Android to the rescue

If you’re under 20 years old and not Japanese you might be surprised that Japan actually makes mobile phones.

Today only Sony Ericsson, half-owned by the Japanese electronics firm, sells phones in any volume outside the Japan market.

The disappearance of Japanese handset firms from the global stage is a business study on “how not to succeed” (and probably says a lot about the country’s wider economic retreat).

One reason has been the industry’s inability to refresh itself. Whereas western handset brands like Nortel, Alcatel and Siemens have disappeared or were sold off, only in the last 18 months have the Japanese players consolidated.

The other is because they decided to focus on the local market, building handsets to specs set by domestic operators - NTT DoCoMo in particular – perhaps in the belief that the rest of the world would follow.

In any case, the days of the narrow focus are over. Japanese handset guys are putting their faith in Android, the broadest church of them all.

Sharp, NEC, Kyocera and Sony Ericsson are all betting big on Android, the NT Times reports, noting that one of the shocks was the smash success of the iPhone, gaining 70% market share in a territory where foreign brands find it tough to get traction.

So Sharp is doing things it’s never done before, like opening up its lab and working with developers, and trying to focus on customers, not operators.

The combination of Android and Japanese hardware smarts is a natural one and, who knows, might propel one of the Japanese firms into the handset top ranks again.

But Gerhard Fasol, chief executive of Tokyo consultancy Eurotechnology, reminds that the Japanese firms are merely “soldiers in the Google army, with Google as king.”

Which also reminds that the Japanese firms are also missed recruiting targets for Nokia-Microsoft, who are well short of an army.

Spotlight again falls on Baidu's MP3 habit

By placing Baidu on its “notorious markets” list for providing links to unauthorised MP3 files, the US Trade Representative has reopened an unwelcome issue for the Chinese search champion.

E-commerce site Alibaba, The Pirate Bay, and clones of Russia’s now-closed Allofmp3 are also on the list, which names and shames alleged pirates with the aim of encouraging local authorities to take action (though it is also a handy guide for those who wish to buy counterfeit goods).

It is telling that while Alibaba acknowledged the move and said it was working “with brand owners in protecting their intellectual property rights,” the Baidu isn’t touching it.

Early last year Baidu won a copyright infringement case filed in Beijing by the global music group IFPI on behalf of the big four labels – reportedly because the actual hosts of the MP3 files could not be identified.

However, Yahoo Music China, which had also provided deep links to MP3 files, lost a similar case in 2007.

While it is unfair to expect a search engine to be responsible for the content that it links to, there are two points to made.

First, Baidu is more than just a passive provider of search results – it has built a dedicated search page that catalogues and sorts MP3 files and hosts banner ads. It is hard to see how it can argue that it was a neutral third party.

Second, it is a competitive advantage over foreign search rivals. For legal and political reasons, it’s not a business that Bing and Google can get into.

Baidu clearly values its MP3 business. But as one of China’s top global brands, it also values its international reputation. We'll see how long the former remains more important.



Top 5 tips for Huawei in the US

Huawei is rolling the dice on its US operations by inviting authorities to see if it actually is a national security risk.

And why not?  It’s been stymied at every turn because of (take your pick) its secret PLA links/the combined effect of US paranoia and lobbying by competitors.

Having followed the company for a dozen years, I'm offering these humble suggestionsfor how the Huawei guys can win friends and influence American people (or at least not get thrown off every network tender):

1. Cut to the chase. Who actually are your shareholders? Your website says the company union owns 98.58% and Ren Zhengfei 1.42%. Have that audited and confirmed, then shout it from the rooftops.

2. Why even mention the Cisco patent case? Sure, Cisco dropped it, but you did stop selling the Quidway routers that were alleged to be full of Cisco code. 

3. Get an American chairman and CEO to front the company. It can only help. And it shows you trust at least two locals.

4. Foreign firms in China get beaten up for just treating it as a place to make money. Same everywhere. It wouldn’t hurt to sponsor a junior baseball team, or donate telemedicine gear to an inner-city hospital. You’ve got 1,000 staff in the US – if they’re not already doing stuff in the community, I’m sure they’d love to.

5. If there’s a common theme here, it’s about how you talk to the rest of the world. Make your US website more than just a copy of the Chinese version; there’s only so much you can tell us about the single RAN solution. Talk to Americans the way they’re used to being talked to (likewise the Brazilians, the Russians, Algerians, etc.).  Put some human beings into it, and make yourself sound less like some China-bots. 

If this doesn't work, you'll at least have shown up the Americans as two-faced, red-baiting protectionists.  And they'll fall further down the broadband charts with that expensive European kit.

Huawei invites feds to investigate it

Huawei has taken the extraordinary step inviting an investigation by the US government to clear up “any concerns it may have” about the Chinese telecom vendor.

The privately-held firm said claims that it was closely connected to the PLA and threatened US national security “have had a significant and negative impact on our business activity.”

The appeal, in an open letter published on its website, follows Huawei’s ham-fisted attempt 12 days ago to force President Obama to make a decision over its acquisition of Silicon Valley firm 3Leaf. Instead of taking Cfius’ advice and divesting the assets as virtually every other company had done, Huawei had escalated the issue by calling on the White House to overturn the ruling.

In doing so it added another topic to the crowded US-China bilateral slate, as well as more closely identifying itself with the government it was trying to distance itself from.

Whether by accident or design - or under the advice of Chinese officials – Huawei made an about-face four days later, declaring it would unwind the 3Leaf deal.

The one revelation in today’s 2,000-word appeal, which appears under the name of US chairman Ken Hu, is Huawei had notified the Department of Commerce at the time of the acquisition last year and was told no export licence was required. Previously, the company had been reported to have not notified the US government about.  

In the letter Huawei says the sole basis for the claims that it is tied to the Chinese military is CEO Ren Zhengfei, who left the PLA in 1987 to set up the company.

It is a matter of fact that Mr. Ren is just one of the many CEOs around the world who have served in the military, and it is also a matter of fact that Huawei has only offered telecommunications equipment that is in line with civil standards. It is also factual to say that no one has ever offered any evidence that Huawei has been involved in any military technologies at any time.

However, Huawei did not elaborate on the core issue - its ownership - structure other than to use its traditional formulation that it is "owned entirely by its employees."

It said the allegation that it posed a threat to US security derived from “a mistaken belief that our company can use our technology to steal confidential information…  or launch network attacks.”

If the United States government has any real concerns of this nature about Huawei we would like to clearly understand those concerns, and whether they relate to the past or future development of our company.

The rejection of the 3Leaf deal is the latest in a series of setbacks for Huawei in the US market because of security concerns. Its planned minority acquistion of 3Com in 2008 collapsed, and last year it was ejected from a Sprint Nextel wireless tender, both on security grounds.

MWC day 2: WAC & a Google attack

Cellco chiefs turned out in force in Barcelona Tuesday to pump the first offerings from WAC (Wholesale Applications Community), the industry’s plan to cash in on mobile apps. They showed off new apps, handset and app stores, although some wondered about the lack of actual developers.

Vodafone boss Vittorio Colao and Telefonica’s Cesar Alierta rounded on Google, with Alierta calling for a “new engagement with content providers” – a not-so-subtle pitch to force more fees out of internet companies.

China Mobile chief Wang Jianzhou sought  handsets with embedded Wi-Fi to cope with the mobile data crunch.

HTC’s Peter Chou was “positive” about Nokia and Microsoft, while AT&T CEO Randall Stephenson put a positive spin on the loss of iPhone exclusivity – all those Apple ads were free publicity, he said.

HTC unveiled its first tablet, the 7-inch Flyer, while Huawei showcased its own 7-inch tablets, priced at around $300, and Nvidia promised a new processor with five times more grunt than its existing Tegra chip.

Product of the day, however, was Gemalto’s Facebook SIM, giving direct access to the social networking site from any phone.