DoCoMo - The Japanese Wireless Telecom Leader

I-Mode: DoCoMo's Success Story Contd...

According to reports, on an average, I-Mode generated 30% higher revenues per subscriber as compared to DoCoMo's phones that provided only voice services. In 2000, the company reported a net income of $ 2.4 billion, a 39% increase from the previous year. To leverage the success of I-Mode, DoCoMo announced its plans to develop third generation (3G) services in late 1999. The company also announced its global strategy to establish itself as a global player expanding its operations outside Japan.

Under this strategy, DoCoMo planned to take up minority stakes in less evolved cellular companies worldwide to establish itself as the first global cellular telecommunication giant. By November 2000, DoCoMo had invested up to $16 billion in overseas cellular companies.

This was in the form of minority stakes in Hutchison Telecom (Hong Kong), KPN Mobile (Netherlands) and 3G UK Holdings (Refer Exhibit III for DoCoMo's partners). Though these minority stakes did not yield much profit to the company, they served DoCoMo's primary aim in gaining international footage through them. As part of the investment agreement, these companies agreed to roll out DoCoMo's I-Mode and 3G mobile services. Meanwhile, I-Mode's popularity in Japan continued to soar.

According to analysts, I-Mode was nothing less than a phenomenon in the Japanese mobile telephony market. Due to its easy-to-use nature and affordability, the subscriber growth was so fast and so high that the company faced capacity problems in early 2000. Reportedly, DoCoMo suffered 16 disruptions in its I-Mode service by April 2000, casting doubts on the ability of the service to accommodate the increasing subscriber base.

However, the company solved the problem by improving the technology used. By early 2001, the subscriber base in Japan accounted for more than 60% (18.1 million) of the 30 million mobile Internet customers in the world. Reportedly, this figure was increasing by 50,000 per day during early 2001, with the Japanese youth taking to I-Mode in a major way. Company sources mainly attributed the success of I-Mode to its simple and efficient network access, its middleware software, its business model and its positioning.

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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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