Terrie's Take 854 -- What is Driving NTT DoCoMo's Profit Jump? E-biz news from Japan
terrie at mailman.japaninc.com
Sun Jun 19 22:00:43 JST 2016
* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.
General Edition Sunday, June 19, 2016, Issue No. 854
- What's New -- What is Driving NTT DoCoMo's Profit Jump?
- News -- Moody's predicting yen to strengthen
- Upcoming Events
- Travel Picks -- Shinminato Bridge in Toyama, Fireflies in Saitama
- News Credits
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+++ WHAT'S NEW
NTT DoCoMo is on a steady recovery track at the moment, after several
harrowing years (2013/2014) of customer defections due to the changes in
the telecommunications laws such as MNP (transferable phone numbers),
the rise of smart phones, and the sudden popularity of SIM-free phones.
According to the Nikkei, the company had a 17% jump in operating profit,
to just over JPY750bn in FY2015, thanks to better data services sales.
Specifically, that means better smart phone sales.
Readers will know this as the "iPhone effect" where DoCoMo's late entry
into the smart phone space (after reluctantly signing a deal with Apple)
meant that it lost early adopters to KDDI and Softbank - 380,000
customers last year alone. Smart phone users of course use a lot more
data, and now that DoCoMo is on board with a full line up, including the
vital iPhone series, the customer defection hemorrhaging has stopped and
Average Revenue Per User (ARPU) is climbing once again. The company
still owns about half the market and now looks set to at least stabilize
Apart from getting smart phone savvy, NTT DoCoMo has also been looking
to improve its market influence and thus earnings by getting into the
content business. The company has an initiative called Smart Life, in
which it partners with consumer banking, payments, and content
co-creation partners, marketing and selling the said content to its 15m+
app users. Actually, DoCoMo has just over 70m customers so it still has
plenty of room to grow this initiative. Smart Life services earned the
company about JPY60bn this last financial year, and sales are expected
to climb to JPY200m in the next couple of years.
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As a large established company, NTT DoCoMo's model of collaborating with
unrelated business partners is a very un-Japanese thing to do, and
perhaps was hatched out of panic after seeing the customer defection
rates due to smart phones. The typical Japanese corporate DNA is to have
a vertically integrated operation that consists of lots of closely held
subsidiaries and which does everything for itself. This model was
developed from Japan's very long mercantile history, and came about as a
way to control the production process from top to bottom and thus be
impervious to the problems of others. It also provided the side benefit
of locking in quality, by having only known and trusted hands involved
in the production process.
The challenge for Japanese companies now that we have the emergence of
the sharing economy elsewhere in the world, is that competitors of all
shapes and sizes are learning that it's more efficient and effective to
share and co-mingle than to own everything. Examples abound everywhere:
Google, Amazon, Airbnb, TripAdvisor, NVidia, Apple, and many others.
Content and software in particular are fertile opportunities for
collaboration, and so it's no surprise that NTT DoCoMo's Smart Life
business revolves around content and financial services. You will see a
lot more about their partnerships as the dMarket and +d lineups become
However, collaboration is not always the quick painless route to market
that we would like to believe. A good case in point is the news this
week that Japan's largest travel agency, JTB, suffered a massive user
data leak involving names, addresses, and passport numbers of 7.93m
people. Unfortunately for NTT DoCoMo, one of the services connected in
on the dMarket is the dTravel site, which is run by JTB. If you go to
the site, you can still see the humiliating announcement being run at
the top of the page, saying, "(Click here) For more information on the
unauthorized access of user data on the JTB server."
Yeah, not the sort of thing that DoCoMo wants to tell or sell to its
customers - especially the 330,000 whose data got leaked alongside the
main JTB customer database.
...The information janitors/
- MVNOs making in-roads into Mobile sector
- Moody's predicting yen to strengthen
- Urayasu subsidizing egg freezing for working moms
- California Roll chef becomes Cultural Ambassador
- Smart money building huge tourist development in Hokkaido
=> MVNOs making in-roads into Mobile sector
MVNOs are really hitting their stride in Japan, recruiting 5.39m
customers by March 2016, 65.5% up over March last year. Analysts are
saying this number will double again over the next two years. MVNO
offerings are discounted up to 50% over major carrier prices. Most of
the MVNOs are reselling NTT DoCoMo services. ***Ed: We switched from
KDDI to BIC Camera SIMs back in February. Yes, you have to buy a
SIM-free capable smart phone, but the saving on connection fees was
dramatic. Our 3-person "family" voice/data SIM from BIC offers 3GB a
month for JPY3,200/month. Previously we'd been paying about JPY25,000 a
month for three people to KDDI. At this rate, we will pay off the smart
phone costs in less than a year. Service quality of the BIC SIMs over
DoCoMo's LTE network is completely normal. FYI, we use Asus Zenfone 2
phones, which are great value for money and very reliable.** (Source: TT
commentary from Japantimes.co.jp, Jun 17, 2016)
=> Moody's predicting yen to strengthen
Moody's Analytics says that it thinks the yen is undervalued against the
dollar by as much as 14%, based on purchasing power parity. It says that
given the failure of Abenomics [Ed: Moody's uses a nicer terminology],
and thus prolonged stagnation of the economy, deflation is likely to
continue. The company is expecting Japan's GDP to grow by 0.6% in 2016
and by as little as 1% for the following 3 years. ***Ed: And this
doesn't include all the external factors such as Brexit, Chinese arms
race, yen carry trade, US Fed interest rates, etc. What Japan needs is
its own version of a Bernie Sanders to shake things up.** (Source: TT
commentary from bloomberg.com, Jun 17, 2016)
=> Urayasu subsidizing egg freezing for working moms
As the home of Disneyland in Tokyo, Urayasu is a bed town for career
moms (and dads) working in downtown Tokyo. The area is mostly reclaimed
land and is a planned community targeting upper-middle class income
families. In this respect, it is perhaps not surprising that Urayasu has
just decided to use public funding to subsidize the freezing of eggs of
female residents who don't want to disrupt their careers. The city will
set aside a budget of JPY90m to subsidize up to 200 women between 25 to
34 to freeze their eggs for future insemination. Private freezing
services cost between JPY500,000-JPY600,000 and the subsidy will cover
80% of this cost. ***Ed: While this move is interesting, the reality is
that families put off having kids because of the economy. It's already
proven that low financial resources is the number one limiting factor in
family planning in Japan. So maybe the government should be applying
this money to adult training for women instead? Not as headline-worthy,
though.** (Source: TT commentary from slate.com, Jun 17, 2016)
=> California Roll chef becomes Cultural Ambassador
While sushi purists might have decried the California Roll, the fact
that its popularity both overseas and here in Japan has in turn had a
huge beneficial impact on the popularity of Japanese cuisine in general.
It's good to see that the Japanese chef who invented the California
Roll, Hidekazu Tojo, has just been appoint a Cultural Ambassador.
Worldwide there are only 13 such ambassadors for Japanese cuisine.
***Ed: Apparently Tojo invented the roll while living in Vancouver,
Canada back in 1971. He couldn't get the right ingredients to create
classic Japanese maki, so instead of tuna he used crab and avocado.
Turning the roll inside out was a pragmatic move, since westerners
weren't used to seeing nori seaweed as a food, even though they still
liked the taste.** (Source: TT commentary from smithsonianmag.com Jun
=> Smart money building huge tourist development in Hokkaido
Among the smartest property developers in Japan is the Mori Trust
company. The CEO of that company, Akira Mori, has just plunked down
JPY60bn to buy and develop a 1,057 hectare property near Chitose
airport, to build a luxury village of cottages, hotels, and a hospital
facility. The facility will be high-end, primarily targeting wealthy
Chinese, especially those seeking competent medical care. The location
is close to the beautiful Lake Shikotsu, a variety of golf courses, a
marina, and ski fields. ***Ed: We expect to see a lot more developments
like this in Japan's hinterland, where land is still incredibly cheap.
In the end we think Japan will become the France or Switzerland of East
Asia for the wealthy in this area. If you're thinking of buying some
land in the hinterland, now is the right time to do it.** (Source: TT
commentary from asia.nikkei.com, Jun 18, 2016)
NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links -- we apologize for the inconvenience.
+++ UPCOMING EVENTS
---------------- ICA Event - July 21st --------------------
Speaker: Takahiro Hatajima - Senior Consultant, Nomura Research
Title: "Evolution of Blockchain to Disrupt Financial Services Industry"
Details: Complete event details at http://www.icajapan.jp/
Date: Thursday July 21st, 2016
Time: 6:30pm Doors open, Buffet Dinner included and Cash Bar
Cost: 4,000 yen (members), 6,000 yen (non-members) Open to all. No sign
ups at the door!
RSVP: By 5pm on Friday 15th July 2016. Venue is The Foreign
Correspondents' Club of Japan
+++ TRAVEL DESTINATIONS PICKS
=> Shinminato Bridge, Toyama
Great attraction without the crowds
Until recently Toyama was an out-of-the-way city that most foreign
travelers had never heard of. Now the new Hokuriku Shinkansen takes you
directly from Tokyo to Toyama, knocking off several hours of travel
time. For us, Toyama was to just be a stopover for our next day trip to
the Kurobe Gorge and Dam. But that all changed when we arrived at Toyama
station and walked into a convenient information center. We found that
we were not as tired as anticipated and decided to use our half-day to
tour the city.
With a self-guided map in hand we noticed a fish market and boarded a
tram to the waterfront area. The tram dropped us off at the last stop,
which turned out to be near the new Shinminato Bridge. You may be
thinking, "So what, a bridge?" This bridge spans 600 meters and after an
elevator ride up one of the towers is a very nice enclosed pedestrian
walkway. On a clear day you can see the Noto peninsula, the Tateyama
Mountains, and Toyama Bay. Looking down on the left side is the Kaio
Maru tall ship. We enjoyed a nice stroll over and back, stopping often
to take pictures through the large clear windows.
=> Fireflies in Kinchakuda, Saitama
Nature's way to welcome summer
Fireflies -- one of the most magical ways nature heralds the beginning
of summer. Many people cherish happy memories of spotting these little
specks of light which inspire childhood fantasies of fairies and magical
beings. Called hotaru in Japanese, fireflies occupy a special place in
traditional Japanese summers. Studio Ghibli's Graveyard of the Fireflies
is probably one of the most well-known and critically acclaimed Japanese
animated film that features these winged lanterns. Sei Shonagon in her
Pillow Book (Makura no Shoushi) also mentions fireflies in her
description of summer:
"In summer the nights. Not only when the moon shines, but on dark nights
too, as the fireflies flit to and fro, and even when it rains, how
beautiful it is!" (translation by Ivan Morris)
Unfortunately, firefly numbers are diminishing, no thanks to widespread
paving over of firefly habitats, extensive use of pesticides, and the
light pollution that make it difficult for fireflies to spot each other
for mating (resulting in fewer larvae for the following season).
Fireflies can then be considered an indicator species -- their presence
indicates a pristine environment.
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+++ ABOUT US
Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)
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