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Rakuten Securities insider deleting unfavourable Wikipedia entry text? August 30, 2006

Posted by fukumimi in Internet, IT, Japan.
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via Technobahn (Japanese)

The netshoken blog reports that the Wikipedia entry for Rakuten Securities has been subject to alteration by someone apprently on the Rakuten Securities network. The most objectionable alteration pertains to the deletion of historical fact – an addition to the entry regarding the FSA’s administrative order as of 2005/11/16 to improve business operations in light of repeated system outages was added on 2006/1/9, and was deleted by a user with IP address of on 2006/7/6. The deleted text was reinstated by a different user on 2006/7/30, and the text was again removed by a user with the same IP address.

Another part of the entry commenting on the MarketSpeed stock charting system was also altered. Text commenting on the frequency of system outages and the severity of the problem this poses for users (many of whom are day traders for whom trade execution timings are crucial) was deleted, and part of a sentence in the paragraph comparing Rakuten’s offering with rival Matsui Securities’ offering was deleted. (the deleted text stated that the Rakuten solution does not have any area in which it is greatly superior to Matsui Securities’ offering)

The blog goes on to detail the result of a Whois query on the offending IP address. Part of the results are reproduced below:

inetnum: – netname: RAKUTEN-SEC descr: Rakuten Securities,Inc. country: JP

Was this the result of an individual inside Rakuten Securities acting on his own, or reflective of a decision made at some level officially within the organisation?

As the blogger behind the netshoken blog says, Rakuten CEO Hiroshi Mikitani’s speech at the recent earnings press conference included something about Rakuten needing to evolve into a “Web2.0” company.

He and his firm should take note that Web2.0 isn’t mainly about AJAX (or DHTML/XML if you want to be fussy), nor about the use of pastel colours or rounded corners.

Regardless of the merits of the term “Web2.0”, there is undoubtedly an attempt (at least in some quarters, others just jump on the bandwagon as usual and miss the forest for the AJAX trees) at a more inclusive and cooperative model for the web.

Trying to censor unfavourable content or opinion isn’t going to work. Maybe they should think about addressing valid criticism, rather than sweeping it under the carpet.
The fact that the individual inside Rakuten, a self-professed IT company, was so clueless that s/he wasn’t aware that s/he was leaving rather obvious clues to his/her affilitation is an hilarious bonus….


Rakuten was sharply down today, closing at JPY53,700, down JPY5,000 or 8.52%. Reuters and Fisco both report rumours that the company and its CEO are rumoured to be the subject of a (negative) article in a weekly periodical due out tomorrow. More on that when the magazine comes out.

Japanese weeklies are a weird bunch. Many of them have girls in bikinis and articles about sex and advertisements for “massage parlours” in them, but yet they remain the most (only?) widely circulated media with any real investigative journalism actively probing the dark side of the Japanese econo-political landscape.

Addendum (added 8/31)

The magazine article appears to be mainly about a property development deal which involves the underworld. This story has been discussed in certain circles since last year, so no real news there.

Rakuten Securities released an apology regarding the Wikipedia incident, it claims an employee was acting on his own, and the employee has been reprimanded. No further details were forthcoming.

Mixi IPO Countdown (T-16 days and counting) August 29, 2006

Posted by fukumimi in Economy & Business, Finance, IT, Japan, Uncategorized.

I’m sure everyone’s counting down the days to the Mixi IPO (September 14th)…..

The TSE announced the tentative price range for the Mixi IPO, at between JPY1.3M and JPY1.55M. Seeing that every single IPO this year has seen offer prices at the upper limit of the announced range, we can say with a fair degree of confidence that Mixi will be offered at JPY1.55M per share. Expect the full 7100 shares to go on sale, including the 500 over allotment shares.

That is still going to mean incredibly slim odds for anyone who isn’t a heavy trading high net worth individual on good terms with their brokerage or an institutional investor to get their hands on even one single share as part of the IPO.

70,500 shares (total issued shares as of 9/14) at JPY1.55M puts the IPO valuation at JPY109.2B, or a shade under $1Billion. Financial market insiders are talking about the share price peaking at anywhere between JPY5M-8M, which would put the post-IPO frenzy peak valuation at between $3Billion and $5Billion……

Crazy? Well, not in the alternative reality that is the Japanese emerging markets exchanges. Remember, Drecom was up in $1B territory (now around $400M, PER still above 300 though…), and that company had approximately 1/10th the sales and earnings of Mixi….

Assuming that Mixi is around 6 million accounts, 70% of which are active (access within last month),  gives about 4.2M unique-users-per-month. Which values Mixi users at around $200 per user, which is significantly more than the per-user valuations seen in US M&A plays of community sites like MySpace or Flickr….

TechCrunch UK launched….. August 25, 2006

Posted by fukumimi in TechCrunch.

And the TechCrunch network expands further….

TechCrunch UK is explained thus:

TechCrunch UK is obviously not a translated blog like TechCrunch France and TechCrunch Japan (although both of these blogs have lots of original content as well)

TechCrunch Japan has a lot of original content?

That certainly is news to me…..

Maybe my feed doesn’t allow me access to that content. Am I persona non grata chez TechCrunch for pointing out the obvious and asking for more disclosure? 🙂 (see my previous posts 1,2,3)

Michael Arrington did respond to my first post, but I don’t see any changes on TechCrunch Japanese.

They haven’t even gotten round to disclosing who the “Japanese Editorial Team” is (are?)….. <hint, hint…>
TechCrunch Japanese is more than 2 months on, that seems like plenty of time to address the issues raised. The TechCrunch empire is probably too busy expanding into gadget blogs (and what really is the difference between CrunchGear and Engadget or Gizmodo? At least TechCrunch was a novel concept when it launched) and recruitments sites to monetize the TechCrunch brand.

Another Sony battery recall, this time, Apple August 25, 2006

Posted by fukumimi in Economy & Business, IT, Japan, technology.
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Another 1.8 million batteries to be recalled….
From Yahoo:

Apple’s recall covers 1.1 million rechargeable batteries in the 12-inch iBook G4, 12-inch PowerBook G4 and 15-inch PowerBook G4 laptops sold in the United States from October 2003 through August 2006. The recall also covers an additional 700,000 batteries in laptops sold abroad, according to the U.S. Consumer Product Safety Commission.

A number of other manufacturers (Fujitsu, Lenovo, amongst others) have come out and said the Dell/Sony recall won’t affect them because of differences in the batteries and peripheral environment in which the batteries operate.

If the recall spreads and these manufacturers end up eating their words, it will be another PR disaster. We’ve seen so many cases of companies issuing statements before the results of a proper investigation has taken place.

Even if the manufacturers are not have direct control over manufacturing faults at the OEM level and are in some sense victims, if they handle the problem incorrectly, they become part of the problem. I must admit some of the other manufacturers were awfully quick to issue statements saying that they are unaffected. Did they do a thorough investigation? Time will tell.

Japanese TV station to put (some) content on YouTube August 25, 2006

Posted by fukumimi in Internet, IT, Japan, Media.

Tokyo regional broadcaster Tokyo MX (which serves Tokyo but is not part of a nationwide network) has announced that it will be putting up snippets of one of its shows up on YouTube (and Google Video and Revver),  in what is probably Japan’s first case of a media company actually embracing internet video sharing technology which isn’t run by a subsidiary (Both NTV (part of the Yomiuri Group) and Fuji TV are spending money building VoD portals to recycle content (and in Fuji’s case, is attempting to get user generated media as well).

Admittedly it is for just one show for the time being, a show called “Blog TV”, which is, yes you’ve guessed it, a 30 minute TV show about blogs. The show is produced in cooperation with Technorati Japan, and apparently the concept is to trawl through the blogosphere to identify social trends. (They probably have some “commentator” who is a celebrity blogger (ie a celebrity who blogs, rather than someone who became a celebrity through their blogging) and other irrelevant “commentators” and “guests” offering inane commentary.

(I must admit I haven’t seen the show. Actually, I don’t think I have ever watched MX on purpose. Sometimes I press the wrong button on the remote and I catch a few seconds of it. Oh wait, they used to broadcast (years old) episodes of Friends and I think I stumbled upon an episode just starting once, that was the only time I watched that channel for more than a few minutes to the best of my knowledge)

MX isn’t exactly an NHK or a NTV or TBS or Fuji or Asahi or even a TV Tokyo. It is definitely a local TV station, and I can’t recall ever meeting someone discussing a show broadcast on the channel. Using the internet to extend the reach of its programming doesn’t sound like such a bad idea for a station with limited reach.

I’m guessing anyone with a life will be out having fun on a friday evening at 10pm, so it might be convenient for blog followers who forgot to set their DVR.

MX has interesting shows like a live broadcast of Tokyo’s governor Ishihara’s weekly press conference. Now that must be essential viewing.

Mobile Phone 3.5G battle lines are drawn August 23, 2006

Posted by fukumimi in Communications, IT, Japan, Mobile, technology.

KDDI, the carrier behind the Japanese #2 mobile phone network AU, has announced its 3.5G strategy.

It announced its upgrade to its existing CDMA2000 1x EV-DO Rev.0 infrastructure, services using the new infrastructure start in December 2006 in major metropolitan areas. The new system is called CDMA2000 1x EV-DO Rev.A. That’s a bit of a mouthful, and nil points for creativity or originality.

The highlights are:

a) An increase in speed, notably in uplink speed. Downlink was already at a maximum of 2.4Mbps, and that is improved to 3.1Mbps, but the real story is that the uplink goes from 144k to 1.8Mbps.

b) QoS technology has been built in, allowing a superior service for quality critical applications. KDDI will be implementing a VoIP videophone service using this QoS functionality. It will no doubt have other uses, potential uses that spring to mind are differentiating their media content services such as VoD and music streaming services from non-affiliated services offering the same. This does potentially raise some network neutrality issues, but that whole debate seems rather subdued here in Japan anyway.

c) BCMCS, a multicast system (requires compatible handsets) which will allow more efficient distribution of mass distribution content over IP. This could also be a big deal for content distribution over mobile IP.
NTT DoCoMo has already announced its plans for HSDPA on its FOMA W-CDMA network which kicks in this autumn, for which it promotes a 3.6Mbps downlink speed (uplink is a paltry 384kbps)

Personally, I think KDDI’s strategy of increasing uplink makes a huge amount of sense. Mobile phones as ubiquitously portable devices to enable mobile blogging (mobile photo blogging, with integrated megapixel cameras of course), video blogging (the cameras do a decent enough job of pretending it is a videocamera), even using the phone to record podcasts….. All of these functionalities will be greatly enhanced by the leap in speed.

As far as the technological battle goes, chalk one up for KDDI.

The language barrier August 23, 2006

Posted by fukumimi in Internet, IT, Japan, Language.
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On the issue of the language barrier providing local companies to clone foreign sites and capture local market share….

There is many an IT startup in Japan whose business model is to clone an innovative or popular foreign site/service, whose local market adoption is hampered by the language barrier. (Other barriers do exist for some types of services and business models, of course)

Most startups where ever they are are usually subject to resource constraints which makes them focussed strongly on their local market and this allows copycat businesses in other locales. Licensing and partnership models have worked for some, but they also have their fair share of potential pitfalls.
There are efforts underway to bridge this gap.

The best way to tackle the problem is at the root, ie for the site to be designed as a multilingual site from the get go. However, such foresight (or suitable resources) is often lacking.
One of the more interesting is a FireFox extension called Japanize, which converts the UI to Japanese, and supports sites like Flickr, Riya, YouTube, Writely, and a lot of others. It allows registered users to assist in the UI localization effort, if you just want to use the extension, no registration is required.

This might be an easy way for non-Japanese UI site owners to give access to their sites, and would work especially well for sites which have little text content. (Beyond the basic UI, there are sometimes backend issues which need to be addressed to support Japanese (or multi-byte/Unicode in general) in data fields.

Writely has an English UI but allows Japanese entry, so this extension would provide an easy way to get an on-line word processor with a Japanese UI. Which might be useful for some Japanese users.

It would seem that this extension is plenty good enough to allow Japanese users to access non-text intensive content more easily.

The Japanize extension is another effort from the folks at Cybozu Labs, the R&D group of Cyobzu, a Tokyo Stock Exchange listed company known for its enterprise groupware offerings.

EbiTV, (another) Japanese YouTube clone launches August 23, 2006

Posted by fukumimi in IT, Japan.
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EbiTV, a Japanese YouTube clone was launched yesterday.

It is a Flash based video sharing service, with a 100Mb upload limit (per free user account, presumably), and no pre-vetting of uploaded content. It does have a feature to allow users to notify the service provider of potentially inappropriate content (as defined by the user agreement). Inappropriate content includes copyright and portrait rights infringements, defamation, porn, etc.

Will users proactively report content? Will the company respond quickly to reports of violations of the user agreement? Will users knowingly using YouTube and the like to upload content without the consent of rights holders adopt this new service? The fact that its interface is in Japanese may make it easier for more users to use this site, although there are plenty of “how to” primers on registering and uploading content to YouTube for the English challenged.

A FujiTV backed video sharing service, Watchme.tv was launched last month, this service checks content before it is uploaded, as might be expected from a company backed by a big media player.

What is certainly clear is that if adoption does pick up, the company will need cash to support its operations, although advertisements are already present on the site.

The language barrier is still a big issue for many Japanese internet users, who will gravitate to services which provide a Japanese interface.

The ValueCommerce IPO and affiliate advertising in general August 23, 2006

Posted by fukumimi in Economy & Business, Internet, IPO, IT, Japan.
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I guess it is better late than never (me, not the IPO), so here are my 2 yen about the ValueCommerce IPO, with some general thoughts on the affiliate advertising market.

Part of the reason why it has taken so long for me to commit this post to paper was because I believe that this company would make a good case study (at least in terms of positive advertising for the Japanese markets who could do with a lot more aspiring entrepreneurs to test their luck and skill here in Japan) of how the Japanese market isn’t a xenophobic clique closed off to foreigners and I didn’t want to burst that feel good bubble.

I also didn’t want to single out ValueCommerce for taking advantage of what is undoubtedly a good time to IPO for this type of stock, nor single out its post-IPO performance as an example of the craziness which surrounds the IPO markets, as the stock’s behaviour is just par for the course.

ValueCommerce is a leading affiliate advertising network, connecting advertisers and web property owners (websites and blogs), and their advertising model is based on the affiliate model, which basically means that advertisers pay for performance, ie a cut of revenues generated by a user referred to the advertiser’s site by a particular ad displayed on a particular web property is paid to the property owner. (they also do some SEO/SEM and business/marketing/technology consulting as well)

I would have thought that having a foreigner founder and a foreigner CEO would have made the ValueCommerce IPO an easy story for the press, but I didn’t see that much in the press, especially compared to the Drecom IPO. (Caveat: I was overseas for about a week after the IPO)

OK, so these guys have been in Japan for longer than I have, so they aren’t exactly new kids on the block. But wouldn’t that make for an even more interesting story? The CFO is Japanese by the way. I don’t think it would be impossible to have a long term resident ex-pat CFO, but if there was a listed company with a management team where all but one post was filled by a foreigner, that sole Japanese person is likely to be the CFO, because the CFO of a listed company is most likely to deal with those pesky people at the stock exchange, and the bankers, and the bureaucrats, and having a sombre Japanese face and native language skills and a familiarity with Japanese accounting rules help. I think. (Say, I’ve never met a foreigner who practices as a Japanese accountant, I know a few that work for one of the big global firms here in Tokyo, but they all have multi-nationals as clients or are not in the accounting or audit practices. Of course, I can’t understand what possesses someone to studying accounting in the first place, let alone in a foreign language….)

Anyway, some people referred me to Terrie Lloyd’s piece on the ValueCommerce IPO, which was extremely positive.

My enthusiasm is a little bit more tempered. Make no mistake, it is no mean feat to create a company and take it to IPO. The IPO was a success, too. (But I disagree with Terrie who says IPO pricings are down recently – seeing the IPO reports which are circulated at our firm shows no such trend, the post-IPO market has also been strong this month, after perhaps a fitful first half of the year – but even 1H 2006 was extremely strong in parts)

ValueCommerce’s IPO was priced at a lower valuation than F@N Communications (which operates the A8.net affiliate network), which listed on JASDAQ at the end of last year and which was a little ahead in sales (JPY4.3B vs JPY4.0B) for the last FY. The reason? F@N’s pre-tax profit was more than 3 times that of ValueCommerce (JPY765M vs 231M). The #3 player in this area, Adways (last FY sales of JPY3.5B, pre-tax profits of JPY465M) also had its IPO in June of this year.

The way the emerging markets IPOs tend to work is that the first of a kind IPOs do tend to attract a premium. Being the 3rd IPO of its peers meant that the market appetite wasn’t as big as its numbers might have suggested. F@N’s stock peaked at nearly triple its IPO price. I can’t see ValueCommerce hitting such a big high. Whilst Terrie argues that a 60% rise in price immediately after IPO is impressive, it is actually not uncommon. Adways hit double its IPO price at its peak, too. Many emerging markets stocks all seem to follow a similar post-IPO trend in stock price, with prices rising to a peak days or weeks after IPO, and then trending downwards back towards the IPO price. So I thought it was a little unfair to compare the market cap of ValueCommerce and F@N when ValueCommerce was still riding the post-IPO buzz.

Compared to its peers, ValueCommerce is just a little weaker on fundamentals; on growth compared to Adways, which is projecting 7B in sales this year compared to VC’s 5.4B, or in profit margins (VC’s projected 10.1% compared to F@N’s 16.4%). Whilst ValueCommerce’s growth is no doubt impressive, a comparison to its competitors puts a slightly different perspective on things.

Historical performance has been a bit more haphazard for ValueCommerce too, which tempered the enthusiasm of analysts. (although the relative lack of enthusiasm amongst financial professionals during the roadshow was generally more of the “oh, another affiliate advertising network” nature, according to an analyst who attended an event)

Yahoo Japan having a big stake in the company is no doubt a strong point in its favour, although contrary to what Terrie says, Rakuten are unlikely to have been interested in picking up another affiliate advertiser, seeing they have had a stake in Trafficgate, a currently unlisted company, since 2001. It was indeed Yahoo who was playing catchup as Rakuten and Livedoor were on the scene before Yahoo. Having said that, Yahoo seems to have made a good profit on their investment.

Indeed because of the crazy multiples that are being achieved at IPO, it becomes more attractive and profitable for major players to invest in companies and send revenue dollars to their portfolio companies and make some capital gains on the IPO than to go into competition.

There are more than one or two companies (I’m speaking in general terms here of internet IPOs on the Japanese emerging markets) where a big chunk of sales rely on major strategic shareholders. Because the listing requirements aren’t that strict, many of startups which affiliate themselves to a major internet player can IPO on their partners’ coattails. Hopefully by then they have built up enough brand recognition and know-how to become less reliant on their big brother.

I suspect that Trafficgate is another such vehicle, it is owned by Rakuten (50%) and Cyberagent(47.5%, 27.5% actually owned by an investment fund run by CA, a sure sign if ever there was one that this is an IPO play).

In September, another affiliate advertiser, Interspace, is listing on MOTHERS.

The segment is getting pretty crowded, and PERs in the 80-100 range for the top 3 players doesn’t seem to be sustainable. Admittedly the growth in blogs is good for these players, as micropublishing hits the big time. However, there are concerns that conversion rates for affiliate advertising on personal blogs. And I don’t think we want the blogosphere to be dominated by sites which are run with too much emphasis on driving advertising revenue. Don’t expect to see shill articles and accompanying adverts pasted all over the page from me anytime soon.

I also don’t feel there is much chance of affiliate marketing taking over from CPM/CPC advertising on high traffic properties, where property owners have much more power to strike a fairer bargain, whereas there might be a little more invasion of the space by CPC advertising courtesy of you know who.

The Big G hasn’t even started trying that hard to sell its advertising programs to the mass market. One acquaintance who has done comparison tests of advertising revenue generated by various advertising mechanisms on his network of Japanese language information sites (which actually do provide useful information on specific technology issues and gadgets (mobile phones, TVs, etc)), stated that Google’s ad services were definitely his most profitable ad revenue streams.

In a sense, getting this far may just be the beginning of the story for the players in this market. Good luck to all involved, it’ll be interesting to see how the market shakes out.

A tale of two ostriches August 21, 2006

Posted by fukumimi in electronics, IT, technology.
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Alternatively known as the Dell/Sony battery fire fiasco.

Dell and Sony knew about and discussed manufacturing problems with Sony-made Lithium-Ion batteries as long as ten months ago, but held off on issuing a recall until those flaws were clearly linked to catastrophic failures causing those batteries to catch fire, a Sony Electronics spokesman said Friday.

From an Infoworld article, dated August 18th.

The two companies knew about and discussed the contamination problem, and the problem was rectified, but they didn’t recall batteries known to be suffering from contamination.

As a result of those conversations, Sony made changes to its manufacturing process to minimize the presence and size of the particles in its batteries. However, the company did not recall batteries that it thought might contain the particles because it wasn’t clear that they were dangerous

I’m sure consumers will be thrilled to buy from manufacturers who when aware of a problem, just cross their fingers and pray that problems won’t occur. That is such an effective and reassuring strategy. Especially when the results of a battery short circuit are not unforseeable.

What we need are batteries which are less susceptible to such catastrophic failures. Electrically rechargeable Zinc/Air battery anyone?