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 - Problems Aplenty Contd...

In mid June 2001, DoCoMo faced severe criticism from its customers who were provided with FOMA services as a part of the trial. According to these customers, DoCoMo phones enabled with FOMA services had a very short battery life, insufficient network coverage and they crashed easily. Apart from this, many customers complained of hackers manipulating FOMA phones. According to reports, when the FOMA service was accessed, the customer got an email attachment, which caused the phone to automatically call another phone number, and then forward the email to other mobile users.

On account of such complaints, DoCoMo was forced to recall over FOMA enabled 1,500 handsets in late June 2001. In July 2001, it was reported that DoCoMo was delaying the launch of I-Mode in Europe on account of the difficulty in adapting it to the European market.

According to company sources, the local operators in Europe were facing problems in launching an I-Mode compatible technology, in place of the standard WAP technology. DoCoMo was also facing problems in Europe on account of a scarcity of I-Mode compatible handsets. Meanwhile, DoCoMo was going ahead with the launch of I-Mode services in other countries such as Netherlands and Germany, in collaboration with its partners.

In the same month, DoCoMo announced that it was fast rectifying FOMA's technical problems and the service would be launched as planned, in October 2001. Reportedly, by September 2001, DoCoMo engineers had rectified 448 problems associated with the FOMA network. In early October 2001, DoCoMo launched its first fully commercial 3G service FOMA in Tokyo.

The service was initially offered in Tokyo and Yokohama, and was to be launched across the nation by mid-2002. FOMA allowed users to transmit video download data-intensive graphics, and MP3 music files. According to DoCoMo sources, FOMA was six times faster than its competitors' services. Though the price of the FOMA enabled handset was very high, the company was confident that it would get over 150,000 subscribers by the end of fiscal 2001.

However, analysts were skeptical about FOMA's success, According to them, the high cost of the new service (including subscription amount, costs of data transmission and handset) was a big hurdle. They pointed out that FOMA lacked the two very essential elements - affordability and ease of use - that had made I-Mode the phenomenal success that it was.

FOMA failed to meet the expectations of DoCoMo as customers still complained of its short battery life, lack of coverage across the country and nuisance from hackers. Commenting on the factors, preventing FOMA's success, Hideki Nomura, Executive Vice President (Marketing), DoCoMo, said, "The largest reason is the limited service coverage. We are constructing the 3G network from scratch and the area is still very limited.

The second is the development of handsets; the availability of handsets is quite limited - the variety is limited and the prices are also relatively expensive. The third reason is related to technology development. The battery life is too short." On account of such problems, FOMA's subscriber base amounted to only 89,000 by the end of March 2002, much below the expected 150,000 for fiscal 2002.

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