Xiaomi announced a new smartphone for Japan, the Redmi Note 9T for sale exclusively through SoftBank. The model is the first Xiaomi device in Japan with Mobile FeliCa support and like Huawei Mobile FeliCa support is limited to carrier models only. There was some interesting Twitter discussion between Junya Suzuki and Junya Ishino regarding the latter’s article which had some Redmi Note 9T FeliCa details.
For the Redmi Note 9T Japan model Xiaomi bought a FeliCa chip and modified the 9T antenna and body design to accommodate it. A customized model just for Japan. Xiaomi did not go the custom embedded Secure Element route like Apple, Samsung and Huawei but saw a business opportunity with an exclusive SoftBank deal to recoup development costs and make money. The low price makes Redmi Note 9T one of the cheapest Osaifu Keitai Android devices sold in Japan. It also illustrates the piecemeal Android hardware business approach and why Global NFC is still pipe dream for Android users.
Disclaimer 1: As many regular readers know, I am not a QR Code fan. It’s not the technology so much as the assumption that the central processing model and constant network connections solve everything. When I went to Starbucks today I tried paying with the Starbucks app bar code and got a nice little rude reminder that when one link fails, the whole QR/bar code chain crashes. The WiFi at that particular Starbucks store is not robust and ends up jamming the smartphone 4G pipe because the device thinks there is a good WiFi connection. After 2 attempts without getting a bar code load, the staffer said, “turn off the WiFi.” I gave up and used Apple Pay Suica instead. Done.
Disclaimer 2: As many regular readers may not know, I am not a SoftBank fan. This goes back to the time when SoftBank bought Ziff Davis of which the Seybold Report was part of. SoftBank quickly destroyed the Ziff Davis business by sucking it dry and selling off the zombie for a good price before anyone realized it was dead. I wrote for the Seybold Report at the time. What had been a tightly run ship collapsed into chaos because the parent company starved the subsidiary groups and people didn’t get paid. Later on when I wrote reports for Off The Record Research, I regularly visited a Yahoo Japan source who complained that they could not create good iPhone apps because SoftBank constantly sucked the budgets dry. Later on he quietly told me he could not complain anymore because all the conference rooms were wired and everything was recorded. SoftBank is that kind of company. To me all they ever really do is play one big never ending shell game.
There will be lots of news and discussion in the weeks to follow but it’s important to remember a few essential points.
One: Line Pay and PayPay operations are running in the red, some people estimate PayPay could never turn a profit with its current business model.
Two: neither SoftBank/Yahoo Japan nor NAVER/Line Pay own a real bank. At some point in the cashless payments process, real cash has to change hands. Payment processors without real bank operations have to live with real bank transaction rules and fees, real banks will always have the upper hand. Having a real bank for example, puts Rakuten in a much stronger position than SoftBank. Yahoo Japan does own half of Japan Net Bank but this is a co-venture and Yahoo Japan only runs the internet service side, the other half, the real bank transaction half is owned and run by SMBC. In this arrangement SMBC is calling the shots.
As for me, I have been hanging out on the Girls Channel where Japanese women let down their hair and diss. Japanese women make, or break, products in Japan, especially everything Keitai, not men. Comments on the Line Pay and PayPay merger are very interesting and cutting. They range from “Mercari Pay is disappearing next” to “Hello Rakuten, goodbye Hagebank,” (a diss of bald Masayoshi Son, but also a double entendre for the highly leveraged SoftBank going bust). Day after day it reads like the bloom is off the Line Pay Pay Pay rose and Japanese women who created the first Keitai boom and have money now, are ready to move on. They are in it for the campaigns but not really in it. I’m going to keep hanging out with the girls. It’s a lot more fun and informative than reading the news, and faster too.
The writing has been on the wall for over a year now, and sluggish iPhone XR sales only confirmed the fact, that iPhone carrier subsidies in Japan which have defined the industry since 2008, were dying. Today’s Docomo announcement unveiled new plans that discard all the complexity of previous plans like ‘FOMA’, ‘Xi’ and ‘docomo with’ all of which disappear on May 31, with 2 simple choices:
Giga-Ho: ¥4,980 a month for 30GB
Giga-Lite: ¥1,980 a month for 1GB with other date tiers available, 3GB@3,980, 5GB@4,980, 7GB@5,980
Docomo customers can apply for the plans from the Docomo web site or a Docomo shop starting May 22, service starts June 1. There are many configurations and new options available, from home internet bundle discounts to new family data sharing. And it looks like tethering fees are gone. Depending on the configuration savings can be as large as 40% compared to previous plans.
At first glance customers will still need to do some homework via the online cost simulator (something that Japanese love to do), or visit the nearest Docomo shop to find the configuration that fits your needs while giving the best discount. This is just part 1 of the continuing saga of data plans without subsidies. At the end of the announcement Docomo said stay tuned for more. KDDI au and SoftBank should be announcing new plans soon, and we’ll get Docomo part 2 when the new iPhones come out this fall.
It looks like Apple is working with Japanese carriers to drum up iPhone XR sales. Docomo already issued a limited iPhone XR discount campaign in December aimed mainly at carrier switchers. Today’s SoftBank announcement of the “iPhone XR Happy Price Campaign” that launches on January 30 appears to be a broader ¥10,800 discount for customers who purchase a iPhone XR with a 2 year contract. However the campaign page says nothing about upgrades. I guess the devil will be in the details.
As Tim Cook mentioned in his letter to investors, carrier subsidies are going away in other markets and Japan as well. Docomo, KDDI au and SoftBank are in a transition away from subsides under pressure from the Japanese Government to get consumer monthly data and voice costs down.
SoftBank’s network meltdown was only the start of QR Code PayPay troubles. The 100 Million Yen giveaway startup campaign that was supposed to run December 4~March 31 was suddenly and unceremoniously shutdown at 11:59 pm December 13. The official excuse was that 100 million yen had been given away, but then Japanese tweets started appearing complaining of credit card holders charged for PayPay purchased items that they did not purchase. There were also reports that store staff were not checking customer IDs which they are supposed to do with PayPay purchases over 30,000 JPY. Last but not least once you register a PayPay account, there is no way to delete it.
2 days later top Japanese tech journalists Tsutsumu Ishikawa and Junya Suzuki started to pick up the story on Twitter. PayPay PR answers to Suzuki san’s questions were particularly damning: PayPay apparently allowed unlimited attempts to register credit card numbers and security code numbers, reported credit card fraud cases are “in the double digits” but PayPay does not have a handle on the problem and requests that anybody with suspicious credit card PayPay charges to contact the company (good luck with the user unfriendly ‘Help’ page). Yomiuri later reported that card frauders apparently used stolen card identities to register PayPay accounts with unlimited security code attempts. PayPay PR says this security lapse has been fixed.
Ishikawa san summed it up nicely: somehow it’s so ‘SoftBank’ that the very campaign meant to kick start a QR Code payment boon in Japan ends up destroying the opportunity to do so.