2006 11
How should FON enter the Japanese Market?
Published by MartinVarsavsky.net in Fon with No Comments
Yesterday I spent my first day working on the launch of FON in Japan. I met many prominent business leaders. I asked many questions and I must say I am confused. FON´s formula of hiring amazing local teams and compensating them with salary and a good stock option package may not work in Japan. Google and Yahoo are a good example of this. Google entered Japan with the salary and stock option formula, and so far it has not succeeded. Yahoo, instead, chose to team up with a local partner. And it is HUGE. There´s Yahoo everywhere in Japan.
What should FON do? Should we follow the Google model or the Yahoo model? At the same time Japan is perfect for FON. Tremendous bandwidth penetration, no large organized WiFi efforts, enormous usage of WiFi enable devices including laptops, pdas, PSPs, Nintendo DS, and now WiFi enabled digital photography.
Follow Martin Varsavsky on Twitter: twitter.com/martinvars
No Comments
Martín Varsavsky on April 11, 2006 ·
Hi Kenji,
There are around 35 million broadband connections in Japan and over 5 million are connected to wifi. There are over 30 million devices in Japan that are WiFi enabled including laptops, PSPs, Nintendo DS. Moreover, Japan is very densely populated, which is perfect for Fon. We estimate that with only 200,000 foneros we would have very good urban coverage in the urban centers of Japan. Other issues that make Japan a fantastic country for Fon is the convenience shop culture. Convenience stores are perfect to acquire Fon routers and Fon prepaid cards.
Regards,
David Oliver on April 11, 2006 ·
I think that it hard to compare Yahoo and Google in Japan as Yahoo has been established there a lot longer (since 1996), plus Softbank has successfully used Yahoo as a brand for many products – portal, search, auctions, broadband service. It also did a separate IPO for Yahoo Japan that would have helped to raise the profile a lot. It depends on how the foreign company teams up with a local partner – it is still unclear whether ceding control of Yahoo China to Alibaba will have been a good decision.
Having people who have a good network of contacts and understand the local market is key, especially in a place like Japan that seems to march to its own drummer. A common mistake of many U.S. companies in Asia is bringing in an American MBA or a returnee who don’t understand the local landscape and try to run an operation just like in the U.S.
To succeed in Asia FON will have to localize its strategy for each country – the overall objective can be the same but the ways to achieve it will be different.
Juan Rufilanchas on April 11, 2006 ·
Martin,
Both Japan and China are amazing places for business, their populated cities and in some cases the penetration of technology make these countries a must for Fon. Unfortunately China and Japan are also completely different “business arenas” than what we know as Europeans or Americans.
Cultural shock is a reality !!! My wife is Chinese, I have seen some people in Asia who did not want to deal with me, just a few words from her and it is done. The same thing happened to her in Thailand, some help from a local and solved again.
“Conquering” Japan and China alone is probably possible but it will take a long time, right now Fon needs to quickly gain a critical mass so that people have an incentive to join Fon rather than another network (I advertise with ebay because everyone is there, I am with MSN or AOL messenger because my friends are there). If you are slow, someone can copy your idea and make it work in a single (but large and attractive) country, you do not want fragmentation.
I am sure you have in mind partners, but maybe it is a good time to contact your investors (particularly Google and Skype) and get some managerial help. VCs will also be happy to assist in things like that, you will make them feel useful !!!
BTW, if you have time give a try to Bangkok, you will discover the next “emerging” Japan.
Best regards,
Rufi
Xavier on April 11, 2006 ·
Japan is a difficult market, I will say that you should use a “mix” formula.
It means, you contract someone, who has the capacity and the abilities to develop the business, and he work in exclusive for Fon, and after you choose some local partners to work.
And the 2 principal points of job description of your employee should be, Cordination and follow up, so he help to your partners, and take care that they are respecting the schedule and are putting pressure on them to do the job,
I think that without a good local partner is very difficult to develop Japanese market.
Jan Michael Hess on April 11, 2006 ·
Entering the Japanese market is definitely a big challenge for most companies – including FON. Of course, with Joi Ito you have one of the best local entrepreneurs to help you make it happen.
Japan is the second biggest economy in the world and it works with one cryptic language. That’s one of the reasons why Yahoo Japan powered by a local partner is so successful. The second reason why Yahoo Japan is so successful is the fact that Masayoshi Son, Founder of Softbank, owns Yahoo Japan. You might know that Softbank just bought Vodafone Japan. So you should try to talk to Softbank/Yahoo.
A big competition for shared WiFi in Japan is 3G. In Japan, 50% of mobile subscribers already migrated to 3G. Push email is a standard keitai feature since 1999 in Japan. So the Japanese don’t need WiFi to read email. The keitai browsers are also quite good.
Take a look at Softbank’s hotspot pricing. I remember something like €3,50/month for accessing all Softbank hotspots. You can read it in their annual report.
So I recommend to you to find a local partner owning and driving FON in Japan. But it will not be easy as FON has not yet a proven business model. You just have famous investors, advisors and a decent number of registered users. What about FON’s revenues these days? A local partner in Japan will definitely want to know more about it.
Kenji Mori on April 11, 2006 ·
Martin,
Thanks for your elaboration. Elementary schools kids would love to play PSPs and Nintendo DS with wifi outside,too. Anyway, looking forward to the roll out.
Kenji
teleken on April 11, 2006 ·
Martin,
Mabe a present it to Japan as a Game of some kind.
or mabe try networkmarketing
or both. Just a idea
roy s. on April 12, 2006 ·
Martin,
maybe you can take a look at http://www.freespot.com. They operate in Japan.
regards,
Roy
isaacb on May 3, 2006 ·
Maybe this commentary is a bit off topic but I would like to know if the salary+stock options formula still generating earnings to the workers from the stock options after they leave the company.
Thanks,
Leave a Comment
You must be logged in to post a comment.
kenji mori on April 11, 2006 ·
Hello,
Well not sure which option is better. However, my feeling wifi utilization in Japan is not so high at this moment, which I think is the major obstacle.