DoCoMo - The Japanese Wireless Telecom Leader

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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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DoCoMo - Beyond I-Mode

In early 2001, DoCoMo announced the development of Freedom of Mobile Multimedia Access (FOMA)⁵, a 3Gservice that was to be launched in May 2001. As a part of this, through the early half of 2001, the company used I-Mode's success to acquire minority stakes in various cellular companies around the world. Commenting on this, Natsuno Takeshi, Executive Director, DoCoMo said, "No one ever expected this to happen a year and a half ago.

Only those who witnessed the shift [i.e. DoCoMo] can imagine what to expect with 3G. DoCoMo alone is very sure of the potential of 3G, because we have already experienced the explosive success of the data business. Our overseas business is to offer our know-how. We cannot give it away free, but we can make a minority investment in interested partners. I think it is a perfect strategy."

Analysts pointed out that though DoCoMo had tried earlier to enter the global arena with I-Mode through its deals with few cellular companies, it could not succeed due to I-Mode's incompatibility with the digital transmission standard used worldwide. Hence, I-Mode did not find many takers though it was faster than the WAP services offered by other wireless companies around the world.

The digital transmission standard used in Japan was compatible with the GSM system used worldwide. Analysts felt that DoCoMo's only chance of fulfilling its ambition of succeeding in the global markets was through 3G services like FOMA.

During the same period, DoCoMo sources revealed that the company was banking on a transmission protocol - Wideband-Code Division Multiple Access (W-CDMA), which was expected to help the company diversify into to 3G services. DoCoMo expected to place Japan on the global wireless telecom map with its 3G services. In words of Mitsuyama Nahoko, an analyst, "3G is offering DoCoMo the first global stage that Japan can enter.

The company's international thrust could act as a wedge, forcing open new markets for its parent NTT as well as for Japanese cell phone manufacturers like Sony and Matsushita, which have done well domestically but have struggled to gain ground abroad against Nokia and Ericsson."

In January 2001, DoCoMo completed the acquisition of a 16% stake in AT&T, the leading wireless company in the US, for $9.8 billion. This was till then, the biggest investment the company had made overseas. DoCoMo expected the deal to help it establish itself in the world's richest potential market (US).

As the penetration of wireless services in the US (39%) was lesser as compared to Japan (above 50%) and European countries (70%), DoCoMo expected to leverage the available potential through I-Mode and its 3G technologies. In line with these plans, the company began taking initiatives to make I-Mode compatible with the wireless standards used in US. In spite of these efforts, the company soon landed in a host of problems.

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5] FOMA is an advanced 3G service that allowed users to download data-intensive graphics and MP3 music files on their phones. It also allowed the phones to transmit video.