DoCoMo - The Japanese Wireless Telecom Leader
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Details
Themes: Differentiation
Period : 1992 - 2003
Organization : NTT DoCoMo (DoCoMo) Inc
Pub Date : 2003
Countries : Japan
Industry : Telecommunication
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Case Code : BSTR049
Case Length : 17 Pages
Price: Rs. 500;
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Life After The Loss Contd...
On account of its problems with its overseas partners, DoCoMo announced in October 2002 that it was considering freezing its overseas investments. According to analysts, the company was forced to consider this option to control its own costs. FOMA was yet to make profits even in late 2002, while competitors KDDI and J-phone's 3G services were doing rather well. To attract subscribers, DoCoMo had to offer heavy discounts on FOMA handsets and services. During this period, the company also began offering free global roaming to its FOMA customers to retain its existing customers and to lure new customers. According to the company sources, such discounts and free offerings took a heavy toll on the company's revenues.
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Meanwhile, the performance of the I-Mode launched in other countries was also not found to be encouraging. In Netherlands and Germany, where I-Mode was launched in July 2002, the service could gain only 34,000 subscribers. AT&T also was disappointed with the performance of mMode (AT&T's version of I-Mode). Business as Usual?In January 2003, DoCoMo decided to reduce its promotional expenditure on 3G services and focus on increasing profits. Commenting on this, CEO Keiji Tachikawa said, "Reckless spending on network expansion will not help promote (3G services); we'd better focus more on returns on investment." The company thus decided to focus on offering better phones with good battery life and to enhance the quality of its content through better content partnerships. By February 2003, on account of DoCoMo's aggressive marketing initiatives, the sales of FOMA handsets increased to over 191,500 (though still behind the target of 320,000 units for fiscal 2002-03). |
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However, the company's new handset P2102V launched in mid March 2003 reported sales of one million handsets by the end of the month. This model featured a rotating liquid crystal screen and had a good battery life of over 250 hours. In April 2003, DoCoMo also announced the launch of its new handset F66li, with the Global Positioning System (GPS) feature, which enabled users to pinpoint their location and get area maps and information.
In April 2003, it was reported that DoCoMo was bouncing back to profits on account of its successful new launches (handsets), declining capital expenditure and higher mobile revenues. In the words of Mark Berman, a telecom analyst, "DoCoMo is rebounding. In another year, it should regain its status as one of Japan's most profitable companies." Proving the reports right, DoCoMo announced a consolidated net profit of $1.83 billion for the year ended March 2003.
Analysts attributed this to the company's return to its 'basics.' (After its lackluster stint with 3G technology, DoCoMo had decided to look once again towards 2G technology. As a part of this, the company launched its first photo handset based on 2G technology in June 2002, and it turned out to be an instant success. Based on its 2G experiences, DoCoMo launched more products based on 2G technology during early 2003.
In April 2003, DoCoMo launched a 'wrist-watch with phone' and also announced plans to launch six new 2G camera phones in collaboration with Sony, Sharp, Fujitsu and Mitsubishi. These camera phones were to offer the fingerprint-authentication feature and a special feature that allowed users to download images on to a small memory chip and print them at their convenience.