I don’t put much faith in market data from companies selling research to sell their other ‘services’. If you ever observed how the backend research process works, you wouldn’t either. Nevertheless it’s fun to read and compare signposts along the never ending journey. MM Research Institute (MMRI) issued a PR tease for their Japanese smartphone marketshare report covering results for the first half of the Japanese 2021 fiscal year (April~September).
The Keitai Watch site paid for the full report and posted some numbers for the various MMRI breakdowns.
Marketshare ranking (all mobile phones)
FCNT (Fujitsu): 6.7
The category breakdowns show some interesting new developments
Marketshare ranking (smartphones only)
FCNT (Fujitsu): 5.9
The story here is that iPhone was selling well leading up to the iPhone 13 rollout, with the addition of Rakuten Mobile offering deeply discounted iPhone 12 and iPhone SE that could be bought with Rakuten Points certainly helping the most, once again demonstrating the power of the Rakuten Economic Zone.
Marketshare ranking (non-carrier SIM-Free only)
The non-carrier SIM-Free ranking interests me most. OPPO and XIAOMI released some interesting low end FeliCa Osaifu Keitai capable models recently. The surprisingly strong showing tells me that the market wants inexpensive SIM-Free Osaifu Keitai models. If there was a SIM-Free FeliCa/Osaifu Keitai ranking it would probably be Apple, OPPO and XIAOMI. OPPO wins because they deliver 5G and FeliCa for a very low price.
I always like Sachiko Watatani’s articles, she always has practical insights other journalists seem to miss. Her quick review of Apple Pay WAON and Apple Pay nanaco is no exception. As a long time user of WAON and nanaco on Osaifu Keitai, both feature phone and Android, the additions of WAON and nanaco to the Apple Pay Japan e-Money lineup completes it enough for her to migrate to iPhone for daily use. On the face of it both cards are almost exactly alike, they work the same and have the same ¥50,000 balance limit. Wanatani san explains the differences.
Transferring a standard rainbow nanaco card and creating a new WAON in Wallet is a breeze. Creating WAON requires adding a minimum balance of ¥1,000, however one of the nice things about doing it with WAON app is you can create a ¥0 balance card, same for nanaco app.
Yes (standard rainbow cards)
Yes (Blue, GG, YuYu cards)
Yes (Blue only)
Yes (standard rainbow card)
Yes (Blue and custom region cards)
WAON has the most options and no sign-up Wallet creation. A unique WAON app feature is custom region WAON cards, AEON donates part of the transaction purchase to the selected region of the card. There are 159 varieties of custom region WAON. The unique feature of nanaco app is card migration from Android to iPhone. It’s a oneway migration. Watatani san makes the same observation I did yesterday that a nice feature of nanaco card in Wallet is that is displays both balance and points saving users a trip to an outside app.
The big feature for both cards is the Apple Pay recharge backend. VISA brand is the odd man out, again, but mastercard, JCB and American Express credit/debit cards are all good. Users can also set auto-charge options using Seven Card in nanaco app and AEON cards in WAON app. Watatani san is the only review to mention the very unique feature of Apple Pay WAON: parents can setup a WAON card using the Apple Watch family setup option and recharge a child’s WAON card remotely via Messages.
Don’t you love how big organizations play fast and loose with big concepts like Host Card Emulation? HCE was SimplyTapp created technology that Google incorporated into Android Pay in 2013 sowing endless nonsense and confused debate about ‘open’ vs ‘closed’ NFC, aka the secure element wars. Back then industry pundits said:
The significance of HCE is that it frees NFC from dependence on the secure element, which has largely been controlled by mobile carriers. Banks, merchants, and wallet developers must pay fees for access to that chip. Yeager is counting on HCE to scare up interest among issuers and kickstart NFC, which has been stuck in neutral for years.
SimplyTapp, the Power Behind Google’s NFC Workaround, Aims at Mobile Banking
Let’s make this simple as possible and list the industry forces in the secure element wars:
SIM Secure Element (SE) used by the mobile carriers
Embedded Secure Element (eSE) used by smartphone manufacturer digital wallet platforms (Apple Pay, Samsung Pay, Huawei Pay that use customized eSE and truly control it, off the shelf all-in-one NFC chipset users like Pixel and Xiaomi not so much)
Host Card Emulation (HCE) is a secure element in the cloud strategy used by banks and card issuers on network connected Android devices using their own apps that bypass #1 and #2.
Carriers, smartphone manufacturers, banks•card issuers. Carriers lost out long ago. A classic case would be NTT docomo who built the worlds first major digital wallet platform, Osaifu Keitai, using Sony Mobile FeliCa technology back in 2004. Osaifu Keitai eventually made it to the other major Japanese carriers (KDDI au and SoftBank) but the carriers made the mistake of locking and limiting Osaifu Keitai service to SIM contracts and their own branded handsets.
More than anything else, carriers milking Osaifu Keitai as an expensive exclusive SIM contract option instead of making it a SIM free standard for everybody, was the reason why Osaifu Keitai growth stalled. The 2016 launch of Apple Pay in Japan circumvented the entire SIM SE mess with its own eSE, and gave Mobile FeliCa the second chance it’s enjoying now.
Smart Navigo power play Smart Navigo is the Île-de-France Mobilités (IDFM) Paris region transit card for mobile on Galaxy devices, and Android smartphones with Orange SIM cards. France was an early innovator of NFC on mobile phones but it did not lead to early mobile transit adoption: Smart Navigo launched in September 2019.
What LeParisien was reporting was that IDFM suddenly ended their partnership with Orange: “As long as you do not change your SIM card, the service is operational: you can continue to buy tickets and validate them with your phone,” If customers change their Orange SIM card, Smart Navigo no longer works.
Hello…it’s the end of 2021, the secure element wars ended years ago. Perhaps IDFM didn’t get the message. Or maybe they want to turn back the clock and fight the battle again. The French Apple news site iGeneration reports:
A new solution is scheduled for deployment in mid-2022. It will be open to all Android smartphones, without operator constraints, thanks to HCE (Host Card Emulation) technology that emulates cards in a mobile application, allowing it to free itself from NFC constraints. HCE was also partly used for the SIM card developed by the start-up Wizway on behalf of Orange.
It’s important to remember that one problem with the term HCE is that people and companies use it very loosely. All secure element methods have to load payment credentials from the cloud at some point. The big difference is that eSE and SIM SE have secure physical areas to store those payment credentials on the device, HCE does not. Far too many people assume that any kind of loading from the cloud = HCE, it does not. HCE = storing on the cloud.
With HCE, critical payment credentials are stored in a secure shared repository (the issuer data center or private cloud) rather than on the phone. Limited use credentials are delivered to the phone in advance to enable contactless transactions to take place.
This approach eliminates the need for Trusted Service Managers (TSMs) and shifts control back to the banks. However, it brings with it a different set of security and risk challenges…
A centralized service to store many millions of payment credentials or create one-time use credentials on demand creates an obvious point of attack. Although banks have issued cards for years, those systems have largely been offline and have not requiring round-the-cloud interaction with the payment token (in this case a plastic card). HCE requires these services to be online and accessible in real-time as part of individual payment transactions. Failure to protect these service platforms places the issuer at considerable risk of fraud…
All mobile payments schemes are more complex than traditional card payments, yet smart phone user expectations are extremely high:
•Poor mobile network coverage can make HCE services inaccessible. •Complex authentication schemes lead to errors. •Software or hardware incompatibility can stop transactions.
What is Host Card Emulation (HCE)?
The two key takeaways are: 1) HCE shifts control back to banks and card issuers, 2) No network = no HCE. Think of HCE as the NCF equivalent of QR Code payment services like AliPay and PayPay that also send payment credentials to the app, just in a different format.
Apple Pay has succeeded because it delivers on those high smartphone user expectations better than any other digital wallet out there. That’s why JR East needed to get Suica on Apple Pay to take Mobile Suica to the next level combining ease of use with growth, which is exactly what happened.
IDFM unceremoniously dumping Orange and going all in with HCE says to me that IDFM wants full control and nothing to do with carrier SIM SE, smartphone manufacture eSE, nor pay transaction fees to anybody… it’s our app or nothing.
We won’t know the full story until the HCE Android service starts sometime in 2022, presumably after pay-as-you-go functionality is fully operational and ready on all exit gates. IDFM has been in talks with Apple ever since Smart Navigo was first announced in 2017. At that time they said:
“Unfortunately, it won’t be possible for iPhone owners to use the service since Apple does not yet allow third parties to access the NFC secure element in their phones. However, we are happy to explore the possibilities with Apple to offer the same service to all Paris public transport users.
One last thing: smart wearables won’t work with a HCE only Smart Navigo strategy. This is the lesson that Fitbit and Garmin have learned well from Apple Watch for deploying Mobile Suica on their devices: keep things simple and on the device for local processing without a network connection. This is what makes the Suica support coming to WearOS so interesting, it might succeed in beating Android as the first non-Apple global NFC device.
As for Smart Navigo, indeed a step forward, a step back. The IDFM journey to mobile ticketing for everybody is not a long quiet river.
This concludes the final installment Contactless Payment Turf Wars. It has been an unexpectedly longer series than planned. I hope people enjoyed reading them as much as I enjoyed writing them. Thanks always and happy transits!
Have you ever noticed that ramen shops in Japan kinda stick together? If there is one, there is another one close by, maybe two or three. And not just ramen shops, it can be Japanese sweets, eateries, anything. This might seem strange at first but there is a well known traditional Japanese business sense behind it. Two is better than one because more choices drives more foot traffic and interest. ‘Hey lets go to the local ramen shop district and get something to eat.’ The common interest is why store rivals tolerate each other because the increased customer interest and traffic drives business for everybody. All boats rise together.
I was reminded of this when a Japanese friend scolded me for constantly putting down code payments like PayPay when the speed and ease of Suica is so superior. “Why is it westerners always see things as black and white? Lots of choices drives interest right?” He was right of course. Coming from a western mindset it’s too easy to fall into the same old double standard of saying more choice is better on one hand, while on the other insisting that we should only use one thing. The old one size fits all, my choices are the best for everyone.
I also think there’s another, much larger and unacknowledged cultural difference regarding the concept of service: the Japanese mind tends to think of good service as being offered many options, while the western mind tends to think of good service as fulfilling one’s personal needs and wants of the moment. It may seem like a small difference but it’s a completely different way of seeing things. It’s also a good reminder that what’s convenient to our person is not necessarily convenient to other people.
One size doesn’t fit all. What’s the point of having all that different hardware when everybody’s forced to use the same software? Lots of choices for lots of people works better in the end…it drives interest in mobile payments when there are still a lot of people in Japan who have yes to use anything but plastic or cash. Variety invites and lifts all boats.
The air in Sado is full of fading history, a history that is never far away for the people born and raised there. Their history is like an acquaintance, a somewhat distant cousin or neighbor and the interconnectedness is everywhere: the proprietress of the inn where you happen to stay is a relative of the wife of the Konponji Resident Priest, and so on.
They take great pride in their history, always eager to tell it. Not in the boring book way but the living oral way of stories passed down through generations. ‘Did you know that Mitsui got its real start as a Zaibatsu because of Sado?’ they will tell you casually. They don’t mince words and have that down to earth directness usually found in people who live by the sea. So when I told my travel partner and guide, a Sado native, that I wanted to visit Zuisenji in the Aikawa temple district on the way to Sado Gold Mine, he asked a question echoed by every Sado native we met along the way, “Why on earth do you want to go there?”
He phoned his mother who said, “Don’t go if you don’t have to, and only go in the morning, don’t be caught late” The elderly Okaimisan of the inn where I stayed had a sharp mind full of current information for the whole island, “All the resident priests fled those temples around there long ago for better places and only show up when they need to.”
Aikawa was a castle town built by the Tokugawa Shogun to operate the Sado gold mine. One interesting fact you can learn by going there was that the Aikawa population of the Edo era was more than 50,000. To understand the significance it helps to know that the entire population of Sado in 1970 was about 90,000, today it is just below 60,000. If you go there it’s mind boggling to imagine the current population of Sado crammed into such a small moutainous area. That’s how important the gold mine operation was. That’s why so many temples were built there.
I have driven many narrow and dangerous mountain roads in Japan but nothing prepared me for the road to Zuisenji. A crooked little side road away from the main temple area that detoured through a steep tiny valley it was like going down a rabbit hole into another world. A road so narrow that the only place for residents to hang laundry was along the road inches away from passing cars.
I parked the rental car in a tiny abandoned field near a side road turn off for Zuisenji and walked a last steep climb. The air was unpleasant and full of flies. We passed a Jodo Shinshu temple. Directly across the road from the temple front gate was a small alcove carved into the earthen mountain wall containing what appeared to be Jizo. I almost took a picture but stopped. There were moldy old half rotten Japanese dolls crammed into it along with the Jizo.
We reached Zuisenji but nobody was there, just a dusty small car with flat tires in the parking space. I started taking pictures and noticed my travel partner looked ill and sweaty. “Go wait in the car” I said and gave him the key. I took pictures in the unpleasant gloomy air with buzzing bugs, surrounded by strangely dark forest then walked back down to the car passing the rotten doll temple.
“Are you okay?”
“I was upset by the voices of those old ladies talking in the temple.” The doll one.
“What do you mean, it was empty.”
We drove on to the gold mine and he went to wash out his mouth and nose. Later on he explained.
“That area is too narrow for proper sewers. Did you see the bit of broken pottery in the earthen walls along the temple road?” I had. “They mixed human manure with dirt and pottery shards as a way of getting rid of it. That was the smell.” A relic of an older poorer part of Sado history that had no place in these times, a sign that somebody doesn’t want to spend money on proper upkeep.
The next day he took me to Myosenji and Sesonji and was saddened by the look of borderline neglect. The temples felt like museums without a life of their own. “The Sesonji head priest taught calligraphy to school children, it was such a lively place back in my school days.” His sentiment was echoed by the sharp old proprietress of Minamikan inn who laughed and said,
“We always love to have Nichiren Shu followers but they leave Sado feeling a little let down after visiting Myosenji and Myoshoji. Nobody’s really lives there to greet and show them around. So they don’t came back. Nichiren Shu should spend some money on refurbishing temples instead of those big statues and anniversary ceremonies.”
There was nothing to say, all I could do was reflect on the fact that ‘saying’ you honor Nichiren Shonin and ‘doing’ honor to Nichiren Shonin are two completely different things. The people in Sado have a saying, Sado is a miniature of Tokyo and Japan. What’s happening to the temples in Sado will happen in Tokyo. The honest words of Sado bite deep.
Unknown Histories of Nichiren Shu Temples in Sado: Zuisenji Temple
By Rev. Sensho Komukai
The Sado Gold Mine began operations at the start of the 17th century. The gold extracted from this mine helped build up the finances of the Edo Shogunate. As production increased by a remarkable amount, more workers in the excavated pit were brought in, including miners who dug into the earth, putters who hauled ore from the mine, timberers who built supports and other frameworks, and blacksmiths who forged metal tools. Water drainage was the hardest labor with low pay and long hours. It required physical strength to remove the water collected in mines. The deeper a tunnel to a gold vein, the more water was there. Workers were coerced into hauling up 9 liters of water, 9 kg or about 20 pounds, with a wooden bucket in 15 seconds. No one wanted to take on the hard work.
Beginning around 1772, repeated natural disasters caused a plague and a famine throughout Japan. Many homeless people came to the city of Edo from various local areas where there was no food or work. To improve public safety and to keep an important source of revenue, the shogunate government decided in 1777 to send homeless to Sado Gold Mine as drainage laborers. Those laborers were exploited without enough rest or wages. They rarely survived for more than three years.
Those who could not stand the working conditions tried to escape, but most of them were captured and thrown into jail with harsh physical punishments or even sentenced to death. A total of 1,874 homeless were sent to Sado Gold Mine. Most died on the island.
Their ashes were buried in the graveyard of Kakushoji Temple. The temple is now abandoned, but their tombs still stand in the same place. The drainage laborers were only permitted to go out once a year. On this free day, they would pay a visit to the grave for their deceased fellow workers to offer flowers and go to the beach to wash off the dirt from their work. Social restrictions were relaxed for the Obon dance. Everyone from high officials to low laborers danced together with the distinctive Sado straw conical hats that hid everybody’s face.
At the foot of the gold mine is Zuisenji Temple, where a memorial service is held for the repose of the deceased drainage laborers on the third Sunday of April every year. Ministers and supporters walk in procession while chanting Namu Myoho Renge Kyo around the site of the mine, the gate to a tunnel, and the grave of the drainage laborers. Finally they come to Zuisenji Temple to chant sutras and offer prayers to their souls. Rev. Renjo Aoki, resident minister of Zuisenji Temple, tells us, “Drawing water is the most important work in a gold mine. We owe the prosperity of Sado Island greatly to those drainage laborers. We must appreciate the service of their labor. We must not forget their suffering.”
In 1989, the operations of Sado Gold Mine were discontinued, since so little gold could still be found.