Terrie's Take 854 -- What is Driving NTT DoCoMo's Profit Jump? E-biz news from Japan

Terrie's Take 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
- Corrections/Feedback
- Travel Picks -- Shinminato Bridge in Toyama, Fireflies in Saitama
- News Credits

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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 
that situation.

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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[...Article continues]

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 
more developed.

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/



+++ NEWS

- 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 
16, 2016)


=> 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.



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=> 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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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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