NTT DoCoMo's I-mode Mobile Sys Gets 2nd Chance In Europe
By Nic Fildes and Arent Jan Hesselink, Friday March 7, 9:24 PM
sg.biz.yahoo.com
LONDON (Dow Jones)--If at first you don't succeed, then try again - or so says NTT DoCoMo Inc. (DCM or 9347).
I-mode, NTT's mobile multimedia messaging service, was launched in Germany, Holland and Belgium almost a year ago by network operator KPN NV (KPN), but consumers weren't keen. Now, the Japanese mobile network operator is launching i-mode in France and Spain, and is hoping this second European push succeeds.
It's early days for the service in Europe, but KPN's rival operators - such as Vodafone Group PLC (VOD) and T-Mobile International AG (G.TMO) - have launched and are heavily promoting services which also allow users to connect to the Internet and use e-mail.
NTT is confident that it has not missed its window of opportunity in Europe and believes the i-mode service can succeed if it is marketed and priced well.
KPN's initial launch in Europe failed to match the wild success of i-mode in Japan or take advantage of the failure of Wireless Application Protocol, or WAP, a platform that also connects mobiles to the Internet.
There are 36 million i-mode users worldwide, but only 200,000 are in Europe, according to KPN. It's no wonder that the Dutch operator could only attract one banal question from a room full of industry watchers after its i-mode presentation at last month's 3GSM in Cannes, Europe's biggest mobile telecom conference.
NTT is determined, though, to make i-mode work in Europe and will consider shouldering a large proportion of the cost of developing i-mode-enabled handsets to attract users.
The Japanese company also said that it hasn't ruled out equity tie-ups with other European operators, despite writing-down around EUR11.8 billion on foreign investments after spending about EUR13.9 billion on minority stakes in foreign carriers. These stakes include KPN Mobile NV (N.KPM) and Hutchison 3G U.K., a unit of Hutchison Whampoa Ltd. (H.HUW).
KPN, meanwhile, is in talks with Siemens AG (SI) about designing a new i-mode handset, renewing its commitment to i-mode.
When NTT launched i-mode in Japan in 1999, users flocked to a service that allowed simple Internet access to certified Web sites on sexy handsets with color screens.
But Europeans didn't flock to KPN when it launched i-mode. "I never use it anymore," said a Dutch commercial director at a multinational company who requested anonymity. "It's too complicated, too expensive and there's not much interesting to be found on the (NTT-certified) Web sites you can access with i-mode," he said, having used the service for around six months.
"My fixed mobile subscription costs nearly doubled since I got i-mode," he said, adding that his variable costs have risen significantly. "I don't feel I am getting much back in return."
Indeed, customers in Holland and Germany may have been bemused at KPN store displays, which failed to hide the fact that there was only one handset model on offer.
Skepticism remains though that a second push for i-mode in Europe will be successful.
Strand Consult, a consultancy specializing in mobile technologies, isn't confident that i-mode will succeed this time round in Europe as it "is like importing a Japanese car to a place with no roads."
Strand said the European mobile market lacks a system that can connect and integrate mobile operators, content providers, media companies and users. This is precisely the reason WAP services - the European equivalent of i-mode - have failed, it said.
For KPN the stakes are high with i-mode. The company has said it wants 1 million users in Germany, the Netherlands and Belgium sometime this year. Hitting that target will indicate whether future efforts to market high-speed Internet services via mobile telephones will be viable.
"I-mode's success tells you a lot about whether people will be interested in 3G, and about KPN's ability to market new telephony products," said analyst Mark-Pieter de Boer at Dexia Securities in the Netherlands.
Europe-Wide Or Just A Dutch Dilemma?
KPN's failure to shift i-mode-enabled phones in its first year could be interpreted as Europeans' indifference to the service. But NTT reckons it is more to do with market awareness in the region and a lack of marketing.
Yuichiro Pat Kuwahata, executive director for public relations at NTT DoCoMo Europe Ltd., said it's too early to say whether KPN's i-mode service would succeed in Europe the second time around.
"They just launched," he said. "Even if they put the money into promoting it, it takes people two or three years to know what it is."
Kuwahata said NTT wants KPN to increase its promotional spending on the service but acknowledged this might be difficult.
"The European operators don't have the money to promote (i-mode)...on TV and newspapers," he said, blaming their high spending on 3G licenses. "Nobody knows what i-mode is."
Kuwahata said French operator Bouygues SA (F.BOU), which launched i-mode in France prior to Christmas, and Telefonica Moviles SA (TEM), which will launch the service without the i-mode name by July, will spend more to promote the service.
Indeed, Bouygues sold its stock of 100,000 i-mode handsets over Christmas and will proceed with the launch of a new i-mode terminal, the NEC N22i. The handsets were heavily promoted and subsidized, and Bouygues considers the promotion "a huge success." It said that 600,000 e-mails have already been sent using i-mode.
But 100,000 handsets pales in comparison with Vodafone Group PLC's (VOD) Vodafone Live!, a comparable service that offers Internet and e-mail access via General Packet Radio Services, or 2.5 generation, networks. It has reeled in 380,000 European customers between October and December. In the Netherlands, Vodafone Live! is outselling i-mode by about four to five times, retailers said.
Meanwhile, Orange said it sold all of its 40,000 SPV phones, which offer Internet access and e-mail, over Christmas, and T-Mobile International AG (G.TMO) has rebranded its mobile data service as t-zones. It will market it heavily in April.
This makes for a crowded market. But some are more upbeat about the prospects of NTT's mobile data service.
"NTT has hope if i-mode is marketed well, advertised well and priced well," said Gartner analyst Stephanie Pittet. "They haven't missed their window of opportunity, but a lot depends on where they're pushing it. I-mode isn't dead in Europe at all, especially in countries with low data usage."
Promotion is key if i-mode is to penetrate the market in a significant way, especially against Vodafone. "The operators need to create a buzz around it," Pittet said, adding that Bouygues has heavily promoted i-mode in France, where consumers don't have access to Vodafone Live!, t-zones or 3G services.
She also noted that the French pricing structure is easy to understand compared with KPN's in Belgium. "It is very important the user understands what they pay for," she added.
Jupiter Research, a unit of research and consulting company Jupitermedia Corp. (JUPM) forecasts that there will be 1.5 million i-mode subscribers in Europe by the end of 2003, a staggering increase on the 270,000 handsets owned by Europeans at the end of 2002.
Jupiter expects growth to be driven by heavy promotion in France and Spain and a wider choice of handsets that will be cheaper than rival multimedia messaging services.
"Although Vodafone Live! will race ahead of its rival i-mode in Europe, content providers must not ignore the i-mode platform, particularly in France and Spain, where it will have the strongest penetration," Jupiter analyst Olivier Beauvillain said.
Company Web site: i-mode.com
-By Nic Fildes and A.J. Hesselink, Dow Jones Newswires; 44-20-7842-9264; nicolas.fildes@dowjones.com; arentjan.hesselink@dowjones.com |
