| 05.01.02 | Weekly i-mode Business Newsletter

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This Weekly Newsletter on the i-mode business ecosystem is bought to you by Walter Adamson, Australia's leading i-mode strategist and consultant for content providers, platform providers and enterprises.

DoCoMo's 2004 - year of traction

The platform for the global strategy as it emerged - key announcements

2005 - year of action

DoCoMo joins Vodafone in Super 3G initiative

Odd Spot: KDDI flat-rate top 10 consumer darling for 2004

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1. DoCoMo's 2004 - year of traction

Through a combination of good luck and good planning 2004 turned out to be the year that DoCoMo had dreamed of for its international business.

By 2003 the original dream had turned to nightmares, see for instance "DoCoMo reconsiders overseas drive" and "DoCoMo faces investor anger".  The 2000 announcements of joint ventures with Microsoft had turned sour and the investment in Hutchison to start the UK market was stalled.  In March 2002, in the euphoria of launching i-mode in Europe, after 6 months of delays, Mr Tachikawa announced that i-mode "will happen this year" in the US.  All this turned to dust.

But through persistence, a strong cash-flow and a dogged belief in their business model DoCoMo shaped 2004 into a year in which they have delivered sufficient traction to achieve their international i-mode goals for the decade.

At the beginning of 2004, not so long ago, there were more sceptics about DoCoMo's international i-mode plans then there were supporters.  As the success of Bouygues Telecom's i-mode implementation gradually emerged, and Telstra uncharacteristically embraced the concept and committed, AT&T Wireless unexpectedly returned most of the money which it had evaporated, and FOMA was relaunched with massive success, then DoCoMo and its doubters became positive and confident.

The traction achieved in 2004 is sufficiently sticky to attract the remaining core players into that vision – including the US in 2005 and potentially China in 2006 or 2007.

2004's achievements included signing new alliance partners  Telstra, Cellcom, mmO2, and MTS and showcasing i-mode at the Olympic Games through Cosmote.   With all these important players now embracing the ecosystem, the stage is set for i-mode to potentially have access to around 200m subscribers by end of 2005, with about 10m actual i-mode subscribers.

- see our choice of the key announcements for 2004, below.

Comment

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2. The platform for the global strategy as it emerged - the key announcements

Of the 100 or so press releases by DoCoMo in 2004 a few really caught our attention.

Here's our TOP 10 + 1 !

These groupings of announcements appear to us to be the key indicators of DoCoMo's success in 2004, it's thinking, and its strategy for the forthcoming years:

1. Jan - NTT DoCoMo to Liquidate a Subsidiary

Behind this innocuous release hid what was the apparently very inharmonious falling out of DoCoMo and Microsoft - the liquidation of Mobimagic was mopping up the blood off the floor.  Salt was rubbed into the wound late in the year with the announcement of the investment in Linux supplier MontaVista Software.

2. Feb - NTT DoCoMo to Market F900i, First Model of 3G FOMA 900i Series

This announcement marked the turning point for the FOMA 3G service and the beginning of its remarkable recovery after an uncharacteristically poor launch which dented DoCoMo's technical pride.  From this point subscribers raced upwards through 3 million, 5 million, and towards 10 million by year-end.

3. Feb - i-mode contract subscribers outside Japan exceed 2 million

When this press release appeared many commentators scoffed at the absolute number, a mere 2 million, but what it showed was that the rate of growth was now taking off - as confirmed soon afterwards when subscribers hit 3 million and close enough to 4 million by year-end.

4. Feb - Regarding the AT&T Wireless Agreement with Cingular Wireless

These AT&T/Cingular announcements were vitally important for two reasons: the recovery of the money lost on the investment in AT&T and for the US i-mode and 3G strategy - which appears to be intact.

5. Mar - NTT DoCoMo Develops FOMA-Compatible Controller for Appliances

This announcement was a low-key precursor to the future 3G machine-to-machine and machine-to-human strategy previously implemented in the MOVA network by DoCoMo Machine Com and now moving to 3G.  Machine Comm was later slated to be shut down and its role absorbed back into other units.

6. Mar - NTT DoCoMo to Revise 3G Packet Communications Charges

Behind this rather dramatic announcement was DoCoMo's capitulation to the flat-rate challenge of KDDI, although only for FOMA.  Dubbed pake-hodai, DoCoMO warned that users might experience network congestion, obviously expecting an unpredictable surge in data traffic.  Through moves like flat-rate KDDI put a lot of pressure on DoCoMo.

7. April - NTT DoCoMo to Invest in the Development and Promotion of Fleet Management Services with Loxley in Thailand

Here DoCoMo confirmed another of its "consulting-led" i-mode business development strategies, in working with local players and understanding complex market and business conditions before moving with an i-mode play.  Not only Thailand, but also in China.  In a related important announcement that was not a DoCoMo press release CEO Nakamura announced a  strategy shift by the company to tie-ups from capital investments in overseas operators (June 22).

8. May - NTT DoCoMo to sell its stake in Hutchison 3G UK Holdings Limited to Hutchison Whampoa

This was a widely expected by key announcement since it marked a point of widespread doubt in the media about the global strategy and its future.  A kind of low-point.  What followed in the remainder of the year with Cosmote, Telstra, Cellcom, mmO2, and MTS put those doubts to rest.

9. June - NTT DoCoMo to Launch Revolutionary Mobile Wallet Service Useable with New i-mode Smart-Card Handsets

One of the most fundamental announcements of 2004 in terms of roadmap and vision for i-mode, demonstrating the practical working reality of a system that had been in trial in various forms over the past 3 years.  There followed a series of announcements as the service rolled out through MOVA and then FOMA and associated service partners and financing to help roll out the service.  By December 1 million FOMA smart-card handsets were in circulation.

10. June - NTT DoCoMo Joins International Operator's Group To Define Requirements For Open Mobile Terminal Platform

Another power series of announcements related to initiatives to reduce the complexity, time-to-market and cost of handsets, and to making them easier for content developers and making a better user experience.  This included massive investments in chip makers (1 and 2), handset-makers like Motorola, mobile platform providers (1 and 2 and Linux) and Macromedia.

11. Dec - NTT DoCoMo Achieves 1Gbps Packet Transmission in 4G Radio Access

Last but not least on the notables was the confirmation of DoCoMo's relentless pusuit of technical superiority - put in place years ago by Dr Tachikawa who said in 2000 that he had a group working on not only 4G but also 5G.  There seems little doubt that 4G will be rolled-out well before the public target of 2010.

In summary - a monumental year of progress for DoCoMo and i-mode, its alliance partners and the technology and future roadmap.

What can we expect in 2005?

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3. 2005 - year of action

The key thing about 2005 is that it will cement the global importance and positioning of DoCoMo and i-mode.

The obvious challenge is that of the roll-outs of Cellcom, mmO2 and MTS, all due in 2005.  This will be quite a project management and logistical challenge for DoCoMo, but thankfully the Telstra team will be over their hump by May and those who become free will be walking into open arms elsewhere.

Perhaps less obvious will be the efforts put into assisting Bouygues and Telefonica and Wind and KPN (especially E-Plus) really get out and increase the i-mode handset penetration and the service penetration amongst their user base.  Part of the "behind-the-scenes" effort will be by way of DoCoMo concentrating on handsets and handset-makers to produce much lower entry price i-mode handsets with good functionality.  This could be a big move in 2005.

And in the really behind-the-scenes top secret department will be the heavy thinking and heavy lifting being done about Cingular and the US, and how to get to grips with an entry into China that meets with DoCoMo's appetite for risk.  I don't see this latter China issue becoming visible until 2006.  Somewhere in here falls India - perhaps in between the timing of dealing with the other two monsters of the US and China?

Not necessarily so visible, but highly obvious, will be the extraordinary amount of attention that DoCoMo will give to 3G consulting and network consulting to partners and potential partners across the globe.

The reason for this is not only to sow seeds for i-mode but to make the ground fertile for the advanced features such as Felica that are bulging out of the product and service roadmap.  Felica-related applications will be huge in Japan in 2005 and DoCoMo needs to distance itself from Vodafone through this type of practical large-scale m-commerce experience - especially to take it into Europe.

And finally there will be the handy new alliance partner announcements, with a number in South-east Asia (we're picking Thailand and Vietnam) and perhaps a major one for the African continent.

- see the i-mode globe

Comment

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4. DoCoMo joins Vodafone in Super 3G initiative

Twenty-six Asian, U.S. and European cellphone service companies and data communications equipment manufacturers have agreed to develop a unified standard for speedier next-generation cellphone technology, to be branded "Super 3G" (why? we might ask?)

Super 3G will be "capable of boosting current 3G mobile data speeds from a peak rate of 2 Mbps to between 30 and 100 Mbps".

The firms, including Vodafone and Cingular Wireless, Siemens, NEC Corp. and Alcatel, agreed to establish a unified standard based on the W-CDMA format.

The Nihon Keizai Shimbun business daily said DoCoMo is likely to invest more than 100 billion yen ($963.6 million) to upgrade its infrastructure for a launch by 2009.

The unified standard is expected to create demand for cellphones with a large liquid crystal displays for playing games and watching movies, and to help handset makers cut costs through mass production, the paper said.

DoCoMo wants to lower procurement costs for cellphones because its revenues have been capped by the introduction of flat-rate services and fierce competition.

A spokesman at DoCoMo said the company was checking the report and had no immediate comment.

- search Google News for Super 3G

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5. Odd Spot: KDDI flat-rate top 10 consumer darling for 2004

At No. 10: Flat-rate fees

Late last year, KDDI Corp. began a flat-rate fee for its third-generation cell phone network. NTT DoCoMo Inc. and Vodafone K.K. followed suit. By introducing a fixed monthly packet fee, the carriers are hoping to encourage users to download more content, including movies, music and games.

- for the complete Top 10 see The Japan Times: Dec. 30, 2004

END

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Comments

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