Birds of a Feather

Some of the coolest stuff you can do on Japanese cell phonescheck Glay’s concert dates, display Winnie the Pooh as a screen saver, change the ring tone to Beethoven’s Fifthcomes to the user courtesy of a company called Cybird.

When and whether those functions will become available overseas, however, rests largely on the prospects of NTT DoCoMo. Like an ecosystem supporting many life forms, DoCoMo sustains a string of suppliers including handset manufacturers, merchants and content providers. It’s a two-way food chain. Cybird’s innovative digital offerings and unique business model helped spur the mobile Internet, and with it DoCoMo. “You could say we’re one of the mothers and fathers of the industry,” says Kazutomo Robert Hori, Cybird’s CEO.

Since its founding by five friends in 1998, Cybird has bloomed into Japan’s mobile e-commerce colossus. Today it boasts 3.2 million paying subscribers and a market cap of $142 million. Analysts project $54 million in revenues for the fiscal year ending in March. Its Tokyo offices display surfboards in conference rooms, and its 36-year-old CEO dresses like a GQ model.

Hori, who was born in Washington, D.C. but was raised in Kobe, started out in 1994 by founding a small Internet content provider called Paradise Web. With roots in Kansai, historically the merchant-class region of Japan, Hori came to despise the revenue-free business models of the dotcom boom. “There were no banner ads then, and no one used credit cards to buy things off the PC,” he says of his early Internet training. “So I thought, why not provide the same services on the phone, and ask the phone companies to bill the customers?”

When Hori and his partners approached mobile phone carriers, the reaction was skeptical but interested. Over the next three years, Hori sold horse feed to pay his bills as he and his partners worked out the details. Today, Cybird provides content for all the mobile carriers in Japan. Users pay between 80 cents and $2.30 monthly for each service, including ring tones and news updates. The carrier takes a 9% cut, and the license-holdersay, Disney for its cartoon charactersup to 20%.

Unfortunately, DoCoMo/Cybird’s business model may not be easy to replicate abroad. In many countries, cell-phone users pay carriers a flat monthly fee for a set number of minutes of phone use. DoCoMo charges by the amount of data transferred. Consumers outside of Japan are also accustomed to accessing Internet content for free on their PCs, so getting them to pay for, say, a weather report could be a tough sell. That’s led some of DoCoMo’s overseas partners to reportedly insist on a hefty 50% or 60% take of content providers’ sales. Nonetheless, DoCoMo is almost ready to launch its first foreign i-mode systems. Cybird will be providing content in parts of Europe this spring as well as on a test basis to users in China, Hong Kong and Singapore. “For now,” says Hori, “we will go where DoCoMo goes.” In this ecosystem, Cybird and DoCoMo are a nesting pair.