Daniel,
I like your writing, and respect your skill as a writer, but beg to differ
on several points:
>First, it is quite difficult to get anyone -- foreign or Japanese -- to
>state (even off the record) whether their mobile Web effort is profitable.
>Go ahead and try -- I've just spent the past 14 months running around Tokyo
>like a madman asking this question, and have gotten little response. If you
>can do better, the beer's on me!
Well, I think you owe me a beer. I have several folks, all Japanese, on tape
stating just the sort of thing you say you asked. In fact, everyone I asked
gave me an answer to this question. I didn't really even have to run around
like a madman, but perhaps if I had I would have gotten similar responses.
:-) I did notice one technique(?), which is that people seemed more
comfortable telling me how many subscribers they had. Once they had done so,
I did the quick math in my head, deducted the 9%, and then said something
like "So, your revenues are 3 million a month. You have three people working
on the site. Does that mean you are profitable?" I got both negative and
positive answers, actually. I have to admit that I didn't talk to any
companies that were in the market for VC, which probably had something to do
with the reluctance in at least some of the people you talked to.
>At least in part, I understand why people are reluctant to state a figure:
>measuring "profit" depends directly on what costs are included. Few serious
>mobile Web sites exist in isolation, and it's often difficult to state what
>portion of backend SI costs should be borne by the mobile component or
>channel.
True enough. Most companies can, and do, however, calculate the
profitability of different businesses within their companies. I don't know
exactly how they do it, but it is apparently an easy enough thing for an
accountant to tell you.
>How come no one ever calls, mails, or faxes to announce that their i-mode
>site just earned them XXX,000 yen in profits for the past quarter?
Because 100,000's of yen is not news? The truth, I think, is closer to this
number than anything: The profits, even on official sites, are not the stuff
of a bubble, which is what mobile internet is shaping up to be. You have
many of the elements, with VCs homing in on Tokyo startups, more press,
which you Daniel have been quite happy with I am sure, investments in little
startups like Layer 8 by biggies like NEC. And whooppeee, they earned $7,000
last month! It is peanuts, and most guys I have talked to, even if they are
profitable, are sheepish about the paltry profit they show. Things like 'it
is just a small part of our overall strategy, but we need to be in this
space because it is the future' seem to be said with regularity.
>So there's my point: Other than a small number of major brand owners, like
>Cybird, Bandai, Tsutaya, Disney, some of the gaming houses, and some of the
>ring tone download sites, I believe that few sites make a cash profit.
You may be right, though I think that there is a distinction that needs to
get made: A cash profit means any money above what is spent on it, right? I
would say that the majority of official sites which actually charge for
their content, in this definition, are profitable. Why? The sites that spend
only server hosting fees aren't really spending very much, though not
dedicating the resources to make their sites better insures they will never
be VERY profitable. The sites which develop and dedicate resources to
developing tend to have better profitability, and a very few sites are VERY
profitable.
>Sure, it's a business, and a damn interesting one -- replete with
potential.
>And yes, there is some $$ being made. But I don't see how anyone can get
all
>gushy and breathless about wireless in Japan if they take a sober look at
>who's making the money.
People like you and I who write books about it are presumably doing well. I
am at least. :-)
Cheers,
Nik Frengle
PS Is the Keitai-l party nomi hodai, or can Daniel buy me a beer?
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Received on Fri Sep 7 10:18:49 2001