Cooking Up a Mobile Feast in Asia
By David James, Tue Jul 03 00:00:00 GMT 2001

With European mobile operators burdened with the high cost of their mobile Internet licenses, and United States operators trying to rationalize an overabundance of competing technology standards, Asia is quietly becoming a leader in the development of the mobile Internet.

Walk down almost any busy street in Asia - in Seoul, Shanghai, Singapore, Sydney or literally hundreds of other cities - and it will seem like half the people you see have mobile phones glued to their ears or are determinedly punching numbers into their handsets with their thumbs or index fingers. This is no different from most other cities in the world, except that Asia is where the future of mobile communications is most rapidly unfolding. Asia has all the ingredients of a mobile feast - huge markets, technological prowess, low cost manufacturing, and a cultural bent for keeping in close touch with family and friends.

Here are some highlights of Asia's expanding role in mobile communications:

- Extraordinary penetration rates (Hong Kong leads the world with 83 percent of its population owning a mobile phone, Taiwan with 79 percent, Japan with 77 percent, Singapore with 70 percent, Australia with 69 percent and South Korea with 58 percent, to name a few).

- China's rapid growth in mobile subscribers (now with more than 100 million subscribers, second only to the United States).

- The success of NTT's DoCoMo's i-Mode service and its impending launch of 3G (third generation) services.

Moving targets

"These people love to be connected with family and friends and for whom a mobile device may be their first and only means of accessing the Internet. They tend to spend more time away from home or office and on public transportation than people elsewhere, giving them more opportunities to use their mobiles", confirms Johnny Chan, CEO of the Hong Kong venture capital firm, Ltd.

Chan believes that there will be many investment opportunities in Asia's mobile space as usage expands. He lists these:

- Voice applications. "People will want to access their data without bruising their thumbs."

- Handset and server improvements. "Higher speeds, better display, longer batteries. Not unlike the developmental progression of laptops."

- Agent software. "Pulling up your personal selections automatically."

- Network improvements. "Technologies that improve a network's performance and capacity at lower cost."

After China, India - with a population of more than one billion - is the next biggest target market in Asia. Now with a mobile penetration rate of only about three percent, a research report by Salomon Smith Barney estimates that by 2005 India will have 46 million mobile subscribers and a penetration rate of 22.3 percent.

"These days mobile phones are seen everywhere in urban India, with casual conversations centering on the latest handset gadget," says Krishna Kishore, director of Global Telecommunications Consulting, Telcordia Technologies, Inc., Morristown, New Jersey. "But access fees and handset prices are real inhibitors to growth, especially in rural India. Pragmatic policies and business alternatives could unleash really rapid growth."

"Plain voice will be the breadwinner in India for some time to come, because a large chunk of the population does not have access to any voice telecommunications, and wireless is the best way to open these markets," says Kishore.

Seasoning to taste

After Asia's huge markets, the next big factor in the Asian mobile feast is high tech manufacturing capability. Japan is the master chef here, having been the high tech leader in Asia for decades. While Japan does not often invent original technology, Japanese engineers often perfect a technology and ultimately lead in quality manufacturing and sales, as in the electronics and automobile industries. In electronics, Sony and Matsushita (Panasonic) have been especially adept in designing and marketing products that appeal to customers' tastes and needs.

Japanese companies - Sony, Matsushita, NEC, Mitsubishi Electric, Fujitsu, Kyocera and Sharp - are now manufacturing mobile handsets and marketing them internationally. Such a large body of competitive developers will undoubtedly result in a steady stream of handsets with cutting-edge capabilities and designs. By contrast, just two manufacturers, Ericsson and Nokia, dominate European handset markets, a limiting factor in responding to evolving technologies and tastes.

The story is similar in Korea. The nation rivals Japan in a number of high tech industries. Korea's Samsung is now the fifth largest mobile handset manufacturer with a 6.1 percent market share. (Nokia is the leader with a market share of 34.1 percent, then come Motorola with 12.8 percent, Siemens with 6.7 percent and Ericsson with 6.5 percent).

And according to Karl Moskowitz, president of KSA Ltd., a business development firm based in Seoul, there is a lot of new business and investment activity in Korea relating to wireless products, recently with more emphasis on wireless PDAs (Personal Digital Assistants) and combination PDA/telephone handsets than previously. "There is also a lot of interest in value-added content for mobile devices, such as games and music," he adds.

Other Asian countries are high tech standouts as well: Taiwan, China, Hong Kong, Malaysia, the Philippines and Singapore in manufacturing and assembly, and India in software development.

Kimchi yeast

The key Asian ingredient in the mobile high tech mix, however, lies in the development of mobile Internet technologies. While David James is president of Business Strategies International, a San Francisco-based consulting and venture-development firm specializing in Asia-Pacific business opportunities.