Interview: Matthew Nicholson, J-Phone


J-Phone’s Sha-mail is widely regarded as the most successful picture messaging service in the world, with over 5m users at March 2002. Following Vodafone’s acquisition of a controlling interest in J-Phone, the company is playing an important role as a key testing ground for Vodafone’s international 3G services. J-Phone is the smallest network operator in Japan, behind NTT DoCoMo and KDDI, and will launch W-CDMA 3G service in December 2002. Matthew Nicholson, spokesperson for J-Phone, discusses competition, killer applications and international strategy.

Insight

What were the three key factors in establishing the success of Sha-mail?

Sha-mail provides users with an enhanced communication experience, i.e. with Sha-mail, users can communicate in ways that go beyond SMS. A picture can transmit emotions in ways that simple text cannot. The convenience of having the camera function built into the phone is another factor. Since most users carry their handset with them at all times, they can easily take photos where they want to, when they want to. Sha-mail is also extremely easy to use. Users can send images as an attachment to other J-Phone users and PCs (note that it is also possible to send pictures to other carrier subscribers via our ‘@sha-mail’ service – users can visit a web-site where images have been uploaded). It’s easy to compose and respond to sha-mail messages as well. Competing services involve more steps: uploading the image, receivers having to access a web-site to see the image – even among same carrier phones.

How has J-Phone benefited from Vodafone’s influence?

There are many mutual benefits and synergy effects in being a member of the Vodafone Group. Better services, sharing of best practices (we can share service know-how from Vodafone’s 28 operating companies in various countries), scale merits via group buying, increased cost competitiveness (especially with 3G) and expanded markets. With 3G, J-Phone can go beyond the borders of Japan and export its technology and know-how abroad.

How has the rapid adoption of KDDI’s CDMA20001x network influenced J-Phone’s own 3G plans?

Although it is taking some time, since we are closely following global standard 3GPP specifications, we are on track with our own commercial 3G (W-CDMA) service, scheduled for a commercial launch in December 2002. Our 3G strategy is unique in that international roaming will be the focal point. When the 3G service starts, users will be able to use a 3G handset in Japan and use their SIM card for roaming purposes when they go to GSM network countries. Later on, we will be introducing dual mode W-CDMA/GSM handsets so users will be able to take and use their phones abroad as is. As Vodafone is the world’s largest mobile carrier, J-Phone is in an advantageous position to be successful in international roaming.

Do you think the comparatively advanced capabilities of existing 2.5G services are holding back 3G adoption in Japan?

In our view, adoption of 3G depends on the three factors: coverage – 2.5G users are accustomed to high coverage rates so 3G must also have high coverage in order to be successful. J-Phone’s goal is to have 95% 3G nationwide coverage by August 2003. Handsets – users accustomed to 2.5G handsets will also demand miniature, light, multi-functional ones, with long battery life and extended standby and talk times on the scale of 2.5G. J-Phone’s goal is to offer handsets that meet these expectations. Price – users are most worried about price so it is important to offer reasonable rates. J-Phone’s goal is to offer 3G functions that are in line with user’s price expectations.

Is there another ‘killer’ application which you think can succeed to the extent of Sha-mail?

The killer applications are already here – Sha-mail, internet content, melody downloads. It is now just a question of making these services better and even more convenient for users. 3G will give J-Phone an opportunity to do this. To give you an analogy, think of a scooter (2.5G) versus a Harley Davidson (3G), or a powered up version of the same basic concept. Of course, it’s very difficult to predict what will be popular in the future.

How much importance does J-Phone place on third party services?

J-Phone places great importance on content providers and continues to have good relationships with them. We have contracts with many content providers. For melody downloads we work with Composite, Sega Music Networks, Yamaha, Infocom; character downloads: Softbank Mobile, Disney, So-net; Java-based games: Namco, Success, Metro, Kotobuki Systems; news: Asahi, Mainichi, Yomiuri, Sankei, Reuters, Dow Jones and CNN.

What are the most popular types of content?

News, games and ringtone melody downloads. Their popularity can be attributed to their effectiveness as time killers in Japan’s highly commuter-oriented environment.

How does J-Phone share revenue with content providers?

J-Phone receives 12% for content. This is a little bit higher than our competitors. A key difference is that we take the billing risk where other carriers pay out after collecting subscriber fees.

What benefits will 3G bring for content providers?

Of course 3G will see greatly enhanced internet content services and transmission speeds, but it is too early to say how this will effect third party content providers in detail.


Originally published by PMN Mobile Industry Intelligence, the subscription-based analysis and insight platform founded by Marek Pawlowski.
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