: English, Korean, Chinese Jun. 2012: French, German, Italian, Spanish, Portuguese, Thai, Indonesian

* As of July 23, 2012

Cloud-based Services: ‘Translator Phone’.

26

Automatic upload and synchronization across

multiple devices

Automatic grouping using face recognition feature

Photos of external services can also be viewed

・ “Photo Collection” service planned for launch in August 2012 ・ Photographs taken by mobile devices are automatically sorted and stored in docomo cloud using a wide variety of high-accuracy image recognition features

・ Can also be linked with external services such as Evernote, Eye-Fi, HighCam

Photo Collection Free of charge (Up to 5GB)

Cloud-based Services: ‘Photo Collection’.

27

・ Plan to start supporting cloud-based multi-device access to address book/email in this winter ・ Offers users with greater convenience and peace of mind through constant storage of latest data on the cloud

・ Aim for further service expansion through provision of supplementary services utilizing profile data of address book

Multi-device access (address book)

Tablet

Smartphone

Utilize for services/business

sp-mode mail

Photo sharing service

呍呍呍

Multi-device access ( sp-mode mail)

Tablet

Smartphone

Cloud-based Services: Multi-device Support.

28

Developer Support Page

Smartphone Developer Support page. Purpose: Create a one-stop information window in English for international developers who are interested in the Japanese market. Information included: •  Information about the Smartphone activities in Japan:

•  Penetration of Android at DOCOMO and in Japan •  Android handsets introduced at DOCOMO •  Information about DOCOMO’s Smartphone related services

http://www.docomo-usa.com/en/developer/index.php

29

Smartphone Related Activities at DOCOMO USA

adrian van meerbeeck

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