Docomo i-mode

March 15th, 2010By Category: Uncategorized

Takeshi Natsuno is well known in Japan as the creator of Docomo’s i-mode platform for their cell phones.  Local blog Shibuya246.com recently attended an event where he talked about the future of the mobile phone market in Japan, it’s opportunities, the disruption caused by devices such as iPhone and how Japanese handsets (long a source international envy) can respond.

The speech was in part to discuss the ‘Galapagos Islands’ branding of Japan’s mobile phone market. “Japan is now commonly referred to as the “Galapagos Islands” of the cell phone world – a reference to the Pacific islands where a vast number of species have developed differently from most of the rest of the world.” Natsuno-san covered his career spanning time with Tokyo Gas, studying for his MBA in America, setting up a free ISP company in Japan at the beginning of the internet boom (gaining 300,000 customers with the first year only to find advertisers were not ready to use the internet, and so could not sustain the business model), to then working for DoCoMo on their new idea of connecting people to the internet via mobile phones and charging for data packets.

At the beginning of his time with DoCoMo, Natsuno-san found most people at the company were not interested in the idea of gaining revenue from data and instead everyone was focused on more traditional voice revenue streams. He, therefore, had relatively free control to set up his own system for the data platform of DoCoMo’s mobile phone which would be branded as i-mode.

Future and Opportunities

Looking at the future of the market and what opportunities exist for Japanese manufacturers of handsets, Natsuno-san was critical of the way in which companies viewed overseas markets. Whilst many look to NTT and argue that they should take the imode platform overseas to expand it, NTT does not have any market abroad. They could license the technology and indeed tried that, but they would be unlikely to share in the data revenue stream which is where the real profits are. Without sufficient content users would lose interest and as has been seen recently, newer technologies have been able to leap frog the i-mode brand. In order to expand and utilise i-mode abroad NTT would have to make some acquisitions of foreign telecommunication companies. He does not see this happening as the experience at NTT’s Board level is too inward looking and they do not have a good working knowledge of overseas markets or Standards.

With regard to handset manufacturers, Natusno-san argues that Japan has some great features on its handsets that people in other countries would love to have. The ability to swipe your phone to pay for goods at convenience stores, departments, railway stations, airports has liberated many from reliance on small change, and in the last few years the official report on the circulation of small coins has shown a reduction where normally in a cash economy such as Japan you would expect growth. Other features such as biometric devices, watching television, lock mechanisms to guard your secret data from others are argued to be cutting edge technology that many Japanese now take for granted

iPhone in Japan

When the iPhone first came out in Japan it was criticized for not having most of these features and many questioned whether it would be a sustainable product because of this. Recently, the iPhone’s popularity has increased greatly and it has become the number 1 handset sold, on a monthly basis. It is common though to find more than a few Japanese who use an iPhone to also have a normal Japanese mobile as well for those other functions. As Natsuno-san himself said, paraphrasing, “the iPhone is not a good phone. It’s terrible, but it’s a great internet computer”. I agree with this. I dislike the iPhone as a phone, but its ability to connect to the internet quickly and access thousands of applications in a small but highly visible neat touch screen, is outstanding.

Many of the things I can do on the iPhone I can still not find out how to do on the computer. I can list on one screen 10 email accounts at the same time and quickly see which ones have messages waiting (can’t find out how to do that on the PC in a web browser), I can easily switch from email to twitter to flickr to my blog with simple clicks not requiring typing in domain addresses (yes, i can set up shortcuts on the PC, but the iPhone does it with such ease it makes the PC look hard).

Data Revenue sources strong

The future for mobile operators certainly seems centered around data, but you have to keep your eye on the shifting revenue models as well. Whereas telecommunication companies in Japan were previously focused solely on voice revenue streams they have now shifted to valuing data revenue streams as well. Just as they get comfortable with that proposition the market will move again and they must now start exploring other ways to make money. One such way is through being a service provider for financial transactions. Building a credit facility directly into the phone is a way to make life more convenient and also ensure that part of the transaction fees goes to the telecommunications company, opening up a new source of revenue for them.

More

Shibuya246 continues to look at other aspects of the market for Japanese mobile phones including how Japanese handsets can succeed overseas, the expansion of Wi-Fi (see our article for getting Wi-Fi anywhere in Japan) and looks at what  factors drive the decision making process in purchasing internet-ready devices. Shibuya246.com: The Father of i-mode How do you use the mobile internet in Japan, if at all…?

Author of this article

GaijinPot

GaijinPot is an online community for foreigners living in Japan, providing information on everything you need to know about enjoying life here, from finding a job and accommodation to having fun.

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