Ten years of i-mode
NTT DoCoMo’s i-mode Internet service celebrated its 10th anniversary in early 2009. The i-mode service was the first in the world to bring data communications to mobile phones. It enabled e-mail, music downloads, online shopping and stock trading, as well as facilitating a new genre of phone-based novels. i-mode shaped the way people interact, impacting Japanese society arguably as much as the personal computer and the Internet have.
However, i-mode was decidedly less successful in conventional business terms. NTT DoCoMo hoped to make the service successful overseas, but failed. As the firm’s global strategy foundered, dependent Japanese mobile phone makers also felt the pain, as they were left to squabble over the small domestic market. The manufacturers, which proved unable to compete overseas with low-cost players, are now facing consolidation.
As for the start-ups that developed content accessible through such services as i-mode, only a handful, such as DeNA and Dwango ever made it to the first section of the Tokyo Stock Exchange. In part, this was because carriers jealously guarded programs developed for their services, limiting the spread of such applications.
Yet, the i-mode business model was not entirely off-track. The bundling of services and billing is now being adopted overseas. Apple’s iPhone is a case in point. Anyone can develop its applications, but users can only download and pay at the online App Store. Google, Microsoft and Nokia have established similar systems. When it comes to the Internet, content generally is accessible free of charge, with revenues generated through advertising. However, it is notoriously difficult to make profits through this business model. As such, Apple and others have been trying to establish feasible billing systems for mobile Internet use.
Major carriers, ramping up for competition with Apple and Google, have been working to commercialise new services based on the LTE (Long Term Evolution) protocol, which could offer data transfer at optical speeds by the end of 2010. Given the way LTE works, carriers that use the protocol would be able to easily conduct billing on behalf of third-party firms.
Japan’s three leading carriers as well as most big overseas players, such as Verizon and Vodafone will use LTE for their next generation platforms. NTT DoCoMo was a pioneer in introducing i-mode and 3G phones, but nonetheless ended up isolated in the global market. Given this bitter experience, ‘we don’t plan on introducing the LTE protocol ahead of others, alone,’ said Ryuji Yamada, president of NTT DoCoMo.
While this was the Japanese experience, China is a different proposition with its home grown TD-SCDMA technology. The might of China Mobile, the largest operator not only in China but worldwide, and the support of the Chinese government will ensure that this technology succeeds. Even if this success is limited to the domestic market, the company has access to over 400 million China Mobile 2G subscribers, not to mention the annual 20% per annum subscriber growth rate still inherent in the China mobile market.