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.
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3 comments:
I have always thought the greatest impediment to the growth of the iPod market is the fact that it requires a computer.
This cuts off a lot of people who don't have a computer or can't afford one or don't want to use one.
That said, I'm guessing Apple's iPod profits mostly come from the high-end of their product line. And their high-end products are more likely to be acquired by someone with a computer.
I'm also fairly confident Apple is coming out with a "cell phone".
Jeremy, there's a lot more for a non-Japanese carrier to learn from KDDI other than their lead in full-song downloads. They're also the first to launch a mobile auction platform (in a JV with bidders.jp) which make a lot of sense when you consider fast 3G networks, 2-3 megapixel cameraphones, and the always-on-ness of mobile. Sadly, the oligopolic [is that a word?] nature of mobile markets means that these companies (in the US) have no real external competitive pressure to innovate.
Japan does have one significant difference from most other major mobile networks- SMS is not implemented. Mobile email is really email, not SMS.
Somewhat related, I have some thoughts on mobile auctions up on my blog:
http://www.kanai.net/weblog/archive/2005/10/25/23h31m54s
I just downloaded my first 5 full track songs over the Sprint EVDO network. Each song loaded in less the 30 seconds and the sound quality is just as good as my iPod. I have a 512MB card in the phone, not sure how many songs that will hold but my guess is enough (and I can get a card with more storage). The service is powered by Groove Networks.
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