The runaway success of i-mode, the wireless internet service launched in Japan by NTT DoCoMo in February 1999, is one of the few bright spots amid the doom and gloom that has engulfed the rest of the mobile sector. For European operators, the dream is that they will be able to replicate the success of i-mode with their own 2.5G and 3G services, and persuade consumers to embrace a wide range of data services in the same way as in Japan.
It is certainly important for operators to look at usage patterns in different regions of the world, but they should also question whether a service that is successful in one country will necessarily work in another, particularly as individual markets have evolved so differently. Bruno Giussani, consultant and the author of Roam, a book on the mobile industry, cites the payment structure in the US as an example of a factor that has caused a distinctive usage pattern. "In Europe, we've always had a 'calling party pays' system," he says. "But in the US, it always used to be the person who received the call who paid. Users turned on the phone to make a call and then turned it off. This has had a massive influence on how usage has developed."
|
Other factors that have played a part include technical standards. Whereas European and Asian governments encouraged phone manufacturers to work towards a single digital standard, the US took a determinedly free market approach that proved much less successful and led to the co-existence of several different digital standards. This meant that users travelling to different parts of the US found that they were sometimes unable to use their phones.
However, in an example of the inconsistency that characterises the take-up of wireless technology, the US is more advanced in its use of PDAs such as the BlackBerry and PalmPilot. Business users in the US are much more likely to use these devices to send and receive data than their counterparts in either Europe or Asia. This could lead to a rapid take-up of 3G-style applications among US customers, because they have already become accustomed to using data services.
Mr Giussani also argues that social factors come into consideration: in the US, an astonishing two-thirds to three-quarters of calls are made from cars. Meanwhile in Japan, where people predominantly travel to work on public transport, commuters are forbidden to use their mobile phones on trains. Hence the popularity of messaging and the subsequent boost to NTT DoCoMo's i-mode.
However, others argue that such diversity is not as significant as has been suggested. Pekka Rantal a, vice-president for marketing services with Nokia, Europe and Africa, argues that key consumer traits can be detected across all cultures: "Certain global consumer segments exist. People within these segments behave the same way whether they are in China, Sweden or Italy because they share the same values in life. However, the size of the segment may differ from country to country. In Taiwan, a certain segment may account for one-third of the population but in Europe only 5 per cent." Nokia has identified a total of ten segments into which all consumers can be slotted.
Leading consultant John Strand of Strand Consult agrees: "I think mobile phones and services are the most global industry there is." The industry might respond to certain cultural patterns in a particular market but it is not shaped by them, argues Strand. For instance, trading shares on mobile phones is popular in Sweden where there is high investment in equities, but such services are virtually unknown in France where share ownership is uncommon.
So was i-mode a success in Japan only because of specific cultural factors? Or could a similar service also appeal to other nationalities? Earlier this year, KPN Mobile, the Dutch company in which NTT DoCoMo holds a 15 per cent stake, launched an i-mode service in the Netherlands and in Germany via its subsidiary E-Plus. According to Mr Giussani, i-mode has so far received a favourable reception in Europe: "I've met a lot of people in Germany and the Netherlands and not a single one had anything negative to say about i-mode. In fact, they were consistently enthusiastic." The advantages of i-mode, he says, include the size of its screen, relatively high sound quality, and the ease with which users can subscribe to services.
KPN Mobile has followed the approach of i-mode in Japan by keeping its charges at a reasonable level. It charges €3 a month for the i-mode subscription in the Netherlands plus a charge of between €2 and €45, depending on the amount of data used. In addition, users must pay €99 for a new handset. Richard Deasington, managing consultant of WFI Consulting, says this is an approach that European cellular operators should imitate with their own technology: "Wap and GPRS have been priced as premium products but they are aren't They don't appeal to premium customers and are more likely to appeal to the mass market, for which the price is too high."
However, in terms of actual take-up, the picture for i-mode in Europe is less encouraging: KPN Mobile attracted a total of 100,000 new customers across the two countries in the first four months of operation up to the end of July. Mr Giussani describers the figures as "well below target". Given that KPN Mobile aims for a total of 500,000 i-mode customers by the end of 2002 - and 1m by the end of next year - he believes the operator should have drawn in 150,000 to 200,000 customers by now. He attributes the underperformance partly to the economic situation but also to the need for customers to buy a new phone to receive i-mode: "It makes the introductory phase a little bit slow."
And not everything about i-mode will necessarily prove popular in Europe. Those services which have made its reputation in Japan, such as ring tones and logos, are not always so popular elsewhere. According to research by Strand Consult, they account for as little as 8 per cent of all premium SMS traffic in certain European markets.
And back home, NTT DoCoMo is facing problems, too. The company's new high-speed 3G service, called Foma - a step up from i-mode - has so far failed to attract significant numbers of customers. Yet despite this setback, it's still hard to knock i-mode's success - its 30m 40m customers each generate Y1,630 ($14) a month in extra revenue for DoCoMo on top of traditional voice services. Now that's the kind of usage pattern that European operators would not mind adopting in their own markets.
(Copyright Financial Times 2002)
Back to reviews page
