NTT DoCoMo has been the cynosure with its subscriber number now reaching a staggering 42 million (over 58 percent of the market share). The company also ventured outside Japan in a big way to spread its mobile leadership globally. Its overseas investments included KPN Mobile—the Dutch operator, KG Telecoms in Taiwan, AT&T Wireless in the US, the UK 3G venture Hutchison, and also a joint venture with AOL-Time Warner. In all, DoCoMo incurred a cost of 624.6 billion yen, along with a tax burden of almost 400-billion yen, to push the company into the red for the first time. DoCoMo has been forced to write-off many of these high-priced foreign investments. It too is struggling against the economic downturn and the increasing maturity of the mobile market in Japan. It is facing problems with its expensive third-generation (3G) FOMA service, which so far has less than 200,000 subscribers against a forecast of over a million. However, as a leader and an innovator in mobile business (especially i-mode service), it continues to be an ideal case study. It is interesting to track such ventures as these ventures unfold and strategize to meet the growing challenge. One of them is in Taiwan.

The Taiwan Case Study
KG Telecom, NTT DoCoMo’s Taiwanese partner, launched i-mode service in Taiwan on 20 June 2002. In just three months, its active subscriber number reached 22,000. The number of i-mode official sites has exceeded 100 and that of voluntary sites reached to 250. This success has once again established the proven i-mode business model, this time outside Japan. KGT forecasts more than 50,000 i-mode subscribers by the year-end and a critical mass of 100,000 by March next year, indicating the entry of wireless data market into a mature stage. KGT emphasizes that wireless Internet service will become the key to success for all the telecom operators, as the voice market is increasingly saturated. The increasing number of i-mode subscribers has increased data volume as well as voice and SMS usage at the same time. In the first three months, KGT’s penetration rate in Taiwan was 0.1 percent. Coincidentally, NTT DoCoMo’s i-mode service too had penetrated over 0.1 percent of the Japanese population during the same period.

KGT’s i-mode service rides on its GPRS network, which after including these 22,000 i-mode subscribers makes the total number of KGT’s GPRS subscribers to be 52,000. In terms of user behavior, each KGT i-mode user subscribes to 2.2 charged services on an average, and 52 percent subscribe to at least one charged service. In comparison, each NTT DoCoMo i-mode user subscribed to 1.07 charged services on an average and 48 percent had subscribed to at least one charged service almost 18 months after the launch. KGT i-mode service has been successful due to its rich content, which is extremely well received by the subscribers. The growing revenue for content providers shows that i-mode is the best collaboration platform for content providers, telecom operators, and consumers. In addition, i-mode subscribers have increased the number of their outbound voice calls by an average of 17 percent, which demonstrates that the introduction of i-mode services also drives the growth of voice. There are many lessons here for mobile business.

Market Segments and Services
Among the KGT i-mode subscribers, male to female ratio is 1.3:1 (44 percent: 34 percent), similar to the average mobile subscriber distribution. Males do not display higher acceptance of i-mode than females. i-mode services are widely accepted by both the genders because these services are user-friendly, with virtually no learning barrier. An even distribution among various age groups shows popularity with consumers. According to KGT’s user profile of the current i-mode subscribers, the age group of 20-34 accounts for the majority of 60 percent, of which 24 percent aged between 20 and 24, 24 percent aged between 25 and 29, and 17 percent aged between 30 and 34. However, subscribers in the age group of 35 to 39 and 40 to 44 account for 11 percent respectively. i-mode has an even distribution among the various age groups, showing that its contents meet the wireless data services’ expectations of all age groups. 

Keiji Tachikawa, president and CEO, NTT DoCoMo, has shown to the world the formula for success in mobile data and the Internet. Hopefully, the company will demonstrate strategies to meet the new challenges.

Niraj K Gupta
www.telecombynirajgupta.com