More on i-mode

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From: Linda (
Date: Fri Jun 23 2000 - 20:53:34 PDT

{...and plans for upgrade to 3G. Looks like i-mode's customer base may
be approaching saturation levels in Japan.


NTT DoCoMo's i-mode Leads the Way for Japanese Mobile Internet Consumers
Jun 13, 2000
Yaeko Mitsumori, Contributing Writer -- Tokyo

Before i-mode service was launched by NTT DoCoMo, a cellular phone was
just a connection tool for Internet users to access their the Internet
with their portable PC. But no more. Now Japanese mobile users access
the Internet with the tiny browser phone using only their thumb.
No PC is necessary.

The big success of i-mode service is winning attention not only in Japan
but also abroad. It is because i-mode is the first successful IT-world
service originated in Japan. Before i-mode, Japanese consumers browsed
the Internet using desktop systems powered by Windows 95 or 98, with
Internet Explorer or Netscape -- all American innovations. i-mode is a
purely Japanese product.

NTT DoCoMo has been continuously upgrading i-mode services. Full-color
terminals are now available, music distribution is planned in the
foreseeable future, and DoCoMo is scheduled to release Java-based
terminals by the end of this year.

Their ultimate goal is 3G, third generation cellular services. DoCoMo
is going to launch its 3G service, an advanced implementation of i-mode,
in May 2001.

When DoCoMo launched i-mode in February 1999, virtually nobody at DoCoMo
expected such a big success. As of May 31, 2000, out of 30.4 million
DoCoMo users, 7.11 million had signed up for i-mode services. The
carrier is now expecting an additional 15 million i-mode subscribers
by the end of FY2000.

Following i-mode's big success, other carriers started providing
Internet access services. DDI Cellular Group is offering a service
called 'EZWeb,' IDO is providing 'EZAccess,' and J-Phone Group is
offering 'J-Sky.' All told, Japanese mobile Internet users exceeded
10 million at the end of May.

Most of the Internet content is being provided free of charge, but much
of i-mode's (and other mobile Internet services') content is
provided for a small fee -- typically 100 - 300 ($1 - $3) per month.
Telecom carriers are collecting these fees with monthly connection
charges instead of content providers.

Tetsuya Sanada, a senior vice president of Cybird, a major content
provider, said that content providers can charge end-users in Japan
since Japanese carriers limit the number of content on their platforms.
Each of the Japanese carriers selects a certain number of official
content providers based on their own standards. Then only these
selected official sites are allowed to put their content on the
carriers' portal sites. Carriers collect fees only from their official
content sites.

i-mode has 70% of the mobile Internet services market. The strength of
i-mode is its abundant content. As of the end of May, i-mode has
501 official sites. In addition, more than 10,000 unofficial sites are
online. Competition runs high for the limited 'official' status, and
content providers jockey for the DoCoMo seal of approval. Since
DoCoMo closely examines all of them and selects only very attractive
content, their services win more users.

As i-mode grows, so does NTT DoCoMo's customer base. As of the end of
May, the number of subscribers reached 30.4 million. But the total
increase of cellular users has been slowing down, as the user number
is reaching the saturation point. It is said the number of cellular
users will reach a ceiling of 80 million (67% of the,total Japanese
population) by 2010. In order to break the limit, NTT DoCoMo is
trying to include a cellular phone (or an equivalent device) in
anything that moves -- and some things that don't -- including pets,
vending machines and cars.

NTT DoCoMo President Keiji Tachikawa said that they could sell 360
million cellular phones (or equivalent devices) in Japan by employing
the strategy. These new "users" will expand data traffic rather than
voice. The data communications is expected to occupy 70-80% of the
total traffic by 2010. But revenues from data services are not as
profitable as voice. So they may have to seek out additional revenue
sources such as advertising in the future.

DoCoMo is scheduled to launch its 3G services based on W-CDMA at the
end of May 2001. The big success of i-mode clearly demonstrated big
business opportunity of 3G services. The 3G service is expected to bring
a rosy, futuristic life. Since the system is internationally
standardized, users will be able to use their phone anywhere in the
world. Since the 3G will provide 386 kbps - 2 Mbps data transmission
services, users will be able to enjoy full multimedia services like
motion pictures or a TV phone.

With second generation data transmission, Japan employed a unique
standard called PDC, which isolated Japanese carriers and venders from
world cellular market vendors. Learning from its experience with 2G,
NTT DoCoMo focused all of its effort to make its original 3G technology,
called W-CDMA, compliant with the international standard for 3G. DoCoMo
is now ready to take the leadership in 3G, riding on the big success
of i-mode.

The success of i-mode revealed certain limitations of the mobile
Internet for end users. Entering data can be difficult -- only
well-trained youths can input data using only their thumb. Japanese
use a variety of characters such,as kana, katakana, Chinese characters
and alphabet, which further complicates matters. Data transfer speed is
limited to 9.6 kbps, and the screen of most devices is rather tiny
(the largest screen for i-mode terminal can demonstrate
merely 10 letters x 10 lines).

Many experts said that i-mode could only have succeded in the Japanese
market, since the Japanese like a tiny tool, are sensitive to new
trends,and neither the Internet nor PC has been used widely
in Japan.

Giles Richter, President of West Cyber, a consultant based in Tokyo,
said that the i-mode business model will not succeed in the United
States, where both the Internet and PCs are widely used already.
"Americans do not like to do the Internet on such a tiny screen.
Americans do not like to input data with just their thumb, either,"
he said.

Cybird's Sanada also pointed out that i-mode succeeded in Japan, where
carriers have a bigger influence than venders. In Japan, carriers
purchase terminals from venders and sell these terminals at a low
price -- occasionally free --paying high incentives to retailers.
Carriers recover the cost with monthly communications fees.

Due to the system, young people such as high school kids have embraced
i-mode. "But in European countries or in the United States, venders have
more influence than carriers and they sell their terminals at a retail
store. So, the Japanese business model does not work in these
countries,"Sanada said.

When i-mode makes the transition to 3G, some problems may be solved,
such as the slow data transmission speed. Some new technologies, such
as Bluetooth may solve the input troublesome by, for instance, allowing
for a separate input device for the cellular phone.

The highest hurdle might be a psychological barrier. Mari Matsunaga,
called 'the mother of i-mode,' said that imagination was the key for
success for i-mode, rather than technology. By using a concept that
does not consider i-mode as a telephone apparatus, i-mode marketers
had a breakthrough, she said. When Americans acquire a more flexible
concept, then browser phone services like i-mode might be
successfully implemented in the U.S.

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