February 2001 Archives

From my column in Japan Inc.:

...We talked about i-mode and the future of 3G and wireless. Mr. Ishiwata pointed out that 80 percent of DoCoMo's revenues still come from voice and that DoCoMo basically subsidized handset makers so that they were able to sell them at the same price as the plain old voice handsets being sold by competitors. It wasn't a brilliant marketing scheme allowing companies to sell the Net to young people so much as a way to use DoCoMo's deep pockets to subsidize a new device for stealing voice traffic away from competitors. Also noted was the fact that most i-mode email is with other i-mode users. Is the service simply a merger between the teenage pager market, which was huge in Japan, and voice?

From my column in Japan Inc.

WENT TO AN IBM JAPAN LUNCH WHERE THEY INVITED their top executives and "NetGen" partners. NetGen is a IBM group set up to work with "Net Generation" companies. I'm in favor of IBM's attempt to bridge the gap between itself and Net ventures, but the Net is converging with traditional IT and the distinction is becoming negligible.

One feature of Net companies discussed was fast growth, but I think ventures are slowing down to focus more on earnings. I sat across from Takuma Otoshi, president of IBM Japan. I told him that I was spending nearly as much time with legacy systems and people as doing the dot-com thing, and that I'm not sure I want to be categorized as a NetGen company. Being called a dot-com now is almost an insult (see www.blowthedotoutyourass.com). It makes sense for IBM Japan to focus on such companies and get traction in this space, but they're up against similar teams at Dell, Toshiba, NEC, and others. To win, it'll have to pick the winners and gain their trust.

Participated in a panel at a conference organized by the Institute for the Future. Moderating was Tim Oren, who ran the Advanced Technology Group at Apple and is now a VC and consultant. I like him because he still puts technology center stage. Also on the panel were Mr. Shohei Ishiwata of Nomura Research Institute and Renfield Kuroda of Morgan Stanley Dean Witter.

Mostly we talked about i-mode and the future of 3G and wireless. Mr. Ishiwata pointed out that 80 percent of DoCoMo's revenues still come from voice and that DoCoMo basically subsidized handset makers so that they were able to sell them at the same price as the plain old voice handsets being sold by competitors. It wasn't a brilliant marketing scheme allowing companies to sell the Net to young people so much as a way to use DoCoMo's deep pockets to subsidize a new device for stealing voice traffic away from competitors. Also noted was the fact that most i-mode email is with other i-mode users. Is the service simply a merger between the teenage pager market, which was huge in Japan, and voice?

Even if it is, DoCoMo, with its near-monopoly and huge cash reserves, may be able to create a dominant content platform. On the other hand, few are making money on content over i-mode, and the promises of video and broadband on 3G/IMT-2000 may be overrated. Renfield said the idea that people would use 3G phones for videoconferencing was naive, particularly since no one has ever shown that people want videoconferencing.

In any event, though I think the i-mode team did a great job, there are many factors that make the success unique, and just copying this in other markets may not work.

Went to Singapore to visit the various government funds and incubators there. We met with GIC, a group that invests government funds for financial return; Temasek, the government holding company for its corporate assets; and the National Science and Technology Board, which funds companies and research in science and technology. We also met with various incubators.

I was extremely impressed with the quality of the people that we met. Jimmy Hsu, at GIC, knew more about Japan than most Japanese investors. Singapore has been able to recruit some of the best talent available to run its government funds. These funds have invested in Silicon Valley and other places and made it a condition that their partners set up shop in Singapore. The result is that Singapore has been able to import a great deal of attention and brains and is now using this to invest in and leverage its assets across Asia. The fact that everyone there speaks English also helps. In Japan, we're still trying to get a bill passed so that government funds aren't used to line politicians' pockets, and we can't even get English recognized as a second language. Singapore is clearly running circles around the Japanese in many areas.

I was also very impressed with the incubators, which I believe are much further ahead than their Japanese counterparts. In particular, the Kent Ridge Development Laboratory was interesting. It receives over US$20 million a year from the government to fund about 300 researchers (many from India and China) and then spins out startups. Why can't Japan do clever things like this instead of building bridges that no one uses?

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