KDDI was once a distant also-ran in the Japanese wireless telephone market. It still trails leader NTT DoCoMo, but the gap is narrowing quickly because KDDI has been taking bold steps. I wish Cingular, Verizon, Sprint and T-Mobile would take notice, but I fear they have been too busy consolidating power to worry about anything else.
To my (admittedly limited) knowledge, KDDI operates the only all-IP cellular network on earth. Skype helped prove that for terrestrial networks, voice is just an application, and KDDI is taking this concept to the wireless world. This is a big deal.
Why? When wireless carriers embrace the idea that their cellular networks are just IP connections to the small computers we call mobile phones, endless possibilities will spring forth. The first post-voice, breakout application seems to be music.
In the US, today's "MP3 phones" are tethered to a PC. There's no way to load music onto these devices without connecting them to a computer. In Japan, KDDI users download music directly to their phone, which means music is a real impulse purchase. KDDI sold its first million tracks in January, just 48 days after launch. This is particularly impressive because only 410,000 KDDI subscribers had phones with music capabilities. That's more than 2 songs per subscriber in less than two months.
KDDI has since surpassed 20 million downloads, and customers are defecting from DoCoMo in droves. The key is flat rate, high speed service. It takes under 20 seconds to download a full MP3-quality track on the KDDI network.
Apple's iPod product line is fantastic, and the iTunes experience clearly works well for most consumers (1 billion served is obvious evidence). But when some company figures out how to replicate KDDI's offering the US, it could take a serious bite out of Apple's music dominance and capture cell phone share faster than by, say, acquiring T-Mobile. I won't hold my breadth for it to happen, but when it does I'll be ready to sign up.