I-MODE: Lessons from i-mode

What are the important dos and don’ts that the world outside Japan can
learn from the i-mode experience? Who are the real winners among the i-mode
content providers? Why is the ‘virtuous circle’ so important for Europeans
to understand? And what will happen once i-mode and i-mode like services are
launched internationally?

Those and other important questions are answered in ‘Lessons from i-mode II’,
a report published by Northstream, a swedish research firm, in January. The
company’s earlier report on the same subject, released in mid-2000 is quoted,
even today. Since then, the number of subscribers to NTT DoCoMo’s i-mode has
increased six times to a staggering 30 million (December 2001) and i-mode like
services are starting to bud in other markets.

"It is a general misconception that i-mode content providers are
generally profitable. Half of the providers selling online content actually make
less than 46,000 Euros per year. A majority is not even charging for the
content," Bengt Nordström, CEO, Northstream, says.

The winners are found among the official content providers selling
mobile-specific content, and among established companies trying to reduce costs
and improve services for which revenues from the particular services are not
decisive. Some winners are also found among ‘unofficial’ providers with, for
example, dating, meru-tomo (pen pal finder), chat, ring tones, pictures and
adult content services.

"Japan has made the most impressive contribution in the field of mobile
Internet by combining applications and content with an advanced wireless
technology. However, for businesses outside Japan, the i-mode experience is not
a question of carbon copying a successful concept, but of achieving a greater
understanding of the driving forces behind i-mode. Rightly used, the lessons
from i-mode can be of great help when drawing the wireless map on European
soil," Nordström says.

The report points out some major lessons from the i-mode experience:

1. Be content provider friendly: A
   portal platform, standard high-quality handsets and attractive business
   models are vital parts of the wireless future.

2. Optimize the user experience:
   Make the service easy to use, keep prices reasonable and understandable,
   offer e-mail, and push for high-quality content.

3. Realize the importance of
   handsets: Subsidize feature-rich handsets (e.g. GPRS, MMS and Java), phase
   out outdated models quickly, and aim for a homogenous handset population.

4. Do things differently: The one
   most important challenge in the European market is to make full use of the
   dynamic interaction between affordable feature-rich handsets, stimulated
   usage and high annual revenue per user (APRU), the ‘virtuous circle’.
   However, with a mixed and divided market and a much lower APRU Europe needs
   a different approach in a number of areas:

5. Co-operate with other operators
   and vendors: A different approach is needed for the heterogeneous European
   market.

6. Don’t forget the business user:
   The big proportion of business users in Europe can actually be an advantage.
   Handsets with appealing and useful services and corporate services offer an
   important source of income from users who do not pay their own bills.

7. Be active in standardization:
   European operators do not have the strength to set their own standards, and
   therefore co-operation is essential.

The report also takes a look at the agenda of NTT DoCoMo and partners like
KPN and Orange, for introducing i-mode in the international market. NTT DoCoMo
has a stake in a number of operators worldwide and a clear strategy to evolve
into a global operator:

"I-mode services outside Japan will run over GPRS and the handsets will
have dual-mode cHTML/WML browsers," according to the report.

Northstream (www.northstream.se)