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Part of the Mobile Communications Resource Center, this is one of several presentations created by Michael Hanley for Ball State University's College of Communication, Information and Media. All rights are reserved.
Docomo pioneered the mobile internet by introducing i-Mode to Japan's market on February 22, 1999, and was the first operator to bring 3G to market. While Docomo has been less successful to capture global value from these pioneering developments, Docomo is one of the most successful and admired mobile operators. This report presents many financial and market data together with analysis, and also gives a thorough overview of Docomo's pioneering i-Mode services.
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Topics Covered:
=================================================
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Visions, assessing, predictions & major themes of e-commerce
Major academic discipline contributing to e-commerce research
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And Gx is not your ordinary business development consulting firm. But we help and advise some of the largest and most innovative companies in payments.
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2. Marketing i-Mode
• NTT : Nippon Telegraph and Telephone Corporation
• What is i-mode?
– 2002: A wireless Internet service, by NTT Docomo, Japan
– 2005 : 30 mil. subscribers , 60% of Japan market share
• Initially : Not appreciated by Expert Pundits
• Two challenge :
1. Domestic : Prevent competitors + manage migration of
existing customer to 3G wireless service
2. International : Bring i-mode model to US, Europe’s reluctant
Market of customer to adopt internet
3. • Keiichi Enoki , MD, Docomo i-mode Operation
– Force behind one of Japan’s fastest moving Org.
• 1990 :
– Low Penetration of Cellular Phone,
Because :
• Deregulation
• Availability of low-cost handsets
• Reduction in subscribers fees
– Docomo : so Popular that facing trouble to keeping up
with demand.
Cont…
4. • 1997 : Congestion Prob.
– Enoki : Placed as Lifetime Employee :
• To convince : Subscriber to start use their cell differently
• Use existing packet switch network : Less Invest.
– Adv. : Wireless circuit open during phone call
• Interweave text-based Data packets into voice stream : allows
multiple subscriber to share single circuit
• Enoki : Recruit two outsider :
– To develop mobile internet service : Think out of box
Cont…
5. 1. Mari Matsunaga, Marketing Guru, Editor-in-chief
• She Doesn’t have cell phone : To focus on content : Brings
Fresh Thinking
2. Takeshi Natsumo, Wharton MBA, Works at Hypernet,
Internet advertising company : Full of Innovative Ideas
• Good at Wireless business
• Finally Charismatic Team : Formed
• Trio : Culture of
– Blue Jeans
– Brainstorming held on Beer Table
• Controversial Decision : Belied to Conventional
Industry Wisdom
Two Outsider Hired by Enoki
6. • Initially : Business People – Always on Internet
• Later :Trendy Young People – Teen and 20’s
– 12 % : Home PC Penetration
– <10 % : Japanese Consumer had internet in 1997
– Few tended to be businessman
• Matsunga Believed:
– Young People Strong Need of Comm. + Attract
towards innovation :
If We get them then WE GOT THE JACKPOT…
Target Market Selection
7. • Another Major Decision: International Market
• USA & European market :
– Focus : Developing proprietary Content
• Create a Portal :
– Subscriber directed to Third Party via browser (iTune)
• Operator : Control Value Chain Content to N/W
– DoCoMo : Increase Data Traffic WIN-WIN , 3rd Party
• Billing System of DoCoMo
– Handle Large no of Small Phone call + Micropayments
– Centralized : One bill = Subscriber + 3rd party fees
• 9% Commission from Content Provides (3rd Party)
Third Party Content
10. Technology Standard-Language Protocol
OPTION 1 OPTION 2
• DECISION- Which LANGUAGE PROTOCOL should adopt???
• Version for PC browser
• Slower Operation but Quicker
Download
• Widely used language protocol on
web
• Version for Mobile Browser
Adopted by Nokia Ericsson Motorola
• Sent Data Faster and more
Efficiently over Wireless Network
• Many Players Pushing WAP to
GLOBAL STANDARDS.
• Deter 3rd Party Operation Content
HDML,WML
• Docomo decided to adopt (Compact HTML)
• Using cHTML, they could optimized existing webpages for mobile viewing by eliminating
some Graphics, Tables & Frames
11. OPTION 1 OPTION 2
• DECISION- Which EMAIL METHOD should adopt???
• Rely on the central server to collect
data
• The user could open any time
• No limit
• Send messages directly so that
receiver can read it directly.
• No need to retrieve from Server
• Minimal storage
• Limit upto 250 Characters
• Speed of DIRECT METHOD
• Sender’s Phone was transmitting and receiver's phone receiving
• Short Bursts of Communication
• Emotions-A new way to express their feelings.
¥20 ¥1
Technology Standard-Email
12. “UNDER 100 Grams and 100CC”
• Top Analyst suggested Enoki to have handset that are heavier, Bigger and consume
mere battery power.
• “We are not selling an electronic planner or a PDA. We are Selling
a Phone!!!” -Enoki
Hardware Manufacturers
13. COST
$167-$250
APPEARANCE
Sleek
99 grams
9.6 Kbps
Single button switch to i-MODE
“UNDER 100 Grams and 100CC”
BATTERY
4 Hrs of Talk time
400 hrs of Stand By tine
Cost of other Phone with no i-mode : $197-$310
• No i-Mode
• >100 grams
• No Gprs connectivity
• No i-Mode
• Upto max. 3 hours
• Stand-by time of max. 96 hours
16. UTILITY
Provided Real
benefits to
Subscriber and
Industry
Partners
• Financial services
• Retail
• Hotels
• Airlines
• News
Entertainment
partners
• Horoscope
• Games
• Ringtones
WHIMSICAL
People were
having happy
hours when
using
i-mode
Marketing the I-mode Service
A
nytime
nywhere
nything
18. The Pricing strategy
• Pricing can influence the product positioning
I-mode
Price
Amount of data
downloaded
Email
1 yen
Downloading
Cost 7 yen
Time spent on web Not desirable
Transferring funds
Cost 60 yen
•Finally team has decided
•Basic subscription fee – ¥ 300 per month
•Every packet data - ¥ 0.3
•No fees for dial up
19. Found
Comparable
with the
cost for
subscribing
ISP
¥ 2000
Cutdowntheprice
¥ 300 per
month for
subscription
With ¥ 0.3
per packet
data Zeroprice
No cost for
dial up and
will be
available
24x7
Strategy
• With a low price the billing method was also convenient for users.
• i-Mode customers used to receive monthly bill with all of their mobile charges.
Cont…
21. • Reasons for this success can be the various features provided by I-mode.
Transaction
Money transfer
Balance check
Ticket booking
Retail sales
Information
News Updates
Sports scores
Stock data
Business news
search
Restaurant guide
Cooking recipes
Data bases
Ring tones
Games
Screen savers
Entertainment
I-Mode
•High switching cost for users
•Market was such
•Ready to spend more
•Ring tones
•Games and Wallpapers
Cont…
22. Content Providers
• Some rules
Could not offer
links to sites
outside the I-
mode portal
Limited
advertise-
ment
space
Chat
rooms
were not
allowed
23. Cont…
By the end of 2001, company has more than
3000 I-mode menu
Contents provider has to meet rigid quality
standards and has to go through the
hierarchical process
In spite of having a rigid standards providers
wants to be with them
• Not much investment in new technology
• Efficient billing service
24. Domestic Challenges
• i-mode’s subscriber growth – falling off
• Competitions was getting intense
– KDDI – 24% market share
– J-Phone – 17% market share (similar to HTML)
• More focused on trying to be innovative, target to youngsters
• Both can use voluntarily i-mode sites
• i-mode committed to shift in its business model
• Complaints from content provider – government
pressure – gain open access to its network
– i-mode portal no longer default starting point
– Reduce basic monthly subscription from 300 to 200 yen
25. • Key challenge
– Maintaining i-mode’s momentum
– Continuing growth in business
• 2001 – first carrier in world to offer a viable 3-
G service branded “FOMA”
– Plan was to move graft i-mode business to faster
3-G network
– Certain technical limitations –battery life
– Complaints about poor connection rates
– Still struggling with pricing, position, promote
FOMA relative to its existing i-mode
FOMA Upgrade
26. • Mobile Internet market – stagnant
• Working to bring i-mode model to US and Europe
• No any carrier dominated in the market
• Difference in consumer behaviour
• Europe
– 70% penetration in mobile phone segment
– Lack of content (content provider reluctant to provide)
– SMS had become popular over voice call
• US
– Less likely to use cell phone – more likely to use internet over PC
– Flat monthly rate for unlimited internet access rather than fee based
on use
• Different marketing strategies
– US and Europe – tended to target early adopters
– Carriers - not responsible for collecting revenue on behalf of content
provider – reluctant to open up network to many providers
International Challenges