Softbank brings Alibaba.com to Japan

Japanese web and telecom giant Softbank and China-based B2B platform Alibaba are collaborating. 65 percent of Alibaba Japan will be owned by Softbank, the rest by Alibaba's parent company. The companies are investing 20 million USD into the joint venture.

There are over 1 million products registered on Alibaba Japan at the moment. The site boasts 75,000 Japanese members.

The new company will be lead by CEO Makoto Koyama. Japan's richest and Softbank's big man Masayoshi Son is going to be a director.

The official press release in which the joint venture was announced the day before yesterday can be found here (Japanese).

In my view, it is about time something happened in the B2B web space in Japan. After all, this is the country of companies: According to the Japanese Ministry of Trade, Economy and Industry 4.7 million SME are registered in Japan!

Review: Japan's No. 2 social network GREE

Mixi is the quasi-standard when it comes to social network usage in Japan (read more in my Mixi-review).

Japan's second largest social network is called GREE. There is no information in English available about GREE online. That means outside Japan almost no one knows about this Web site even though MILLIONS of people are using it (mobile and Web version). So I decided it is time for a write-up to present this service to Non-Japanese speakers.



I will review GREE in the following order:
I) General Info
II) Starting Page
III) Functions and Features
IV) Business Model
V) Opinion

I) General Info
Gree, Inc. currently employs 74 people in its HQ in Tokyo. The name GREE is derived from a sociological concept named "Six degrees of separation".

The company published a press release last month claiming they have over 3 million users now. Impressive, but still a far cry from Mixi's userbase of well over 12 million. Both services started operations in Japan at about the same time.

GREE's president Yoshikazu Tanaka is 30 years old and founded the company in 2004 (!). Before, he was responsible for operating Rakuten's auctions operations.

Click here for a detailed statistic on details how GREE clearly trails Mixi in the Japanese SN market.

II) Starting Page
GREE's top page is rather minimalistic as you can see from the JPEG below for which I translated key items:


III) Functions and Features
GREE is an invite-only service like Mixi.

In essence, GREE offers the following functions:
- blogs
- photo albums
- video uploads
- messaging system
- forums
- reviews
etc.

What's more interesting is GREE's mobile version. The service is called "au GREE" for KDDI's carrier "au". The company invested 31 million USD in July 2006 to develop a mobile version of the Web site. Softbank and DoCoMo customers know it as "GREE mobile". Mobile GREE is "integrated" into the Web version so that PC-only users are able to interact with handset-only users if necessary.

au GREE in particular proved to be a huge success. Its user base passed one million in July 2007 (information from the latest official press release related to this number).

What's the difference between the mobile and the Web version?
For example, - besides the usual features - au Gree users can send each other html-rich emails (called "decoration-mail"), play games based on flash and get their fortunes told. Click here for screenshots.

However, there is also a mobile version of Mixi which is even more successful. No Japanese Web company would dare to offer a PC-only service!

IV) Business Model
GREE makes money in the following ways:
- advertisements
- affiliate links to online shops
- premium accounts

A GREE premium account costs 315 Yen/month (2.80 USD/1.90 Euros). Premium users get 1 GB of storage for uploading videos and pictures and unlimited Email storage. Moreover, users can keep provisions if the products they reviewed are purchased after clicking an affiliate link.

V) Opinion
GREE can keep up with Mixi as far as basic features and functions are concerned.

The huge marketing pull with which Mixi managed to conquer the Japanese SN market is the decisive reason for GREE being a distant second.

Another reason is to be seen in GREE's design and usability approach. The Web site has a business-like, rather "cold" feel to it. Not exactly like LinkedIn or Xing obviously but Mixi somehow exudes more fun and looks more casual.

GREE doesn't do anything terribly wrong but suffers from the "The winner takes it all"-law pertinent to a lot of Web 2.0 services. That is why in my opinion it will be VERY hard for GREE to enjoy a Mixi-like success in Japan in the near future.

Review: 8 reasons why Yahoo rules Japan

My posting about the Top 50 web sites in Japan featured a winner: Yahoo Japan.

The company not only dominates Internet search in Japan (approx. 65% market share) but the Internet as a whole, offering a wide range of services. Corporate business figures are not too shabby either. From April to September this year for example, Yahoo Japan's profits equaled 29,27 billion Yen (254 million USD/178 million Euros)!



Here are 8 reasons for Yahoo Japan's success so far:

1) Head Start
Yahoo started Internet operations in Japan in 1996 when Google didn't even exist.

2) Tie-up with Japanese communications powerhouse Softbank
Yahoo Japan didn't just translate its service but localized it in cooperation with a strong Japanese joint venture partner (telecommunications giant Softbank). Actually, Softbank owns 41% of Yahoo Japan while Yahoo Inc. only owns 33% of shares. In my view, Yahoo Japan is in fact a very, very Japanese company...

3) Adoption to Japanese tastes
Yahoo Japan's top page is cluttered (see the screen shot below for a translated version). Google Japan's top page is as minimalistic as its non-Japanese versions which is a good thing in my view. But Yahoo's design is appealing to Japanese people. Users here are used to see a lot of links and text boxes on a top page. In a way, they expect it to be like that!

4) Wildly successful auction site
"Ebay? What's that?" would be the answer the average Japanese Joe would give if asked if they knew a company of that name. There is actually no Ebay Japan (here is why they failed 5 years ago). Yahoo's auction service is absolutely dominant in Japan and makes a LOT of money. There are over 15 million items on sale! They have a popular mobile version, too.

5) Comprehensive online service lineup
While more or less buried in the West, Yahoo Japan is living proof the "Internet portal idea" is very much alive, at least here in Japan. I personally regularly use Yahoo to look up the TV program, weather, news, train information and much more. See the picture below for a translation of the Yahoo Japan top page.

Picture: Top page Yahoo Japan (click to enlarge). This is the brushed-up version which is available after January 1st, 2008.


Let me break down the particularly important "CATEGORIES" column on the right (from top to bottom).

The first part is entitled "Yahoo!サービス" (Yahoo services) and covers 17 items:
Shopping, auctions, travel, news, weather, sports, map, traffic info, real estate, eating out, cars, BBS, blogging, beauty and dating.

The second part (お気に入り, meaning bookmarks) consists of five items:
Movies, music, games, astrology and videos.

The third part is named "ピックアップ" (Pick up) and currently features selected music only.

6) Investments in Japan
Yahoo Japan has a history of investing in the Japanese market signaling serious commitment to the domestic market. The company employs nearly 2.700 people in this country. Its HQ is located in Tokyo's poshest office complex, Roppongi Midtown in Tokyo.

Yahoo is also Japan's biggest broadband operator (Yahoo BB)!

7) Cooperations with Japanese companies
I already blogged about Yahoo Japan's plans to bring the web to HD-TVs (in cooperation with Sharp). The investment in Japanese web company GMO Internet (13.5 million USD two weeks ago) is a second and more recent example for Yahoo's integration in this country's economy.

8) Innovations
One recent example for a new service from Yahoo Japan is "Yahoo Videocast" which is not available in other countries. This subsite makes it possible for users to upload and watch videos from their mobile phones and on the web. Yahoo claims videos can be displayed on any handset. Not a huge thing but it shows they put some resources into fighting Youtube and Nico Nico Doga, at least here in Japan.

Moreover, Yahoo Japan and Ebay America are cooperating now so that Japanese people and Ebay users can trade internationally (background). This new service is called Sekaimon ("door to the world").

Did I forget anything?

Google aims at conquering Japan through the backdoor

Google is the world's No. 1 search engine but here in Japan, Yahoo is the undisputed king - not only for Internet search but also as a very comprehensive portal.



Today it came to light Google Japan will cooperate with Japan's leading telecommunications company and cell phone carrier NTT Docomo. In fact, NTT Docomo is the world's biggest mobile communications company. In Japan, the wireless market is clearly dominated by DoCoMo. The company served more customers in 2006 (51.1 million) than KDDI (25.4 million) and Softbank Mobile (15.2 million) combined!



So Google Japan's choice is not too bad and the Shibuya-based subsidiary surely has the pocket money to get a deal like that financed. The Tokyo Stock Exchange liked Docomo's idea. Docomo shares rose to a five-months high today!

In detail, Docomo plans to integrate Google's search engine, scheduling service, Gmail and other Google functions into its i-mode mobile Internet services.

That's not all. NTT Docomo is part of the Open Hand Set Alliance of Google's Android open source platform for the development of software for handsets. While the integration of Google services into i-mode is scheduled for this spring, Docomo aims at introducing a mobile phone based on Android in the second half of 2008. For example, joint development in the area of localized store information and navigation on mobile phones is planned.

Yahoo Japan is dominant also on handsets
i-mode users can already access Google search with their handsets. My guess is that Google will be featured more prominently on and in Docomo's handsets. For example, my Japanese handset features a "Y!" button with "Y" standing for Yahoo. After pressing it, I am connected to the Internet: The starting page is Yahoo Japan...

So maybe one day there will be a "G" button on Japanese phones and Google can finally conquer this difficult market here ;)

The latest Japanese Internet news and business briefs

Some noteworty (business) news from the Japanese Internet scene in the last days:

1)
The Japanese equivalent to NASDAQ, the JASDAQ opened its NEO market last week. Click here for the English press release (PDF).

NEO is aimed at start-ups featuring cutting-edge technology only. JASDAQ also accepts companies operating at a loss if they think the technology behind them is appropriate.

Ubiquitous Corp., a maker of communications software for Nintendo's wildly successful portable game system DS (amongst others), is the first company listed on NEO. Their shares soared from 100,000 Yen to 400,000 Yen on the first day!

2)
Skype collaborates with Excite Japan (website is Japanese only). Yes, Excite is very much alive over here!

Skype has 5 million users in Japan and is apparently not happy with that number. By this cobranding deal, the company said on Tuesday this week it hopes to double the number of customers.

Skype worked with Japanese web heavyweight Livedoor (Japanese only) and chose Excite as their next Japanese partner because of their impressive user base of 24 million (!).

3)
Disney will launch cell phone services in Japan beginning spring 2008. Although Japan has its own anime and manga culture, Disney is VERY popular over here. The company will lease telecommunications networks from Softbank Mobile which is the No. 3 in the Japanese cell phone market.

Moreover, Disney said it wants to design their own handsets based on their popular characters. Also, Disney cartoons will be available for download exclusively for subscribers. The company seems to be bullish about Japan: It hopes to attract 1 million subscribers!

3G cell phones are standard in Japan but not in the US. This reason was cited by Disney when the company gave up similar plans in their home country in September this year.

Club Penguin-Scale Acquisition in Japan

Livedoor (Japanese only), THE Internet company in Japan, is set to sell its shares of its software sales subsidiary Yayoi (Japanese only) later this month to MBK, a quite famous private equity fund active in Japan, China and South Korea.

MBK is pumping a whopping 71 billion Yen into the deal. That is 624 million USD! MBK will borrow a portion of the sum from Swiss financial powerhouse UBS.

Livedoor bought Yayoi in 2004 for 20 billion Yen (158 million USD) - not a bad deal, indeed. Previously, Yayoi was a Japanese subsidiary of American accounting software giant Intuit (known particularly for Quicken). Insiders think it is likely Yayoi will go public in the near future.

Virtual world Club Penguin was sold to Disney last month for an estimated 700 million USD, creating a huge buzz not only in the Internet business world.

With Livedoor receiving roughly 90% of this huge sum, you can see a) the Japanese web business is not about peanuts at all and b) outside this country almost no one notices deals even of this size.