DoCoMo - The Japanese Wireless Telecom Leader

DoCoMo - Problems Aplenty Contd...

Company sources said that they wanted to take feedback from the customers to improve the service quality before going ahead with a full-fledged launch of the service. However, analysts felt that the reason behind postponement of the service was that DoCoMo was experiencing some technical problems with its 3G networks, and that it had bought time to rectify those mistakes. They remarked that the company was planning to strengthen its networks and work out the differences between the W-CDMA standard used by the company and the Universal Mobile Telecommunication Service (UMTS) standard used in the European countries to launch its 3G services globally.

However, analysts were quick to comment that such a delay in launch might prove disadvantageous because competitors like J-Phone Communications were also planning to launch 3G services by early 2002. If this happened, DoCoMo would have very little time to establish itself in the market and reap the first-mover advantage.

In early June 2001, media reports indicated that the initial enthusiasm over 3G services created by DoCoMo was slowly dying down across the world. Many wireless companies seemed to doubt the commercial viability of the service in the long run. As investors began losing interest in 3G services, stocks of companies foraying into 3G services fell drastically.

In the words of Niq Lai, Director, Telecom Research Center, Hong Kong, “Investors have now practically written off 3G.” DoCoMo's share price declined during this period. Analysts said that customers might not be interested in buying costly 3G enabled handsets, just to have faster service and view pictures and video. They felt that mobile phones might not be suitable as multimedia devices as they had small screens and weak batteries.

Hideo Okinaka, Manager, KDDI (a DoCoMo rival), opined,” People would not like to stare at video on a tiny screen for a long time.” 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.

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Case Details

Case Code : BSTR049
Themes: Differentiation
Case Length : 17 Pages
Period : 1992 - 2003
Organization : NTT DoCoMo (DoCoMo) Inc
Pub Date : 2003
Teaching Note : Available
Countries : Japan
Industry : Telecommunication

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