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DoCoMo boosts i-mode screen real-estate by 30%
How does flat-screen sound work - is it stereo?
Showdown year for music-enabled mobile devices?
1. DoCoMo boosts i-mode screen real estate by 30%
The headlines screaming "DoCoMo Develops Mobile Phone with Flat Panel Speaker" are a testament to the power of the i-mode ecosystem, and something that most i-mode alliance partners could not buy on their own.
After all DoCoMo isn't a manufacturer and doesn't own the IP or expertise in making this new innovation, but obviously it has collaborated and designed elements with NEC - to everyone's advantage.
And in a testiment to their own ingenuity and vision, NEC has produced the first handset to contain a flat panel display which also functions as a speaker, the 2G mova N506iS. The secret to the new monitor is a transparent, vibrating acrylic panel developed by NEC R&D subsidiary Authentic and based on core technology from NXT Sound.
NEC started work on this technology more than 8 years ago - not the research but the effective development of the applications.
The flat panel speaker emits sound by sending vibrations throughout the entire display panel, allowing the user to hear the person on the other end by placing an ear anywhere on the panel.
Wow! What a winner, not only do you get easier listening, a larger TFT liquid-crystal screen (some clamshell models give up around a third of the space on the top half to the earpiece) - 240×345 pixel, better screen quality, but also:
- TV hookup capability for viewing of photos and video;
- An access reader that allows storage of information from business cards written in Japanese to the phone's address book;
- Dictionary searches for unfamiliar words; and
- Button navigation enabling telephoning, e-mailing and browsing after the handset has been opened, rotated and then closed again.
The handset also has a mini-SD memory card. In a small twist DoCoMo noted that the handset was not compatible with DoPa.
It is reported that NXT Sound will take a license fee for its technology from NTT DoCoMo and then receives royalties for each handset sold (the UK press say £0.13 - US$0.25?). This is an interesting statement because it leaves out NEC yet NEC are the SoundVu license holders and development partners in Japan, perhaps non-exclusively? (NXT's revenue is quite small at £2.3m last financial year, 50% was from royalties.)
There are five other mobile phone companies or producers expected to release phones using the NXT technology during 2005.
The technology is impressive but some analysts remain sanguine. After the share price jumped 70% on the news, one commented:
"It looks like an over-reaction," said one analyst, who declined to be named. "It's only a second generation phone and NTT experiments a lot. It looks like a gimmick."
Personally I doubt that it is a gimmick, either in technology or in demonstrating the power of the relationship between DoCoMo as a service provider and NEC as an equally powerful R&D innovator and manufacturer. This is one of the key strengths of the i-mode alliance ecosystem.
2. How does flat-screen sound work - is it stereo?
NXT Sound said that the 2G mova N506iS is the first phone the first in the world to incorporate its SoundVu technology and "...when using multimedia services, phone users would find audiovisual content more vivid than on conventional handsets."
NEC already uses SoundVu in large PC monitors and laptops for the Japanese market.
The secret to the SoundVu flat-screen speaker is a vibrating acrylic panel developed by Authentic Limited, an NEC internal venture capital company, jointly owned by NEC and Citizen, and NXT licensee, and Access Technica Ltd, NEC's manufacturing subsidiary.
This panel replaces the protective transparent outer sheet of regular LCDs. Two exciters attached to the sides of the handset control the panel's vibration. When the panel vibrates, so does the air, creating sound.
The panels use the science of Distributed Mode theory - a method of creating sound by controlling and bending waves and by vibrating specific points of the "board", in this case the acrylic panel, after study and analysis of the distribution of the vibration in relation to the particular physical embodiment (that's where NEC and DoCoMo come in).
There have been competing technologies, even from DoCoMo handset partner Panasonic, but they have failed to develop for handsets.
A benefit of SoundVu technology is that the power loss due to distance is much smaller than for convential diaphragm speakers. This is obviously a big advantage for mobile phones for clarity and functionality, and most likely for reducing power consumption.
Can the sound be in stereo?
In theory, yes.
Although the acrylic panel does not function as a "single" left and right speaker, it is theoretically possible for the location of the exciters to be determined to realize natural sound as much as possible. Detemining how to do this is part of the distributed mode analysis which would be an essential part of the product design.
Surround sound effects, so-called 3D Sound, can also be achieved by careful tuning of the nodes and exciters, since a characteristic of SoundVu is wide, frequency-independent directivity - meaning that you can obtain a much wider listening angle.
Bear in mind that the stereo effect can be tuned to a potential horizontal deployment of the screen (not the N506is), raising the potential separation effect and depth of "surround" for say viewing video on the handset.
By the addition of a micro-subwoofer , the next generation of (let's say FOMA) flat-screen speaker phones will be fabulous gaming devices and viewing devices for higher quality streaming music and video.
This is one reason why NXT's CEO, David Pearson, commented, "We are delighted that NTT DoCoMo has delivered an NXT SoundVu enabled handset, which demonstrates the relevance of NXT technology to advanced functionality in mobile communications and wireless content".
It is also a reason that this development is not just a gimmick, since such improvements in the quality of user experience are an important part of the i-mode 3G business case.
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3. Showdown year for music-enabled mobile devices?
Wireless Watch Japan's (WWJ) Ken Gai had a few days off over the holiday season in and check out the latest gadgets.
"2005 is shaping up as a showdown year for music-enabled portable devices and I couldn't help but notice how DoCoMo's new 3G handset, the SH901ic by Sharp, really does seem to have at least a slight style similarity to the iPod.
As the network speed increases — and with flat-rate packet costs and improved handset technology — critical mass adoption by mainstream users buying even more data seems to be at hand."
Ken asks: "As competition increases, how will carriers, handset makers and content providers adapt their offerings over the coming year?"
Up to now most handset vendors have integrated music piecemeal as a value-added feature supporting messaging and imaging features.
Still, even with this ad-hoc apporach sales of music-enabled handsets are predicted to grow by 59% annually rising to over 450 million in 2009.
Early movers like the Siemens SX1, Motorola E398, and the Samsung 1.5GB SPH-V5400 are all currently
the market. But demand for music-focused devices is expected to balloon in 2005.
Motorola's aggressive pursuit of a music content alliance with MTV and Apple stress the importance that both device segmentation and branded music content will play in the emerging music enabled device market. Motorola recently launched its its multi-tasking MusicMOTO (ms350) in Korea which it developed with SK Telecom, and also released the ms340 Spinmoto.
However, in their report, "Mobile Music on Demand Goes Centre Stage at Vodafone 3G - But Service Concept Questionable," Strategy Analytics predicts that mobile operators will struggle to generate volume sales of music through their new Music on Demand (MMoD) services, and alternative strategies are needed for success.
Strategy Analytics predicts that these services will be generating $2 billion per year, compared with $57 billion for SMS, by 2009.
On the basis of this analysis they predict that iTunes will trump carrier music services.
Edgar Bronfman Jr, the new Chairman and CEO of Warner Music Group, and is convinced that the only successful challenge to the iPod won't come from an even better player made by another consumer electronics company. But rather from the cellphone carriers who will be able to create a "secure, piracy-resistant network" to distribute music over high-speed wireless connections, according to Engadget.
Engadget is skeptical of Bronfman and remarks that Apple need not worry "since it'll be years before cellphones have the storage capacity, high-speed connections, ease of use, and battery life to rival iPod". That's a bold statement to make in December 2004 !
But does experience in Japan support this skepticism?
Not really. WWJ's Daniel Scuka did his own modest analysis of publicly available data which indicates that KDDI could be looking at US$70m in annual revenue after 2 years.
See more analysis in a previous i-mode Strategy Newsletter where we show that Sony Japan has a $60m annual business at the current run-rate for chaku-uta downloads, and the carriers get 10% so that is $6m per annum alone from Sony, and growing rapidly.
Clearly, despite limited onboard memory, high cost and the necessity to pay packet fees as well as content fees (prior to the advent of flat-rate pricing), music delivery to a cell phone - even just a 30-second partial delivery - is a hugely successful product and is giving PC-Web downloading a run for its money.
Literally, in Japan, "Mobile music is killer content," says Daniel.
Gerard Fasol of Eurotechnology Japan, in his latest newsletter, Headlined "1 Million downloads in 48 days".
"Chaku-Uta-Full" are full songs downloaded to mobile phones via KDDI/AU's 2.4 Mbps 3G mobile network. "Chaku-uta-full" started on November 19, 2004 and achieved 1 million downloads within 48 days.
Fasol projects that mobile music "has the potential to become a major, if not the major, music distribution channel in terms of value in Japan, replacing CDs and DVDs".
Full song downloads (Chaku Uta Full) are only realistic for radio networks with 2.4Mbps or higher data transmission speed. At the moment only KDDI/AU is the only mobile operator in Japan offering a 2.4Mbps data network, and only 410,000 handsets have been sold, which are compatible with chaku-uta-full downloads. DoCoMo is expected to start HSDPA services during 2005 with data rates up to 14.2Mbps. At the moment mobile music sales in Japan are around US$ 1 Billion/year. As DoCoMo's HSDPA services come online and more handsets are sold for full song downloads we expect a dramatic increase of mobile music sales - full mobile music report.
What's the biggest cultural change for 2005 in mobile music?
Ringtones were mainly about personalization - the songs you chose for your ringtones said more about how you wanted others to perceive you and your choices. They weren't meant for serious listening.
Full-song realtones and music video, on the other hand, represent a transition toward personal entertainment whereby the phone becomes an individual's music/video services centre.
- for street-level news and analysis of Japan's mobile world and more from Ken Gai on the music mobile trends go to Wireless Watch Japan.
- DoCoMo started selling the Sharp SH901iC 3G FOMA handset on December 1, 2004.
4. Bouygues builds profit on 1 million i-mode customers
Bouygues Telecom announced that as of end-September "more than 920,000 customers have access to i-mode services, confirming Bouygues Telecom as a major player in the i-mode alliance".
Bouygues posted nine-month sales of €2,725 million and net sales from network of €2,480 million euros, respectively 13% and 11.6% higher. As a result of growth in sales and tighter control over costs, EBITDA rose by 20% to €934 million euros, operating income by 25% to €475 million euros and net profit by 51% to €272 million euros. The EBITDA/net sales from network margin stood at 37.7%.
Back at launch in 1998/99 Telecom was deep in the red, with a €155 million loss for 1998 and minus €68 million for the first half of 1999. But Bouygues runs a tight ship, and for the year ending 30th September 2004 Telecoms contributed twice the profit of Construction, on two-thirds of the sales.
For the Bouygues Group overall the Telecom progress has been representative of a good year and it will making a special payout of €5 per share this month. Compare this to Deutsche Telekom who in November announced a plan to pay a dividend of 62 euro cents for 2004, its first in three years.
Bouygues launched in November 2002, following Germany, the Netherlands and Belgium to become the fourth European country to get i-mode.
Bouygues Telecom hit the 1m subscribers almost exactly 2 years since launch. At launch time Bouygues had about 3/4 of the subscriber base of Telstra when they soft-launched i-mode in October 2004, and Telstra aims for 1m i-mode subscribers in 3 years.
The big question for DoCoMo is how effective Bouygues is at converting those with "access to i-mode" to being active subscribers.
At present this is one of their big worries with some carriers, such as E-plus. Perhaps Bouygues is getting better results than what is speculated to be a 30% subscriber-rate from E-plus, but DoCoMo would have a target of twice that percentage and it's unlikely that Bouygues is up there yet.
It's a truism that selling to existing customers is more cost-effective than capturing new customers, so the question is how can the European subscription rate be best advanced?
By the combination of increasing the subscription rate, and increasing the i-mode base, especially through cheaper handsets, DoCoMo is intending to make 2005 a golden year in Europe.
- download the press release announcing the Bouygues profits - PDF.
5. History Corner: The Finnish infatuation with the telephone
Q: Why is the country so gaga over all forms of telecommunication -- beginning with the phone?
by June Pelo
A: There is no single answer. But there are some telling data points.
"Firstly, the Finnish infatuation with the telephone is no new phenomenon, no mere byproduct of Nokia's dramatic rise to prominence. Finns have been crazy about phones from practically the first moment they could get their hands on them.
In 1896, Mrs. Alex-Tweedie, an English travel writer, noted that 'Finland is full of phones.' Angel Ganivet, the Spanish consul in Finland in 1896-97, observed that phones were almost as common as kitchenware, and devoted an entire chapter of his book on Finland to the 'excessive' interest Finns had in technology.
It also has become an inordinately popular national obsession (at least among the telecom-literate people I interviewed) to mention at least once a day how there were more than 800 separate telephone companies in the country during the 1920s and '30s.
Finland is a sparsely settled country -- a little over 5 million people are sprinkled across a land mass 1,000 kilometers long from north to south. An attraction to phones is therefore an understandable outgrowth of local geography.
But a historical misstep by the Russian tsar also played a crucial role. During the 19th century Finland was an 'autonomous Grand Duchy' under the rule of the Russian Empire. (Prior to that, for seven centuries Finland had been ruled by its neighbor, Sweden.)
Finland's multitude of phone companies was a legacy of the Tsar's decision to declare the telegraph a militarily essential device -- and the telephone, on the other hand, little more than a toy.
Wary of the possibility that the Tsar might change his mind, the Finnish government chose to grant licenses to operate telephone companies to all applicants -- in marked contrast to the practice of most other nations, who ensured that telephone operation was a tightly controlled state monopoly.
The reasoning of the Finnish government was as follows: It would be much easier for the tsar to renege on his decision if all he had to do was simply close down or otherwise take control of one state enterprise, rather than hunt down hundreds of independent companies.
When you have 800 telephone companies in a country that, in the 1920s, only had a population of 2 million to 3 million people, you are forced to become expert in interconnection technologies.
As a result, Finns understand networking."
- read June Pelo's full article from the Swedish-Finn Historial Society's collection.
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