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Nintendo DS sales top 18 million July 20, 2007

Posted by fukumimi in Economy & Business, games, IT, Japan, Mobile.
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The Sankei Shimbun reports that domestic sales of the Nintendo DS handheld gaming console has topped 18 million units.

That number translates to one DS for every 7 people. Of course, some of these DSes have been shipped overseas, due to the region-free nature of these devices. Global sales exceeded 40 million units in March, and this suggests there is potential for Nintendo to grow sales outside Japan if it can replicate the model of getting users outside the traditional gaming audience to buy the device.

Most of the DS commercials on TV feature titles which are not games in the traditional sense of the word. There is everything from e-books to brain training to language training to interactive cookbooks and more.

More than a year after the launch of the DS lite, many shops sellout as soon as they stock them. (The Wii is even harder to obtain. The PS3 on the otherhand is plentiful)

I can’t help but wonder if the $100 laptop approach is really a better option than getting Nintendo to supply something based on the DS. Better battery life and real portability.

It can also be used to teach people to actually write as well as type.

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i-mode’s global expansion is faltering July 18, 2007

Posted by fukumimi in Economy & Business, IT, Mobile, Overseas, technology.
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Reuters reports that both Telstra (Aus) and O2 (UK) are abandoning i-mode.

I guess this just highlights the difference between the mobile scene in Japan vs elsewhere.

I would like to point out that the following statement from an industry analyst:

 “In the i-mode business model, operators keep only a small amount of content revenue, making most of their money by charging for data network usage,” […] “But regular users of the Internet on mobiles will become increasingly dissatisfied with ‘having the meter running’ while they surf, and the trend is already moving in favour of flat-rate data tariffs.”

is misleading in that flat rate tarrifs are available with i-mode on DoCoMo, and as such the i-mode business model is not tied to a metered data service.

If the reports of the O2/Apple iPhone deal are correct, I would suggest that O2 is betting that users will embrace the “full” internet on the phone and make i-mode redundant.

I’m still not convinced that continously zooming and scrolling to read a page not optimized for a phone’s limited size is the best option for users….

iPhone’s global expansion July 5, 2007

Posted by fukumimi in Communications, Economy & Business, Internet, Japan.
2 comments

The BBC reports that O2 is close to signing an exclusive deal for the iPhone rights in the UK. No news on whether it will be crappy GSM or 3G.

This is a change from earlier reports which suggested Vodafone was the front runner.

We shall see.

But if it does turn out that O2 does get the iPhone, that is sure to spark speculation as to the impact that has on the likely Japanese partner. All 3 major Japanese carriers have expressed interest. O2 is owned by Telefonica, which has strong ties to NTT DoCoMo. (O2 and Telefonica are part of the i-mode alliance)

But DoCoMo and Apple don’t feel like natural partners.

DoCoMo also has Napster under its wings, and I suspect that Apple will almost certainly insist that that has to go.

au(KDDI) also has its LISMO music service, which would also conflict with iTunes. I think KDDI has spent a lot more money promoting LISMO than DoCoMo has Napster.

In any case,will either be willing to cut loose the user base of its existing music services (for what they are worth)?

Softbank is leveraged to the hilt and whilst Son-san would no doubt like to partner with Apple, can they afford it if it became a bidding war against the big two? I’m sure the creditors won’t be too keen on taking that particular gamble. That said, Yahoo! Japan, which is part of the Softbank group, has a commercial tie-up with iTunes….

Here’s a totally crazy idea. What about emobile, the data only 3G carrier? Voice services using software VoIP. Apple would certainly have the upper hand in that relationship, and could have a go at running a mobile carrier through its partner. For one thing, it would have the only voice capable device on the network!

But then, the iPhone would probably look anorexic and grainy next to a 4.1″ 800×400 WVGA screen (Sharp EM ONE) which has a touchscreen (albeit not a multitouch one) AND a proper keyboard. Admittedly the Sharp is pretty heavy.

Even so, if I were Apple, I’d give the upstart some serious consideration. (I could also point them to a bargain solution to handle the voice infrastructure part, too. Although I do hear emobile are working on something themselves…)

From a purely technical perspective, it would seem from Apple’s tie-up with at&t that a 3G device if and when released would go down the UMTS route, pointing to DoCoMo/Softbank/emobile as more likely candidates than au(KDDI).

Of course, I’m one of the sceptics with regards to iPhone’s potential fortunes in Japan. Can (non-smartphone) users embrace the fact that the iPhone will need both hands to operate? I’m not so sure. Width apparently is a more important dimension than thickness for most Japanese. Length is apparently not an issue. Most collapse into a compact size when not in use. No sniggering at the back. We are talking phones.

The fact that the generic 10key is highly compatible with the Japanese alphabet means that semi-blind touch typing in Japanese is easy on a phone (many older people who have difficulty with a PC seem fine with using the phone interface, based on casual research observing people on the trains and elsewhere – using text messaging on the phone is certainly not limited to young people and businessmen here in Japan).

Without tactile feedback, that is going to be more difficult. (And I certainly don’t want to be on the same road as some idiot trying to type on an iPhone whilst driving. It is bad enough with a one-hand typist driver. Both are equally illegal, of course, but two hands on the iPhone means no hands on the wheel, which I suggest is a little more dangerous than just one hand on the wheel)

Also, the auto-correction and auto-completion techniques which are apparently well received in the US are not sufficient as is for the Japanese language. Predictive suggestions fill half the screen on my 3″ screen phone when I type a message, I can’t see how that will be compatible with typing on the same screen if I actually want to see some of the message I am composing. Well, actually, I can. It will work in the same way as pressing the space bar on a real keyboard with a Japanese IME installed, which calls up the list of choices. The virtual qwerty disappears and the list appears in its place. Once a choice is made, or the user hits a back key, the virtual keyboard will reappear. Anyway, I digress. The point is that I suspect there will be some additional challenges involved.

Of course, if Apple aren’t in a hurry to release an iPhone with a 3G chipset, the whole question is a non-starter.

[I guess there is another player on the scene, Willcom, the PHS network, if Apple really didn’t want any 3G phones which might be un-locked and exported…..]

iTouch sold for $191M July 4, 2007

Posted by fukumimi in Economy & Business, Internet, Japan, Mobile.
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Just a few months after For-Side.com sold its iTouch subsidiary (apparently for around $100M, and not GBP33M as I saw quoted elsewhere) to a group led by iTouch’s ex-CEO, iTouch has been flipped to the Italian mobile content firm Buongiorno for $191M.

$91M in 4 months isn’t bad.

But it does beg the question, did For-Side.com’s executives shop the deal around sufficiently to get the best price, as they would be expected to do by their shareholders?

Comsn continued June 12, 2007

Posted by fukumimi in Economy & Business, Japan, Society.
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With Goodwill Group being pressured into divesting Comsn to a third party, several groups are being mentioned in the press as potential parties to a transaction.

Watami has expressed an interest in the old peoples’ homes business, which they already have a presence.

Another interested party is Nichii Gakkan, who is a major player in the care services market.

But Nichii was one of the three companies (along with Comsn and Japan Care Service) which were named as having profitted illegally from abusing the system.

A Tokyo Metropolitan Government sanctioned inquiry had found that Nichii had pocketed approximately $1M illegally, compared to Comsn’s $2.5M.

Why is the media glossing over the fact that Nichii has also been abusing the system, even if they did not engage in the tactics employed by Comsn of liquidating their subsidiaries to escape punishment?

It seems to have been decided by the media’s puppetmasters that Comsn will be used as a scapegoat whilst others who engaged in substantially similar illegal practices are allowed to continue as if nothing had happened.

Whilst Comsn’s attempt to avoid punishment is undoubtedly a underhanded act which exacerbated the situation, the underlying issue is that a number of major care service providers have been institutionally defrauding the taxpayer. The problem is bigger than one single corporation.

It seems the problem is being spun as being due to a greedy rogue corporation, when the signs are that there are fundamental problems with many of the larger players in this sector.

Pretending that the problem is isolated to Comsn is unacceptable. A wholesale review of the industry is required. But I don’t expect that to happen in the current climate. The underlying problems will resurface again later, after more people suffer, and more taxpayers’ money is wasted, unless the structural problems are not addressed. Another MHLW disaster in the making.

Comsn June 7, 2007

Posted by fukumimi in Economy & Business, Japan, law, Politics.
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Just as I was going to bed last night, I caught the news that Goodwill Group was going to circumvent the sanctions imposed on its (fully owned) subsidiary Comsn related to the fraud (of taxpayers’ money no less) by transferring the care business to another group company, NSS corporation. The Ministry of Health, Labor and Welfare (hereafter the MHLW) apparently doesn’t have a problem with that and the existing licenses will be renewable by NSS. As far as Goodwill Group is concerned, it will basically be business as usual.

This is total Bullshit. (excuse my French)

I was so pissed off at the MHLW for allowing such a blatant attempt at circumnavigating the rules that I woke up at 4am in a really foul mood. I’m still angry as I begin to type this post at 4:10am.

(I don’t have much anger directed at the company, because I’d already decided based on past performance that they really don’t give two hoots about anything more than basic compliance to the letter of the law and have given up on them)

Comsn has a history of evading sanctions by winding businesses up when a realistic threat of an official sanction appears. The legal corporations are dissolved, and a new corporation is formed to pick up where the old one left over. All directed from HQ.

This latest attempt is much the same, albeit on a much larger scale.

It doesn’t surprise me that the MHLW is fine with this slight of hand, either. The timing of their announcement regarding the Comsn affair also appears to be a diversionary tactic, as they are also involved with the scandal surrounding the Social Insurance Agency and the 50million pensions records which are unaccounted for. Nice distraction, eh.

Wasn’t the Aneha scandal exposed just when the media started probing politicians’ finances? And Livedoor….? (Not saying that these wrongs should not be exposed, just that the timing of many of these scandals seems to be convenient. I guess they have a whole bunch of stories in their cache which they can whip out and offer to the media, so that the media can jump on these stories and plausibly explain the shift in attention from stuff which is embarassing to the government and bureaucrats, whilst the media is rewarded for its cooperation….)

Regardless of the timing of this current round of sanctions, Goodwill Group (a group who have been implicated on multiple occasions of illegal labour practices, and not just at Comsn) needed to be punished. Pity the central government bureaucrats colluded with the company to insure that no substantive punishment will be forthcoming.

The CEO of Goodwill Group is certainly well connected, and has a post within the Keidanren, who historically have been large clients of non-full time labour providers.

Crystal Group, which was shipping out labourers to various manufacturing giants in contravention of labour laws is now part of Goodwill Group, and Goodwill are also the people behind Mobaito.com, the leading mobile portal which is a marketplace to attract cheap, casual, day labour.

(Companies who have been found to be exploiting labourers by using firms like Crystal and breaking the employment laws reads like a who’s who of Japanese manufacturing – Canon, Toyota, Matsushita, Ricoh, Fuji Xerox, Nikon, NEC, Sony, Sharp, Sanyo, Fujitsu, Toshiba, NTT, Komatsu…. Fujio Mitarai, Chairman of Canon and head of the Keidanren criticized the labour laws for being too restrictive when his company was implicated for having thousands of labourers working under illegal schemes. The “miracle” of Japanese manufacturing companies’ financial performance during the decade+ long economic malaise is exposed as having been built upon the exploitation of the workforce, but as usual the media circus died down very quickly)

For all the drum beating that goes on about having to improve labour conditions and increase full time labour and reduce the number of especially young people who are not in full time employment, the establishment continues gleefully exploiting the situation.

At least some people are taking a stand. Governor Nisaka of Wakayama prefecture has stated in his weekly press conference today (June 7th) that he is not going to approve license approval requests from NSS.

Hopefully there are other politicans with a backbone who will follow Gov. Nisaka’s stance and say NO to exploitation of workers.

Update: 24 hours later, the MHLW is now saying that it will oppose Goodwill Group’s plan to transfer Comsn’s care practice to another subsidiary and thereby avoid sanctions. What has changed materially in the last 24 hours, apart from public criticism? Clearly these people are unfit to oversee anything.

I have a feeling that Goodwill’s founder will again claim he is being victimized. (for whatever reason….)

I’d be inclined to agree with him a bit if the other firms who have been similarly defrauding the taxpayers get off without similar punishment, but regardless of the punishments doled out (or not) to others, it doesn’t change the fact that Comsn has been engaging in a pattern of behaviour which was designed to avoid sanctions by dissolving a huge number of group companies just as these companies were being audited by local authorities, and this pattern is nothing if not premeditated and directed from the top of the organization.

China invests in Blackstone May 22, 2007

Posted by fukumimi in Economy & Business, Finance, History, Japan.
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China is putting $3B into Blackstone which is preparing to IPO. (Times)

This is the tip of the iceberg. The same article goes on to say that $200B is earmarked for overseas investments.

Jin Renqing, the Finance Minister, has said that one of its models would be Singapore’s state-owned Temasek Holdings, which invests in a broad range of industrial and financial assets at home and abroad, including Chinese state-owned banks.

I’ve been saying privately to anyone who wants to listen (and to many who probably don’t) that Japan should be embarking on a similar strategy with a strategic fund which is aligned to Japanese interests and strengths. (I suspect the best way would not be to get the government to do it themselves, otherwise it will end up being another exercise in futility, staffed by clueless academic “experts” and others who will be busy trying to divert money to their (and their supporters’) interests as is so often the case)

I don’t think putting money into funds controlled by interests not necessarily aligned with Japanese interests is the way to go (but then I’m sure it was a cheap way for China to get in the current US regime’s good books – after all Swarzman and Bush Jr were dorm mates at Yale – China isn’t stupid), but the country needs a well financed fund to a) keep key Japanese interests from being transferred to competitive hands outright (such as this one, but even moreso the other business units belonging to same), and b) to take a stake in overseas assets which are aligned with the future direction of the Japanese industrial base. (I’m thinking strategic technology and access to resources (energy, raw materials, logistics))

Japan’s foreign currency reserves are only $900B (according to the IMF) compared to $1.2Trillion for China, but there is another $2.1Trillion sitting in the Japan Postal Savings system, more than half of which are in low yield Japanese Government Bonds. It would seem that it would be in the government’s interest to put some of that into play.

Give me and my buddies $100B or so to go to work with, and I’m confident that we can return more money to the Postal Savings system than the current investments, whilst simultaneously strengthening Japan’s strategic position. Hell, even with just $10B and taking strong positions in venture businesses and SMEs I can see a lot of opportunities. I’m sure some of the big industrial companies and financial groups would be willing to pitch in a little money, after all they seem to be perfectly fine financing overseas funds in a similar fashion.

I’ll even offer to work on a miniscule management fee. The fee depends on the focus of the fund, but I think Japan needs new hands-on players in the VC scene (ie people with a nose for technology who are with the programme and not playing the game 6~24 (or more) months behind the global leaders), as well as in the bigger PE sector. If that is the case, it’ll need more than a handful of people to manage of course. Still, I’d have absolutely no interest in trying to get rich off management fees, nor do I feel the need for a corporate jet.
I’m not holding my breath for the Japanese government to come knocking on my door, although there are certain individuals (ok, one) making the right noises.

KKR: Japan ‘fertile territory’ for private equity April 27, 2007

Posted by fukumimi in Economy & Business, Japan.
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The FT article.

I wholeheartedly agree that Japan will be ripe with opportunities for private equity players. There are lots of PE firms expanding their presence in Japan as we speak.

Whilst traditional business interests seem to have been successful in manipulating the media to sensationalize the activities of PE funds and tarred them all with the same brush as money obsessed vultures willing to do anything to make a quick buck, I personally think that PE firms can be a force for good in the current Japanese business climate, and it may be necessary for outside influence to kick start the process of introducing change into the system.  It would seem much easier for foreign firms with no ties or associations to attempt audacious deals than for natives.

That is not to say that I am a fan of the overly aggressive and/or short-sighted practices employed by some firms/funds, but maybe having such players in the game is a price the local business ecosystem has to pay to allow firms with more balanced strategies to operate.

I hope PE firms become an agent for change for the better in Japan, there are lots of companies and departments within companies with substantial unrealized value, and if the potential can be unlocked, it will strengthen the Japanese economy as a whole.

I hope the PE firms learn from the mistakes made by their VC cousins who attempted to break into Japan and then retreated back in the early 2000s. The biggest challenge may be to find the right resources to staff their local offices.

Drecom revises earnings (downwards of course) April 11, 2007

Posted by fukumimi in Economy & Business, IT, Japan.
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Drecom, which had one of the big IPOs last year (back in February, with the market cap exceeding JPY100B at one point), announced it is revising its full year(closing end of March) sales and earnings figures downwards. Sales down 42% from a projected JPY1.5B ($12.5M) to JPY870M, with ordinary profits down JPY400M to a loss of JPY180M.

Shares were down nearly 10% on the day closing at JPY689,000.

That still values the company at JPY13.7B ($114M).

The interesting thing is that Drecom had released its 3Q earnings just two months ago. Full year guidance was unchanged, even though cumulative sales for the year were just JPY602M for Q1~3 against a target of JPY1.5B.

Two months later, they revise sales forecasts down 42%. Surely some heads should roll. (If I were a betting man, I’d bet against anyone actually taking responsibility though….)

I wonder if the logic was that the Q4 spike last year was going to be repeated this year. It would be interesting to see if they had a pipeline to justify such reasoning, or if it was just wishful thinking. I’d bet on the latter, if I was a betting man.

You thought PayPerPost was bad? April 11, 2007

Posted by fukumimi in blogosphere, Economy & Business, Japan.
2 comments

Following up on a post I wrote last November….

CyberBuzz (which I wrote about in the previous post) says they activities are twofold:

  • Advertising focussed on CGM
  • Word of Mouth marketing facilitation

CyberBuzz is an astroturfing agent, plain and simple.

Advertising focussed on CGM? I think they mean Consumer Generated Advertising. Paid shilling.

From their terms of service:

第12条 (禁止事項)

1. 会員は、本サービスの利用に当たって、以下各号の行為又はそのおそれがある行為を行ってはならないものとします。
(1)弊社が定めた基準により割り当てられたバズステージ、もしくはそれに基づき支払われる謝礼を、マイメディア上に公開する行為

Article 12 (Prohibitions)

12.1 Members must not:

12.1(1)….Publicize payments received….

So, an astroturfing shop which explicitly bans users from disclosing that they are paid to post. This must surely be worse than Pay Per Post….

CyberBuzz is a 100% owned subsidiary of CyberAgent, which is listed on TSE MOTHERS. It this kind of lack of judgement which gives the internet bubble “successes” a bad name (not to mention the ethical bankrupcy inherent in pretending to be “consumer generated media”). Some people might remember that CyberAgent got blacklisted by Google last March because of their questionable SEO practices.

My previous post mentioned another shill agent called Blomotion, at least that service requires users to display a Blomotion banner on their blog to progress to the more lucrative compensation levels, although personally I wouldn’t settle for anything less than a per post disclosure policy being mandatory for word of mouth “advertising”. I see that CyberAgent and its corporate VC subsidiary are also shareholders in Mobile Factory, who operate Blomotion. Coincidence?

If PayPerPost had stipulated that they required users to keep the financial relationship secret, I wonder how big the whole fuss would have become.

But this is Japan, where the media and advertisers are joined at the hip (mediated by the advertising agencies, of course) so I doubt much of a fuss is going to be made even if this issue become more prominent.

Addendum: I was looking at the Blomotion sign-up page where they have a link to tutorial pages with screenshots of the UI (CyberBuzz is a bit more secretive/user unfriendly). What was interesting was that they have screenshots of how to post a shill post. Requirements include number of words, topics to write about, linking, etc, but most interesting was that they had a “how to tag(link)” tutorial, which shows that the html which users are requested to insert a link to the advertiser, and an image file used for tracking purposes. The image file (http://pv.blomotion.jp/img/pv/entry-pv.gif) is a 1x1pixel transparent (and therefore invisible) image. I had thought that maybe they were using an affiliate advertising like link but this way (which is used often used for cookie tracking), using a direct link to the advertiser’s site, the advertiser gets inbound link love which may in fact be more valuable to them in the long term by boosting their search engine rank than clickthrough traffic that comes to them via the shill post.

I think I like this model even less now, with the smell of dubious SEO practices in the air. I have a strong suspicion that the shill posters may be being misled as to the value the posters are providing (or at least being told only part of the story).