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Internet, Mobile, IT and industry in Korea

Interview Benjamin Joffe, CEO of +8* and founder of Mobile Monday in Beijing

Benjamin Joffe is the CEO of +8*, a Beijing-based strategic consultancy focused on Internet and mobile innovation in Asia. Clients include Microsoft, Deutsche Telekom, China Mobile, Sands Capital and Adidas. Benjamin is also the founder of Mobile Monday in Beijing.

Do you think Facebook, Google and other big western Internet players will eventually gain more market shares in Korea?

No… A little bit, since Facebook does not have a local equivalent (Cyworld’s DNA and target population is quite different). Google possibly a bit as they hired some pretty good guy, including my friend Kim Changwon with their acquisition of TNC. However, Naver = search in the mind of Korean users, and Google looks like an old toy for kids compared to Naver’s search.

What is the main model of monetization for social networks on mobile in Korea and Japan?

Cyworld monetizes via virtual goods and advertising. Mixi in Japan uses mostly advertising. Mobile Game Town and Gree in Japan monetize on mobile and mostly via digital goods, associated with in-browser mobile Flash games.

Do you think there are limits to the advertising based model on mobile in general?

Yes. Advertising does not scale rapidly, has very little network effects. Essentially, advertising is a B2B play, while virtual goods is B2C.
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Are there still barriers to the development of mobile Internet in China?

Yes, huge ones. The main barrier is that China Mobile makes life hard for content providers, who have to find ways to generate revenues outside of the operator’s influence. Innovation comes from constraints, so some companies have already found interesting service concepts and revenue models, but overall life is tough. Another barrier is the absence of good flat-rate data plans, which was one of the main catalysts for the market growth in Japan once 3G was introduced. Last, 3G is just starting, at about the same level the Japanese market was at the end of 2001 and other advanced markets were in 2005, so there is still a long way to go.
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What are the big lessons to be learnt by European mobile players from the Asian experience to build a better ecosystem for mobile Internet?

Europeans invented SMS+, which was a good idea to monetize content. Now SMS is slowing them down, as they cannot get rid of it since most of their profit comes from it. Japan has had push email since 1999 and messaging is now a very small percentage of their data revenue (data ARPU is about 30%). Basically, improving on SMS instead of going all-IP is like improving on candle technologies instead of using electricity. In terms of ecosystems, Japan has done an amazing job for which the closest model is Apple’s iPhone with its application store + revenue share on data. I think most telcos worldwide did not understand what is an ecosystem and saw that as “suppliers” or “contractors” and tried to squeeze content providers instead of helping them thrive. I think their vision is unlikely to change and that the market will simply pass them by.
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When it comes to the revenues who are the biggest earners in Asia : telcos, manufacturers, Internet portals?

Telcos make billions in revenues and profits. Manufacturers have low margins and generally struggle. Internet portals make hundreds of millions and have decent margins. The big winners are the online game companies, the social networks and some e-commerce players. This is going to continue.
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Finally, what are the main innovations and trends in the mobile area for 2009 according to you?

The iPhone raised the bar for all mobile phone manufacturers, so one big trend is the touch screen and wide screen. Another trend is GPS – Nokia is especially keen on that. I don’t expect much technical innovations aside from displays and multi-touch, but the spread of services (most of them already successful in Japan) such as mobile music, mobile advertising, mobile commerce, mobile social networks, possibly mobile books (already a hit in Japan), casual free games as well. Mobile video should be more and more popular but the revenue models are still very unclear. Personally, I find the most interesting is the combination of SNS with location and gaming – a field I worked in back in 2003. Combined with GPS, electronic compass and databases, you can also “point” at things and receive information on them. This will lead to “pervasive” things – somewhat “seeing the Matrix”. Later you’ll be able to point your phone at people or just “detect” them around you, and get info about them (with more or less disclosure). This will change our lives and is not even technically difficult, this is more a business model and service design problem.

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