Softbank .vs. AU (KDDI)

Bryan Copeland & May Su Aung

Company name SOFTBANK KDDI

Focus Broadband Infrastructure Segment

High-tech investment

Telecommunications Business Fixed business dominance Content partnerships

BusinessSegments

Fixed-line Telecommunications

e-Commerce Segment “Internet Culture” Segment “Broadmedia” Segment Media & Marketing Segment Overseas Funds Segment Technology Solutions

Services

Short-term goal: secure a 30% share of mobile market (roughly 30 million subscribers)

Mobile Music market Mobile Search advertising M-Payments Exclusive licensing c Trendy / Fashionable handsets Outreach through KDDI Design

studio flagship store

Established (circa) September 3, 1981 June 1, 1984

Principal Office SOFTBANK CORP.Tokyo Shiodome Bldg., 1-9-1,Higashi-shimbashi,Minato-ku,Tokyo 105-7303, Japan

3-2, Nishi-shinjuku 2-chome,Shinjuku-ku, Tokyo

Company Overview

Payment Plans

Cheapest on paper Many “support” plans

• Cheapest, but only if everyone you

know uses Softbank

• Highly focused on customer needs

• # of offerings can be extremely confusing; almost ensures no two customers pay the exact same fee

Data Access & Infrastructure

Merger & Acquisition

41% stock ownership of Yahoo! Japan; acquired Vodafone Japan

Yahoo Portal access “Y!” button on phone hardware

Leads directly to Yahoo! Mobile search / serviceswith Yahoo! display ads

Partnership (tie-up)

Google pays KDDI for Ad-words placements and to be default search provider

“My AU Page” personal portal service

– Blog– Mail– Address Book

Most Popular Data Services

Video download & streaming Game Downloads

Location Search & FriendAlerts

Mobile web browsing

Picture & video messaging M-Commerce Transactions(online shopping via mobile)

Music & Ringtones

GPS, Map & Navigation

Manga on-demand

Business Model

Handsets

# of Handset Models “Fancy-looking” phones, high-tech functionality

Softbank’s Latest Handset

911SH by Sharp

2-Megapixel Camera Music Player E-comics QR Code Reader S! Town Video Call Enjoy Voice Call & E-Mail

all while watching TV!

Business Model - KDDIFTTH

(Internet)

Fixed-line

Phone

KDDI (Handsets & Direction)

GOALS:“…to continue expanding our customer base while cultivating new business domains based on the watchwords ‘Strategy’ and ‘Speed’.”

Ubiquitous Network & Society agenda Maintain Net Positive Churn Rate Deal with decreasing ARPU Simple & functional handsets

KDDI’s Most Popular Handset

A5514SA by Sanyo

Global Passport Digital Camera Talk/Use Email & EZWeb Overseas Safe-Navi GPS & Live Earth Worldwide FM Radio tuner English-Japanese Dictionary Language Recognition (using camera)

Effect of Mobile Number Portability

Growth in Subscriber Number (net)

Effect of Mobile Number Portability

3G Growth (Subscriber number, by carrier)

Total ARPU

Total ARPU (year-on-year) change:

▲¥490 （▲ 6.8% ）of Voice – ¥600 （▼ 11.3% ）of Data ＋ ¥110 ▲（ 5.8% ）

6200

65306580 6600

6000

6100

6200

6300

6400

6500

6600

yen

2003 2004 2005 2006

Softbank - ARPU (4yr trend)

＋ ¥20（▲ 0.3%）of Voice – ¥680（▼ 10.3%）of Data ＋ ¥700 （▲ 10.6%）

55.7%25.2%

16.4%

2.7%

Future

Race for handset features, functionality

Minimize subscriber churn-rate

MobileTV, other advanced services, could be solution to ARPU problems

Customer loyalty & retention becomes increasingly important

Stiff competition to claim share of DoCoMo churn as Japanese Market opens up

Analysis

Softbank should:

Continue to target tech-savvy users & early adopters with high-end devices

Partner with organizations such as Universities, Companies and Government departments where real savings can be made for contacts within a “white plan” network.

Aim for a portion of NTT Docomo’s less-tech enthusiast but function-focused business users with simple yet powerful handsets

AU should: Reduce subscriber churn by

simplifying payment plans, especially for data plans

Offer a loyalty program which rewards customers for staying with the service long-term, such as complimentary downloads (can also get them interested in trying content services)

Entice NTT and Softbank customers by being the first to offer an unlimited bandwidth option for new handset models