France's Bouygues Telecom successfully duplicated the Japanese wireless carrier's development and marketing strategies -- right down to the last pixel.
Here Walter Adamson talks with Daniel Scuka and Jan Michael Hess, experts in Japanese and mobile internet and leaders of the Tokyo Mobile Intelligence Tour. Daniel is also cofounder and contributor to WirelessWatchJapan.
Walter Adamson: Where is i-mode succeeding best outside of Japan?
Daniel Scuka: The baby i-mode services launched by Dutch cellular carrier and DoCoMo investee KPN in several European markets (and by other Euro partners elsewhere) are finally achieving some degree of success. Overall, i-mode numbers outside Japan remain weak. Not long after DoCoMo's breathless January 2004 announcement at the 3GSM World Congress trade show in Cannes, global mobile leader Vodafone said it had more than 6.8 million customers on its competing Vodafone Live mobile Internet service -- all outside Japan.
But there is one market where, for its size, i-mode is quietly doing rather well: France.
Prior to French mobile carrier Bouygues Telecom launching i-mode, data services in Europe's largest country were anemic. And with KPN's i-mode already struggling next door in Holland, Belgium and Germany, i-mode's Gallic prospects were not so formidable.
Adamson: Is there any social background that you think is related to the early success of i-mode in France?
Scuka: France already has its famous Minitel system, a sort of philosophical grandfather of the i-mode Internet concept, but wedded to fixed-line terminals in consumers' homes (and often used to browse adult services or order in dinner). But Minitel growth long since peaked and offers no reason to suspect that Francophone mobilers would need i-mode nor adopt it any faster than their EU cousins.
But France's i-mode has taken off due largely to the arrival of better handsets similar to those in Japan, a tight i-mode marketing focus, and an emphasis on a well-defined and controlled portal strategy, all copied faithfully from DoCoMo in Japan.
Adamson: So you mean that the other i-mode carriers in Europe launched with a less through-through handset component of their strategy?
Scuka: It's widely acknowledged that the early German, Dutch and Belgian i-mode services suffered from poor-quality handsets that, at least initially, didn't even come close to the highly advanced models available in Japan.
There was, for example, no i-mode-enabled cell phone available from dominant European leader Nokia when KPN's i-mode started (Nokia released the 3650 a year after KPN's i-mode launch). Until then, frustrated KPN customers had to make do with recycled discards from Japanese makers -- like NEC's N21i, a 120-gram beast with a lackluster 256-color display. Mitsubishi and Toshiba later fielded i-mode handsets for Europe. These, too, were unremarkable.
Adamson: When KPN started, you couldn't get i-mode data while roaming nor send an i-mode e-mail to your buddies who didn't have the service. The Germans wouldn't switch. Why should the French?
Scuka: All European markets also feature an existing user base of mobilers used to seamless roaming and universal SMS text messaging. They have little incentive to make the i-mode switch.
Bouygues senior managers were aware that there had been branding problems and that the challenge of getting sales, development, planning and marketing staff all dancing according to the new i-mode tune were almost too much for KPN. Shortly after KPN's i-mode launch, senior managers admitted that it was a big task to develop i-mode for their networks. Merely aping Japan's i-mode content offerings was proving insufficient.
Fundamentally, Bouygues seems to have done a better job than the other i-mode carriers at actually cloning the original Japanese i-mode model -- right down to the last pixel.
The billing, the content, the overall service envelope, and the evolution toward highly interactive Java content have all been implemented faithful to Tokyo's teachings -- and Gallic i-moders love it.
Adamson: Are there any other aspects they love?
Scuka: They also love a bargain: For service launch, Bouygues offered steep discounts to new i-moders for two months. Customers received free packets for all mobile Web browsing, e-mail was free, and all downloads from i-mode content providers were free.
Adamson: What were the other big lessons that Bouygues learnt from the previous European launches?
Scuka: Launching later than KPN, Bouygues also had the advantage of watching other carriers make mistakes first, says Cedric Nicolas, the i-mode roadmap manager at Bouygues Telecom. "We started our i-mode service eight months after KPN and we learned a lot from their errors, so it was a clear benefit for us."
He credits KPN with taking the risk to launch the first overseas i-mode -- a risk he admits was much lower for Bouygues: "They also had the difficulty to manage three national operators." Holland's KPN Mobile, Germany's E-Plus, and Belgium's BASE are all KPN subsidiaries. "This is much more complex than our situation," he says.
Bouygues also benefited from a better selection of i-mode handsets.
The original clunky NEC N21i was still there, but in addition, a Toshiba model was available shortly after launch. NEC, Toshiba, and Mitsubishi have all since fielded improved versions with better displays just as Bouygues has been turning on the marketing afterburners. A bigger, better fleet of handsets to entice new i-moders has made Bouygues' marketing challenge much more similar to DoCoMo's in Japan.
Adamson: Did Bouygues follow a marketing strategy faithful to the Japanese i-mode strategy or did they invent a new approach?
Scuka: At home in Japan, DoCoMo has always been able to emphasize the unity of content branded by i-mode, regardless of the actual content provider. The marketing done by DoCoMo nationwide emphasizes the i-mode brand, not any particular provider's, and benefits all content partners more or less equally. The Bandais and Disneys as well as smaller, unknown providers like Cybird and Index all win from this.
"Our mantra was to have as few differences as possible, betting that what had been successful in Japan should also work well in France. And this belief was true," says Bouygues' Nicolas. He explains that i-mode on Bouygues followed the same business model, the same portal strategy, and the same marketing policy as i-mode in Japan: "Internet in your pocket, simple, and for everybody."
Speaking at the same show in Cannes where DoCoMo made its "2 million users" announcement, Yves Goblet, deputy CEO of Bouygues Telecom, explained the company has adopted "all" aspects of DoCoMo's original i-mode including technical specifications and marketing strategy.
Bouygues devoted 70 staff members to the i-mode launch -- a huge number for a small company -- and created a highly visible marketing campaign. "Sixty percent of our marketing budget was spent on TV," said Goblet, adding that the company had created an i-mode ecosystem in France that is a "duplicate" of the one in Japan.
Adamson: How did Bouygues assemble content and what kind of content did they have for the launch?
Scuka: Fifty content providers were in i-mode's launch lineup, with a strong presence from media owners. On the portal, official providers were categorized much the same as those in Japan: News/Weather, Convenient Information, Travel/Transportation Information, Trip Information, Message Services/Chat, Ringing Melodies/Images, Fortune-telling/Games, Shopping, and Banking/Securities.
In the News/Weather category, official i-mode providers in France include CNN, Le Parisien, Reuters, Le Figaro, LCI, Le Nouvel Observateur, Meteo France, and several others. There were 220 overall as of February 2004.
In contrast, KPN launched its i-mode with a wishy-washy campaign on TV and bus shelter signs highlighting individual provider content channels.
| I'm now going to explore some different aspects of the European approach with Jan Michael Hess, CEO of Berlin-based mobile consultancy Mobile Economy at Mobileeconomy.de and co-leader of the Tokyo Mobile Intelligence Tour. |
Adamson:
What lessons did you see that Bouygues specifically learnt from the mistakes of the previous launches:
Jan Michael Hess: Well, for example, one KPN i-mode TV commercial that showed users accessing the i-mode mobile portal while displaying content provider logos. This emphasized individual providers and their brands at the expense of i-mode. This was contrary to the DoCoMo marketing model in Japan and proved ro be an inferior choice for KPN - a mistake not repeated by Bouygues.
KPN only spent (in the) two-figure million euros (range) to bring i-mode to the market; not so much was spent on marketing. In Japan, DoCoMo and other carriers spend billions of yen to promote new handsets and services each year.
Bouygues recognized the value of making i-mode its primary mobile data effort, while other European i-mode carriers, including KPN and recent i-mode club member Telefonica Moviles in Spain, continue to promote SMS texting and MMS picture mail as well as i-mode. Customers, understandably, are confused.
Adamson: Some carriers also have WAP-based mobile browsing services left over from the start of the wireless Internet in Europe in 1999, how did they blend their i-mode offerings into the market without confusing customers?
Hess: At Bouygues they decided from the beginning that i-mode will be their main multimedia offer “because it is far superior to WAP,” according to Bouygues’s Nicolas. He said that "even if we still maintain our WAP service in order to provide basic services to existing WAP customers, we put the majority of our efforts into the development of i-mode. For example, we put much more money on promotion and training our shop dealers for i-mode compared to what we do for WAP."
Adamson: What do you know so far of the business return and ARPU of i-mode for Bouygues?
Hess: We know that the average Bouygues i-mode user subscribes to three pay content sites, stays with a new site for six months, and generates an ARPU (average revenue per user) of about $90 (72 euros) per month for contract users versus $65 (53 euros) for non-i-mode users.
The basic monthly i-mode fee is 3 euros, more than $3 with the euro going for a little over a U.S. dollar these days (the fee is 300 yen in Japan). Packet fees for mail or browsing cost 0.01 euro per kilobyte, or about 1 yen per 1,024 bytes. That's more expensive than in Japan, where i-mode packets cost 0.24 yen per 1,024 bytes.
Nicolas says customer satisfaction runs at around 80 percent, and the main complaints are about the cost of using i-mode in a world where a lot of online content is free on the PC Internet.
Adamson: How has Bouygues approached the issue of official versus unofficial sites?
Hess: Like DoCoMo, Bouygues offers both free and paid access to content sites on the official portal as well as access to suitably formatted unofficial sites elsewhere on the Internet.
Official providers can bill up to 3 euros per month (300 yen in Japan).
While many of these pricing structures have also been adopted by the other European i-mode carriers, Bouygues has put strong emphasis on developing the content developers.
Adamson: In what specific ways has Bouygues encouraged the content developer community?
Hess: In November 2003, a year after the launch, Bouygues upgraded its i-mode service by launching Java application download sites. DoCoMo had done the same in Japan 23 months after i-mode's start there.
Java-based content started with several dozen applications on tap, including games and maps, and could be accessed via the new Java-compliant NEC N341i and Mitsubishi M341i i-mode handsets. These offered much-improved features over the earlier i-mode models, including 65,356-color and 262,000-color displays, cameras, 40-voice polyphonic ringtone capability, and expanded memory for storing photos, messages, and address book entries.
Bouygues' Nicolas claims that the carrier has invested a great deal of energy into fostering a content developer community - perhaps more so than DoCoMo has in Japan, where other carriers have also helped develop the mobile Internet and Java developer community. "We put a lot of effort into training content providers and leading them to produce very good i-mode sites, with quite strict usability guidelines," Nicolas said. "Those guidelines reflect precisely our content policy in order to get mobile content with very high quality and consistency across sites."
Adamson: How much emphasis did Bouygues place on the "alliance" standards for handsets as opposed to widening the range for developers?
Hess: Some i-mode carriers offer i-mode services to handsets from makers like Nokia and Siemens which are not fully compliant, as I understand it. According to one industry watcher. "This makes it difficult and more costly for content providers to render content for all phones," says the source. "Bouygues, to the contrary, only supports i-mode phones that are 100 percent i-mode compliant, like the NEC, Toshiba, and Mitsubishi phones."
Thus, making developers' jobs easier, Bouygues only fields fully i-mode-compliant handsets.
Adamson: How do you think that the landscape is changing now that Vodafone Live! Is rolling out successfully in Europe and other carriers are offering good mobile data services?
Hess: Many non-Vodafone European carriers are deploying new data services on their networks in part to persuade current-gen users to switch to new 3G networks being launched in 2004 and 2005 and also to compete against Vodafone's Live service.
Telefonica Moviles in Spain and Wind in Italy launched baby i-modes in June 2003 and November 2003, respectively. In June 2004, Greek carrier COSMOTE announced an i-mode launch in its home market, just in time for the Olympics. Apparently taking a page from Bouygues' launch marketing campaign, all Greek i-mode data was initially free.
Adamson: As you see it, Bouygues has really set the pace as compared to the other non-Japanese i-mode launches?
Hess: I think so. Bouygues is planning to launch 3G in 2005, and continues to have what it claims to be the "richest multimedia platform in France and probably Europe."
There are now more than 260 official sites, thousands of unofficial, and more than 150 Java applications available for download (100 are games). For Bouygues, i-mode is serving as a jumping-off point into the brave new world of high-speed 3G data services, much as DoCoMo intended when it initially marketed the mobile Internet service to European carriers four years ago.
In fact you yourself have commented on this same aspect of Tesltra Australia's strategy, which as you said is missed if moves are taken in isolation by commentators.
I must say, however, that it would be unfair to credit all i-mode success to Bouygues and none to the other carriers, who, finally, are getting their i-mode in groove. In 2004, Bouygues expects to reach 1 million users by year-end. KPN and others are also on track to see improved i-mode usage by December.
Adamson: So, finishing off on the same kind of question with which I opened with Daniel - do you think that there are cultural issues that remain to be solved in the wide-spread adoption of i-mode outside of Japan?
Hess: There is some evidence to argue that mobile media content -- initially news, weather, sports, headlines, and now video and audio -- is as powerful an incentive for the French to adopt i-mode as for the Japanese.
If I can quote Eric Capelle, head of Bouygues' office in Tokyo, he says "The ranking of content usage is the same in France as in Japan, and it depends on the customer segment. Most of all French customers are fond of personalization like screensavers and ringtones. For light users, the most-used services are news, weather forecast, banks, and trading. For the average user, the main one is sport; for heavy users, games (more so since we adopted DoCoMo's Java). For very heavy users: chat, messaging, and astrology."
Capelle agrees there is a fundamental similarity in cultural worldview between Japanese and French consumers, who both see a data-enabled terminal as a personal link to the rest of the world. He says e-mail and SMS traffic increase among youth while they watch TV shows and exchange opinions about a performer. "For young people it is really a link with the rest of the world," he says. "But more so with the group to which they belong."
Based upon my direct experience I agree with him. I think that i-mode is a powerful service with inherent appeal particularly initially for the youth market as early adopters of mobile phone technology.
| Adamson: Thank you Daniel Scuka and Jan Michael Hess, and we trust that the Mobile Intelligence Tour in October 2004 is as successful as all the previous ones. |
To understand better the i-mode business model see my related blogs on
imodestrategy.com and
DIblog.com:
Telstra's 3G Decision - Where the Analysts Missed the i-mode Play - here
Aussie Commentators Scatter as Telstra Endorses 3G - here
Who's who in the Zoo of Hutchison 3G in Australia? - here
How to Build Your Linkedin Business Network - here
Why the Open Mobile Terminal Platform Alliance is a Win for the i-mode Business Model - here
Why the Analysts Have It Wrong About Telstra's new i-mode Alliance - here
How to Redesign the i-mode Sales Process for Success - here
Sourcing Strategies for Telco IP Core Network - here
Do you think cloning NTT DoCoMo's strategies would work as well in other nations? Post your Comments.
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"I can personally recommmend the Mobile Intelligence Tour as the most effective, most intensive and most enjoyable way to acquire business insight into the Japanese mobile economy and the people behind it," Walter Adamson.
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Nokia is being even more specific, with Nokia Research Centre "working with VTT Technical Research Centre of Finland and the University of Tampere to launch WellnessDiary, a free fitness-software application for its S60 smartphones, next month. When users enter their weight and other health-related variables such as diet details, they will be able to get on-screen feedback, including graphs showing their weight history".
DoCoMo launches its 3.5G network next week, along with a Linux-based phone - the NEC N902iX phone which offers 3.6Mbit/s peak download speeds. HSDPA (high-speed downlink packet access) is based on the same WCDMA technology used in DoCoMo's currently available 3G network, FOMA ("Freedom of Mobile Access"). DoCoMo's HSDPA service will launch with initial coverage limited to Tokyo, and where HSDPA service is not yet available, the N902iX mobile phone can fall back to FOMA.
Currently, excessive congestion in either voice or data transmissions can force DoCoMo to limit network usage for both voice and data in order to prevent network breakdown. One result of the move is the increased ability to successfully transmit text messages via i-mode mail, or to DoCoMo's i-mode Disaster Message Board service, even if voice traffic should rise during a disaster as has been experienced in several recent earthquake and tsunami events.
Bouygues has also announced that its has selected Nortel as one of its suppliers for its 3.5G HSDPA UMTS network "to provide customers in France with services such as high-quality live TV, high definition video on demand, MP3 streaming and multi-user mobile gaming" when it goes live in early 2007. (DoCoMo will launch HSDPA services on 31 August.)
On the other hand DoCoMo expressed its support for digital broadcast to mobile TV through DoCoMo Capital investing in GCT Semiconductor, based in San Jose.
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