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New Japanese photo sharing community site (Zorg.com) February 24, 2006

Posted by fukumimi in IT, Japan.
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I wrote about a new Japanese photo sharing community site called Zorg.com in a previous post (in Japanese) and thought it might be worth covering the topic in english.
The photography market is pretty healthy in Japan, even though silver halide technology is quickly disappearing, with a new generation of photographers (who probably have never used a film camera) (Yomiuri article in English) and older users rediscovering the hobby triggered by the convenience of digital photography buoying the market.
The dynamics of the photography market have changed, however, with new entrants not traditionally associated with photography taking significant market share (Sony, Panasonic, Casio, for example) whilst established camera brands have had a mixed experience in transitioning their camera business into a consumer electronics business.

Futher, many mobile phones have mega-pixel resolution cameras (3M+ rapidly becoming the norm, some phones even have anti-shake technology which promises less mistakes) which allow decent images to be taken and sent extremely conveniently.

In this climate, there have been several attempts to foster an on-line community of photo enthusiasts, and Zorg.com is a “Web2.0” attempt at this market in Japan.

Launched (at the end of Dec 2005) by a couple of guys who apparently spent way too much of their time on Flickr, it incorporates proven features and functionality seen in earlier (overseas) attempts at this market. So basically it has community features, indexes photos using tag based folksonomy and community feedback, and has the requisite use of Ajax in the UI and RSS functionality (the latter to come imminently) in the feature set. Easy access and uploading from mobile phones will also be supported. Individual URLs for photos hosted on the site are available. EXIF information can be uploaded with the photos.

Blog functionality is also promised. Zorg aims to be an open social networking site (the largest SNS communities in Japan, Mixi.jp and Gree.jp are both by-invitation-only communities) focussed (at least initially) on people for whom photography is a hobby. (Either taking photos and showing them off, or appreciating pieces produced by others) Other normal SNS type functionality (calendar, etc) is also in the pipeline.
An interesting feature which awaits release is easy tagging of photos with creative commons copyright notices. CC is yet to receive widespread recognition in Japan, this site and others like it may change that.
Why does the Japanese market need this site? There are many Japanese Flickr users who, whilst finding Flickr useful, were held back by the English UI and the fact that the community language is English. For a community to thrive, communication is key, and for many Japanese users it is just a lot easier to communicate in a forum where Japanese is the common language.
For the people behind this project (both are keen amateur photographers), the photos had to take center stage, so the UI is understated using a white background and understated fonts, no bold colours or pastel shades adorning the background potentially clashing with the photos.

The site is expected to be ad supported when it is opened up, and premium subscription is available for enhanced storage and other functionality.

The photos uploaded by the users (currently in the low thousands) are impressive, as could be expected by hard core hobbyists and professional/semi-professional photographers comprising a signifiant number of the initial population.
Currently in an invite-only alpha release, Zorg.com is targetting the photo community space in the domestic Japanese market.

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From a:c euro “An uncertain future for pure-play blogging startups” February 21, 2006

Posted by fukumimi in IT, Japan.
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a:c euro has an interesting article with a comment about the size (and by inference value) of the blogging paltform/tools market from one of the bigger potential users for blogging platform vendors.
http://www.thealarmclock.com/mt/mt-tb.cgi/511 

From the link:

Stephane Pictet, co-founder and CEO of Virtual Network in Nyon, [said] that his small team of developers put together in three months a new blogging platform for his firm’s popular web sites, Romandie.com, musique.com and jeu.com. These are highly-trafficked, French language web-sites, whose users are potential casual bloggers, basically newcomers to online publishing in the blog format.
Virtual Network could have undertaken a partnership with one of the established players active in the Swiss and French market, but Pictet told us that it was “five times” cheaper to build rather then buy space on an existing platform [my emphasis].

Whilst this particular comment seems to be commenting directly at the blog hosting ASP market, the article also notes that Virtual Network had developed its platform on the pblogs open source software distribution, so blog software vendors are also at risk.

It may be aruged that VN as a player with a significant on-line presence already was in a particularly strong position to leverage its internal skill sets and existing infrastructure to deploy an internally developed platform.

However, looking at the bigger picture, as open source blogging software (and blogging software in general) becomes more and more mature, OSS is likely to become more than good enough for most applications, and become the default choice in the same way that sendmail or apache have dominated their respective niches.

As far as personal blogs are concerned, I think a:c euro is right in assuming that mass market users will flock either to portal/content provider/SNS provided platforms where these users spend most of their time. As user numbers grow at these sites, given the availability of open source material to work with, it is not beyond imagination for such sites to go with a non-licensed approach (as some have already done)
This would leave provision of branded ASP and software models to corporate customers as the significant market, and for this to become a significant revenue stream, blogging must become truly established as a must-have means of communication for the wider business community (ie beyond media content providers and portals(=personal blogs)). The verdict is till out on that count.
In this light, Drecom’s market cap of $700M (shares were down another 10%, to JPY4.12M today) still appears crazy…..

On a related note, Rodrigo and Om Malik are talking about Six Apart’s rumoured $12M financing, and Rodrigo is doing some number crunching about a possible valuation, which seems to be in the right ballpark (he says $350M, on an estimated $15M revenue) compared to the Drecom IPO price. His sane calculations reinforce my instinct that having a company with an estimated $5M revenue for the year ending March haveing a valuation of $700M is rather crazy….

Of course, Drecom may yet justify this valuation. But it needs to start diversifying upstream in the blog value chain, hopefully their foray into search advertising is a signal of that intent. But their current arrangement with CyberAgent gives them just 5% of ad revenues from this service, so unless they get a more significant chunk for providing advertisers access to their user base, the model doesn’t seem to pan out.

Sling Media vs Sony February 20, 2006

Posted by fukumimi in IT, Japan.
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One of the widely talked about companies at this year’s CES was Sling Media(http://www.slingmedia.com/), provider of a STB which allows streaming of your TV, DVR etc content to your PC. They closed a $46.6M round comprising of Goldman, Sachs & Co., Liberty Media Corporation and EchoStar Communications led the financing round. Allen & Co. LLC, DCM – Doll Capital Management, Mobius Venture Capital, The Hearst Corporation and other undisclosed investors.

They are up against Sony. Sony announced Location Free TV at CES2004, originally a dedicated wireless LCD screen which you can carry around the home. However, sales were poor.

But recently Sony announced a new version of Location Free TV, which is a slim Wi-Fi box but also a media server, which can be accessed from the internet.

(http://www.sony.jp/products/Consumer/locationfree/LF-PK1/pointl.html in Japanese but with pictures)

This service allows users using PCs and (perhaps crucially) PSP to access their own TV/DVR/etc content from outside the home.

Sony have announced that they are launching this system in other countries this year.

It will be interesting to see how David takes on Goliath. And when will Goliath release a mobile phone with the required software to connect to the LF-PK1? (They have a JV with Ericsson which produces mobile phones)

RealNetworks and NTT DoCoMo Sign MOU to Develop Mobile Video Streaming Software February 20, 2006

Posted by fukumimi in IT, Japan.
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MocoNews reporting from 3GSM:

http://www.moconews.net/?p=5061
NTT DoCoMo press release here:

http://www.nttdocomo.co.jp/info/news_release/page/20060217.html

(japanese)

http://www.nttdocomo.com/presscenter/pressreleases/press/pressrelease.html?param[no]=613

(english)

NTT DoCoMo has more than 20million subscribers on its 3G FOMA network, which translates to about 40% of its subscription base. Contrast this with AU (KDDI), where more than 80% of subscribers are on 3G. As far as 3G is concerned, DoCoMo is playing catchup. AU has a slight edge in terms of total number of subscribers on 3G networks at this time, but DoCoMo are encouraging users to migrate to FOMA from the 2G MOVA network, and it is expected that DoCoMo will have more 3G users by the end of the year unless AU manages to capture more market share. With mobile number portability scheduled to start sometime this year, it is difficult to tell how the market will pan out.

In any case, it is hoped that DoCoMo’s efforts are to faciliate content providers to provide higher QoS streaming services to DoCoMo subscribers, rather than an old fashioned attempt to create a walled garden. Clearly, it is easier to artificially manufacture a framework which results in a significant differential in user experience for bandwidth intensive, QoS critial applications than for static web content, and I hope DoCoMo does not try to bully content providers.

We need content providers who are able to offer their (device and network optimised) content from a variety of devices connected to the internet.

To do so, network providers need to play ball, and come up with a way to sufficiently monetize a framework which does not depend on the providers creating another walled garden…..

Megabanks, Megaprofits February 20, 2006

Posted by fukumimi in general, Japan.
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Just a few years after having enormous amounts of money injected by the government, the Japanese megabanks are doing very well, it seems. Posting record profits even surpassing the figures achieved in the late 80’s bubble.

The largest financial group, the newly merged Mitsubishi UFJ Financial Group, is on track to post profits of more than 1.3 trillion yen, and surpassing even the profits of Toyota.

But how is this being achieved?

Interest on current accounts is still at 0.001%p.a.

Even for a 5 year fixed term savings account with at least JPY3M (approx $25,000), interest is at 0.1%p.a.
However, if you were a small business trying to borrow money, the ads state interest rates starting at around 2.5~2.75%, but many small companies can’t even get approved for these loans which typically apply interest rates significantly higher than the advertised rate anyway, depending on credit rating.

Being shunned by banks, small businesses and individuals who need cash urgently turn to consumer credit companies, many of which have been snapped up by the big financial groups. Even if the bank refuses to lend you money, their affiliated consumer credit companies appear more than willing to lend them money, the only catch being interest rates in the teens.

With penalty clauses pushing real interest rates up to and beyond 25% in some cases, it would seem consumer credit companies are in the business of getting their customers to default on payments and milking them for all they’re worth. And these consumer credit companies are indeed making a tidy profit. Which adds to the parent bank’s profits in the consolidated group earnings report, of course.
The banks would claim that they needed to clamp down on corporate lending because they were burdened by bad loans and heavy losses on their stock portfolios. Consumer credit firms were more willing to take risks, and these firms grew quickly during the 90’s. The banks bought these firms seeing how profitable they were, and by colluding to deprive corporations of capital at reasonable interest rates, are driving the companies to borrow money at usurous rates.

The cost of capital for the banks is considerably lower than it was for the consumer loans firms when they were independent, yet the banks (via their consumer loans subsdiaries) keep on gouging profits out of businesses and consumers left with no where to go.
It could be argued that the tightening of the credit conditions is due to the banks, which by throwing money at businesses during the bubble and therefore were complicit in the reckless abandon which resulted in the bad loans in the first place, which are now overreacting to being burned in the past.

However, a more cynical observer might ask, “Why lend money at a reasonable interest rate which will allow your customer to pay off the loan, when you can charge them higher interest and keep milking them for longer….”

I don’t think it is unfair to state that the banks are defaulting on, or actually even exploiting the implicit social contract that existed when these firms were given their licenses.

There is no incentive for banks to revert to giving companies loans at more reasonable rates, unless an outsider takes the initiative, as the large domestic banks aren’t going to be the ones which challenge the status quo. If I had to guess who is likely to come up with a guess for which bank makes a splash, it would probably be Shinsei.

Drecom update 2/20 February 20, 2006

Posted by fukumimi in IPO, Japan.
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The markets just closed here in Tokyo, and Drecom shares ended the day where they began, at the bottom of the allowed single day price fluctuation range, down JPY1million (-17.79%) at JPY4.62 million, after having dipped above JPY5million during the day’s trading.

That means JPY2billion was wiped off the company’s valuation in one day, but looking on the bright side (if you got a slice of the IPO action), the shares are still worth more than six times the IPO float price….

Stay tuned to see if this blog software/service and search advertising firm’s share prices rebound or if this is the beginning of a slow and painful downwards descent…

Drecom Update 2/17 February 17, 2006

Posted by fukumimi in IPO, Japan.
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Drecom closed at JPY5.62million, up 2.74%, valuing the company at JPY111.2billion valuing the company at approximately $940million. To reiterate, the company had profits of approx $0.5M on sales of $2M for the year ending March 2005. PER is above 900. Anyone for a $1B cap and PER in 4 digit territory?

Drecom raised just $15million from shares floated at 2000shares@JPY0.76M…

高校写真部、女子生徒が急増中from読売新聞 February 16, 2006

Posted by fukumimi in IT, Japan.
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今日の読売新聞にこんな記事が載っています:http://www.yomiuri.co.jp/national/news/20060216i508.htm

記事にもあるとおり、近年若い女性の間で着実に写真文化が定着しています。「もともと自己表現したいという気持ちが強い女性が、操作が簡単になったカメラで気軽に写真を楽しむようになったためではないか」

最近カメラ事業撤退や売却などの話題が多いが、カメラで写真を撮っている人は減っているような実感は無い。

小生も絵の才能は無いが(音楽的な才能も無いが・・・) 、カメラだったらなんとかビジュアルな自己表現を試みることができそうな気がする。当然プロやセミプロには敵わないが、自己満足だからそれでいい。

そんな中で、撮った写真ををどうするか、というのがポイントになる。

やはり人に見てもらいたいと思う人は少なくないらしい。Yahoo!に買収されたFlickrの人気はそこにある。タギングによるフォルクソノミーを活用した、写真公開サイト。日本国内のユーザも少なくない。

国内はと言うと、写真コミュニティーサイトはいくつかある。そんな中で、Flickrの日本語版を軸に、ソーシャル機能を搭載するモデルで開発されている新しいサービスが12月末からアルファリリースされている。名前はZorg.com

自称Flickr中毒だった日本人コンビが企画したサービス。

縁があってZorgに招待されたのでアクセスしたところ、洗練されたUIに流行のAjaxを使ったり、かなり意欲的な試みと感じた。

やはり日本人には日本語UIが便利だし、ユーザの圧倒的多数が日本人でコメント等が日本語が基本なのは日本のユーザにとっては大きなポイントだろう。

まだアルファリリースで色々機能が追加されるそうですが、注目していきたい。

唯一気になったのが、Zorgのロゴって、Picasaのロゴとちょっと似過ぎていませんか?

Looking back, to move forward – Facing up to Japan’s past February 15, 2006

Posted by fukumimi in general, Japan.
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An unexpected voice has criticised Koizumi for his handling of Asian relations. Tsuneo Watanabe, chairman of the Yomiuri Group media empire (group portfolio: newspapers, magazines, TV, radio) and powerbroker has launched into a scathing attack of Koizumi and of Japan’s “attempts” to face up to historical facts and responsibilities.

Watanabe is known mostly for giving animated performances to the press coming out of some ultra-exclusive ryotei or restaurant, usually having had a bit to drink and with cigar in hand, launching into scathing criticism of anyone and everyone who he disagrees with in a tone conveying withering contempt and not a little arrogance. Makes for good soundbites, I must concede that he does understand what makes “good” media, and he plays the media like a fiddle, regardless of the way he comes across.
It seems that he is also able to make coherent and sensible arguments when he is so inclined:
http://www.asahi.com/english/Herald-asahi/TKY200602080515.html

http://www.iht.com/articles/2006/02/10/news/MOGUL.php

It comes at a time when PM Koizumi and Foreign Minister Aso (is that short for anachronistic nationalist a$$h*le?) have been alienating Japan’s neighbours with their actions and words.

“Japan’s Offensive Foreign Minister – NYT” (registration may be required)

http://www.nytimes.com/2006/02/13/opinion/13mon3.html?_r=1&oref=slogin

To any neutral observer, it is patently obvious that Japan has much to lose and not much to gain by irritating its neighbours. It is in Japan’s own national interest to achieve definitive closure on 20th century issues in order that the country can focus on how to work with its neighbours in an effective and mutually beneficial way.

Further, by removing a major external target for the Chinese government to deflect its peoples’ attentions and criticisms to, a Sino-Japanese political detente is likely to accelerate China’s slow progress towards a more progressive and less insular society. Referencing Japan’s Imperial history is a convenient mechanism to achieve Chinese national unity. Removing the excuse will require Chinese authorities to deal with real present day issues which are impacting the population to a much greater degree than affairs from more than 60 years ago.

It could be argued that Koizumi (and the LDP in general) see Japan’s future as so dependent on its alliance with the US, and that they see a politically belligerent China as a means by which Japan can maintain its status as a key US ally. Setting aside the accelerating economic ties between Japan-China and US-China, it may be convenient for both Japanese and US authorities to have China act in a belligerent way by baiting them with historical disagreements.

It is appalling that the closest the Japanese government can get to an apology is the reference to PM Murayama’s expression of regret.

Whilst the argument about reparations may be attempted to be reopened by various countries or special interest groups, the legal status is fairly clear so this should not be an excuse to refuse a forthright apology once and for all.

The LDP’s traditional power base are conservative rural areas and older members of society (plenty of overlap there), and perhaps historically they felt they needed to pander to their electorate to remain in power. However, the opposition parties have been a joke for quite a while, and I can’t see any of them being enthusiastic about pandering to the right wing nationalists as well as the LDP does, so it would seem the LDP have squandered a window of opportunity to achieve closure (assuming they ever want to). With high popularity ratings and with Japan in an economic rut, the last few years would have been a opportune time to face up with history, wipe the slate clean and leave a positive legacy.

For all his rhetoric about de/reconstruction of the Japanese economic/political/bureaucratic systems, it is ironic that he keeps pandering to the same anachronistic group, which, ironically, is the group which is probably most disturbed by Koizumi’s attempt to leave a legacy by changing the laws relating to succession in the Royal Household. Go figure. Perhaps he was talked into this by his coterie of feminist novice politicians who he has drawn into his inner circle…. But that’s another story.

FTTH growth outstrips ADSL in Japan February 13, 2006

Posted by fukumimi in general, IT, Japan.
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Reported in the Nikkei today (2/13), for the 3 month period between July and September 2005, more than 0.5 million new FTTH connections were made, compared to 223,000 ADSL connections. Whilst ADSL (speeds upto 54Mbps available here in Japan) still has about 3 times as many subscribers in total, FTTH has outstripped ADSL growth and we can expect 5 million homes connected to FTTH connections by end March 2006.

FTTH connections are available starting at about $50 (for 100Mbps access, upto a theoretical 1Gbps for $80 including ISP charges)
Of note is the dominance of NTT in the physical FTTH market. NTT accounts for 2.35million of the 3.73million connections, approximately 63% (combined total of NTT east and NTT west who do not compete with each other due to the geographical restrictions imposed on both companies when NTT was split up).

3rd in the list was UCOM, a member of the USEN group, a multimedia provider whose original business was piping music down fixed lines to shops, hotels, restaurants and households.  They had 377,000 connections.

The rest of the top 10 providers comprised of providers affiliated with electricity companies (who use their electricity pylons to support fiber along with the wires carrying electricity), property developers (providing access for the inhabitants of their developments), and independent telcos.

Japanese users often have a choice of ISP regardless of the ownership of the physical fiber connecting their home to the ISP PoP in the local telco exchange, although more often than not, users appear to find it convenient  to go with the ISP provided by the fiber owner. The NTT group owns several ISPs, and their largest (OCN) is the largest FTTH ISP with approx 0.75M subscribers, and another NTT ISP “Plala” has 0.4M subscribers. Large independent ISPs such as NEC affiliated BIGLOBE and Fujitsu affiliated @Nifty have more than 300,000 FTTH subscribers each (alongside many more subscribers on ADSL and ISDN, dial-up), but clearly NTT is in a strong position here also.

Many ISPs have started premium services such as high quality VoD, and it may be a matter of time before a debate also starts raging in Japan about ISPs reserving bandwidth for themselves at the cost of reduced bandwidth available to access open internet sites.