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JUNE 22, 2001 Invasion Mode Japan is not known as a global I.T. standard-setter, but DoCoMo just might be able to win the wireless Internet race By TIM CLARK With i-mode, NTT DoCoMo became the first mobile phone company in the world to prove that wireless Internet services could be not only wildly popular with consumers but profitable too. Now the company is taking the lead again, creating and deploying a platform for high-speed, "third generation" mobile transmission technology. The risky bet isn't being made for the sake of national pride. If it can make 3G as successful in Japan as i-mode has been, DoCoMo is wagering it can convince the rest of the world to adopt its technology and thereby reap profits beyond its home market for years to come. But i-mode's domestic success has so far not been enough to convince mobile phone companies in Europe and the U.S. to fall in line behind DoCoMo. The fact is, Japan is not seen as a global standard-setter in information technology. If anything, Asian nations including Japan have been viewed as laggards in the adoption of I.T. U.S. companies including Microsoft and Cisco Systems are the most visible examples of how standards for desktop computing and networking technology are established by Americans. When it comes to the wireless Internet, however, Japan may very well wind up calling the tune for Europe and America, for some of the same reasons that the U.S. became the computing kingpin. Asia was slow in its uptake of personal computers for several reasons, but one large factor was that early desktop machines were difficult to use for those not fluent in English. Once software was developed allowing native-tongue input, computer sales skyrocketed. Apple Computer's Macintosh operating system incorporated Japanese character support before Microsoft's DOS; as a result Apple's market share in Japan is larger than it is in the U.S. to this day. I think we'll see a similar pattern with Internet-enabled cellular phones — but in reverse. This time, the technology will mature in Japan before migrating to the rest of the world. Consumers in Europe and the U.S. so far have not taken to the wireless Internet because the user experience is poor. WAP, the technology being used in the West, has been an utter failure in both ease-of-use and in the availability of content. In Japan, on the other hand, millions of people have taken up wireless messaging, e-shopping and other mobile activities because DoCoMo made certain that i-mode phones were easy to use. In the race to establish wireless Internet standards, DoCoMo enjoys certain advantages. As the dominant mobile carrier in the world's second-largest economy, it can make huge investments in unproven technology while demanding its partners, including cellphone manufacturers, follow along. That level of top-down coordination is impossible in Europe. Moreover, high debt levels and bloated equipment inventories carried by European operators make investments in projects lacking a guaranteed quick return unlikely. Too, Japanese have proven to be more willing to use their cellphones for non-essential communications than Westerners. This is part of an evolution in consumer behavior that has taken place over the last 17 years, as the telephone has gone from being a pedestrian tool for conducting business to a personal, portable device for idle chatting and "feeling connected" — a toy as well as a tool. In the West, the mobile phone is still used mainly for productivity, not entertainment. More than any other company, DoCoMo has expanded the definition of the telephone. It has done so by providing a blueprint for a wireless user experience filled with games, contests, shopping and communicating that is far superior to anything available outside of Japan. The company's recent test launch of its 3G service in Tokyo means that handsets, transmission technology and applications will have a few product cycles behind them well before 3G cellular services become widely available in the West. Given Japan's cutthroat consumer electronics market, that just might lead to the kind of improvements that will make DoCoMo's 3G technology and services irresistible overseas as well. Tim Clark is the Tokyo-based strategy director fore-business integrator Ion Global. He also writes Japan Internet Report (http://www.jir.net/), a monthly newsletter Write to Asiaweek at mail@web.asiaweek.com
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