Vodafone's 256K Java: Pricey Eye Candy for Mobiphiles
By Daniel Scuka, Wed Dec 17 06:00:00 GMT 2003

In a Java market long accustomed to cheap downloads, Vodafone segments deep-pocketed gamers from the rest.

It's been long argued that Japan's mobile Internet can be divided into two eras: pre- and post-Java. Despite the 100K (or lower) limit imposed on Java applications by all three operators and a low cost of just a couple of hundred yen per download, the mobile application environment has been crucial in boosting usage, packets and profits, particularly at NTT DoCoMo. Java has been cheap for the public - and a moneymaker for the carriers. But a richer Java experience, introduced by Vodafone Japan, is what a high-end segment of the Japanese crowd is looking for.

Vodafone Japan launched a new service allowing app sizes of up to 256K on Sharp's J-SH53 handset back in May 2003, offering the bigger downloads at a premium price. Even though the service does not appeal to the mass market just yet, Vodafone is satisfied with the early-adopter acceptance, which is fast creating an entirely new segment of the Java market: gold-plated premium downloads for aficionados willing to pay higher content fees and substantially higher packet costs. But will this niche segment be enough to keep the service alive?

Although Vodafone is loathe to release sales figures, one measure of the service's success has been the quickly growing number of applications available for it, while another early indicator of solid sales is the stability of the SH53's retail price, which had fallen only 4,000 yen four months after its release; which is nothing considering how the handset prices often tumble much faster in Japan's hyper-competitive market. Another boost comes from the widespread - and largely positive - tech media coverage. And what's more, the handset, which comes complete with a megapixel camera, expanded MMS mail features, and Sharp's super high-quality CG silicon display, is a must have for gadget geeks.

Before the 256K service was launched, the local carriers strictly limited Java downloads for fear that the traffic would swamp their narrow-pipe 2G networks and upset consumers by quickly inflating their packet bills. NTT DoCoMo set their limit at 30 KB, KDDI and Vodafone set theirs competitively higher at 100 KB, though developers groused that 30 or 100 KB wasn't enough to do anything really cool.

But the games on the 256K Java lane are rich and compelling, unlike anything seen on mobile handsets before. The graphics, sounds, and sequences are substantially similar to what's available on portable consoles. In fact, the same developers who created the Playstation version of "Ridge Racer" ten years ago worked on the new 256K Java version (see sample clip here).

Content fees have been similarly modest with the slimmer Java downloads - typically 250-350Y per month for a handful of 100K downloads on DoCoMo or KDDI. In contrast, some 256K applets cost 500Y and, with packet fees, could bust a Tokyo teen's wallet to the tune of 1,000Y. Only now are some carriers introducing discounts for heavy 2G downloaders, though 3G rates are strikingly different - on DoCoMo's FOMA the average packet cost is just 0.06 yen.

The reason for such a high price is due to the lack of proper 2G packet discounts for heavy users. In 2002, DoCoMo offered a paltry 0.1Y discount after 30,000 yen's worth of usage. However, last month, Vodafone decided to cut 2G rates with their "Happy Packet" discount, offering up to 80% off all packet usage for a base fee of 2,950Y. This will offer much-needed relief to 256K Java users.

With 3G all carriers are forced to offer steep packet discounts or flat-rate to bolster usage. While the price to download a 256K Java applet may be a concern, David Collier, an experienced industry watcher now on Namco's Web & Mobile Contents Overseas Team, says he hasn't heard any complaints. "If the quality is there, which, in this case, it unarguably is, then there seems to be price elasticity."

Regardless of the pricing strategy, Vodafone's 256K Java move is "cutting edge" according to Collier, and even if risky, the new applications - games in particular - should have lots of future resale value as handsets with the advanced capabilities of the SH53 make their way around the world. But does the enhanced Java service risk alienating users at the low end who are used to cheap and fast Java downloads? It might, but it's likely the traffic generated by high-end users will make such a worry irrelevant.

With an obvious money-maker on their hands, Vodafone have said they plan to offer a second 256K Java handset, Sharp's V601SH. Indeed, senior Vodafone global strategists have recently hinted at plans to bring rich, made-in-Japan content into other markets like Europe, where Sharp's GX-10 has enjoyed good success based in part on Java. Although no decisions have been announced, other Japanese handset makers indicate they might enhance their Java environments.

Against this backdrop, Java -- one of the best, all-time money makers on Japan's mobile Internet -- may be about to undergo a boom thanks to the Vodafone/Sharp duo and, of course, legions of Japanese early adopters.

Daniel Scuka is a technology writer and consultant, and co-founder of the Wireless Watch Japan media project.