6152009

1
Mobile Commerce Buzz and Value Chains

• Pirkko Walden

2
Value Chains and Value Networks

• a value chain is a framework for considering key
  activities within an organisation and how well
  they add value as products and services move from
  conception to delivery to the customer
• a value network is the links between an
  organisation and its strategic and non-strategic
  partners that forms its external value chain

3
Natsuno, NTT

• My role is to coordinate a value chain larger
  than the world of networks, servers, and handsets
  NTT is used to. I know that no single company
  could provide the entire value chain, so I set
  out to create alliances and support among
  third-party developers.

4
m-Commerce products services involves a number
of players

• infrastructure equipment vendors
• software vendors
• content providers
• content aggregators
• mobile network operators

• mobile portals
• third-party billing operators
• mobile device manufacturers
• wireless application service providers
• location information brokers

5
Value

• value for whom?
• the customer
• the company
• relevant business partners
• customers define what value means to them and
  buy on that basis
• freedom becomes value when it changes the limits
  of the possible in the structures of everyday
  life (The Braudel Rule, cf. Keen Mackintosh)

6
The Entertaining Way to M-Commerce (Baldi
Thaung 2002)

• Japans approach to the mobile internet i-Mode
• A model for Europe?
• Japan only market where wireless internet has
  exceeded expectations
• Why?

7
What is i-mode?

• i-mode is NTT DoCoMo's mobile internet access
  system.
• "i-mode" is also a trademark and/or service mark
  owned by NTT DoCoMo.
• the "i" in "i-mode" stands for information,
  internet, etc.
• is a service offering wireless web browsing and
  e-mail from mobile phones
• most popular among young users, 24-35 years of
  age heaviest users, women in their late 20s,
  slightly more male users than feamle users, all
  categories

8
Who is NTT DoCoMo?

• NTT DoCoMo is a subsidiary of Japan's incumbent
  telephone operator NTT.
• The majority of NTT-DoCoMo's shares is owned by
  NTT, and the majority of NTT's shares is owned by
  the Japanese government.
• NTT-DoCoMo's shares are separately listed on the
  Tokyo Stock Exchange, Osaka Stock Exchange, New
  York Stock Exchange (DCM)
• NTT-DoCoMo's market value (capitalization) makes
  it one of the world's most valued companies.

9
i-mode An Early Success Story

• Launched February 22, 1999 by NTT DoCoMo
• 44 million i-mode subscribers in 2004
• Market share 56.1 (2004 Q3 Results)
• Network/Communication Standard
• Japanese PDC, PDC-P, W-CDMA
• packet-switched (always on)
• Mark Up Language iHTML
• Critical mass of content and services
• Services Transactions (banking), entertainment,
  DBs, etc.
• 4,500 official sites, tens of thousands of
  unofficial ones
• Fixed monthly fee fee per packet subscription
  fees for different services
• Content providers CNN, Disney, CITYBANK, etc.

10
Foma, Freedom of Mobile Multimedia Access

• FOMA is NTT DoCoMo's 3G service the first in
  the world based on the W-CDMA system, which
  complies with IMT-2000, an international standard
  for 3G mobile communications.
• FOMA service began in 2001, and its fundamental
  performance continues to advance, evidenced by
  new terminals with reduced weight and longer
  standby times and an expanded service area.
• NTT DoCoMo's goal is to provide richer mobile
  multimedia communications by developing
  applications that take full advantage of FOMA
  features.
• Connecting with anyone, anytime, anywhere, and
  freely access all kinds of information that's
  the limitless potential of mobile communications
  offered by FOMA.

11
The Story

• Kouji Ohboshi, chairman
• DoCoMos success is largely a product of his
  vision
• graduated in 1957 in law
• NTT did not fit in the Japanese management
  culture
• Keiji Tachikawa, president and CEO
• 1962 engineer, 1978 Masters degree from MITs
  Sloan School
• 1982 he received his Doctor of Engineering degree
• from Tokyo University

12
i-mode Subscriber GrowthMonthly
                                            
13

• As of now, there are 44 million i-Mode
  subscribers
• According to DoCoMo's data, the large majority of
  subscribers use email and browse webpages every
  day.

14
Site Growth/Content Provider Growthi-mode Menu
Sites Monthly                                 
            
15
Independent Sites Monthly                     
                        
16
(No Transcript)
17
The i-mode Portal (Sadeh)
Source NTTDoCoMo
Information News Updates Weather
Information Sports News Stock
Quotes Business/Technology News
Town Information Horse Racing Information
etc.
Transaction Banking Security
Trading Ticket Reservation Airline
Information/Reservation Credit Card
Information Book Sales
etc
eMail
Entertainment Network Game Character
Download Horoscope/Fortune telling Karaoke
Information/ Song FM Radio Information Club
Event Information etc.
Data base Telephone Directory Search
(Yellowpage) Restaurant Guide Dictionary
Service Cooking Recipe etc.
Information Bill Collection System for IP
User Profile Data Base
18
i-Mode

• The most popular i-mode sites are by far
  entertainment-related sites where you can
  download character images and ringing tones,
  play games, read your horoscope and find dating
  services.
• Other popular services include weather
  information and news-related sites.

19

• there are over 60 million mobile users in Japan,
  i-mode and competing mobile internet systems have
  around 50 million users in Japan.
• i-mode has started in Europe in April 2002
• Germany, the Netherlands, Belgium, France, Spain,
  Italy, Greece
• i-mode elsewhere
• Taiwan, Austrailia
• i-mode is the most successful mobile data service
  today.
• DoCoMo and i-mode is blazing the trail into the
  unknown world of mobile internet and mobile
  multimedia.

20

• http//www.nttdocomo.com/home.html
• http//www.nttdocomo.co.jp/english/

21
i-Mode

• Possible reason
• The different strategy followed by i-Mode system
  focused on entertaining services
• Not professional business services like European
  WAP services
• Cultural peculiarities of Japanese society
• 50 of i-Mode user activities
• visits to entertainment sites offering games,
  screen savers and ring tones

22
i-mode

• Technical factors
• Market related factors
• Cultural factors
• Consumer-group specific factors
• Trade-off between reach and richness

23
Mobile entertainment

• A business-to-consumer service
• Pure entertainment
• Applications solely accredited to the
  entertainment industry
• Entertaining service
• Serve a second purpose beside pure amusement
  (e.g. educational or informational)
• Often incorporated in the business environment

24
Breakdown of Pure Entertainment Services
25
Breakdown of Entertaining Services
26
The Japanese Environment

• 50.8 of the Japanese population owned a mobile
  phone keitai in early 2001 70 million users
• 50 million wireless internet subscribers
• NTT DoCoMo 56.1 of the market share
• Three main rivals about 15 each

27
The Japanese Environment

• i-Mode
• A branded micro-browser service launched by NTT
  DoCoMo
• Simultanously an operator
• Internet service provider
• Portal
• The packet-switched service incorporates XHTML
• The service boasts numerous official as well as
  unofficial web pages created by individual and
  companies

28
The Japanese Environment

• One of the world leader in kitsch
  entertainment, Tamagotchi, Hello Kitty
• World leader in gaming experience, game consoles
  and complex PC games
• 55 of the i-Mode accesses in early 2000 were
  for entertainment related areas

29
The European Environment

• Mobile phone density in Europe was 62 by the
  end of 2000
• 250 million users
• 6.1 were WAP-enabled
• 3.1 were used for accessing WAP services
• Wap is a standard supported by an international
  consortium for delivery of content from the
  internet to mobile devices to be used with any
  mobile phone

30
The European Environment

• Wap
• Incorporates a simple micro-browser and specifies
  the WML for creating content
• Not bound to a specific network structure
• Mobile entertainment applications
• Available in simple forms today in parts of
  Europe
• Scandinavian countries, with Finland taking the
  lead, are emerging as the centre of European
  wireless innovation (Baldi and Thaung 2002)

31
Europe vs Japan A Comparison

• Technological differences
• Network technology
• Packet-switched vs circuit switched
• One important pre-requisite for the penetration
  of m-entertainment services lies in the intro of
  packet-switched systems
• i-Mode always on connection to the internet
• In 2000 the speeds of i-Mode and WAP were
  comparable 9.6 Kbps (WAP took minutes to
  reconnect to the internet)

32
Europe vs Japan A Comparison

• Language
• C-HTML
• Applies a simple programming language
• The ease of C-HTML has encouraged numerous firms
  and private developers to build unofficial
  websites contributed to the success of i-Mode
• WAP
• A more comprehensive and sophisticated language
• Content providers must learn how to develop the
  sites
• Allows for more advanced applications
• Is widely compatible to other standards

33
Europe vs Japan A Comparison

• Devices
• Cutting edge vs good standard
• Hardly comparable in terms of technical features
• Handset lifecycle in Japan among the lowest in
  the world and a fierce competition - the
  development of devices with superior quality and
  features a reality
• Special interest is given to the user-interface
  large colour displays and good input methods

34
Europe vs Japan A Comparison

• Market structure
• Carrier vs manufacturer
• In Japan all four handset manufacturers are given
  handset specifications by DoCoMo
• European specify the phone attributes themselves
• Wired internet experience (low vs high)
• Wireless internet and voice calls primary means
  of communication in Japan
• Penetration of the wired internet low (14)

35
Europe vs Japan A Comparison

• Wired internet experience
• In Europe wireless internet as an alternative
  means of accessing the web
• Average 20 familiar with the internet (7
  Portugal - 44 Norway)
• Early disappointments in Europe not as rich and
  fast as the wired internet
• Billing scheme
• i-Mode accessed through a central portal through
  which the official sites provide their services

36
Europe vs Japan A Comparison

• Billing scheme...
• Very attractive for content providers to become a
  official site since NTT DoCoMo provides a billing
  facility, where the user is charged for value
  added services via their phone bill
• DoCoMo keeps about 9 of the fees charged and in
  addition makes money from charging the i-mode
  users for the data transferred
• WAP must consent beforehand to pay for sites
  with their credit card.

37
Europe vs Japan A Comparison

• Pricing
• NTT DoCoMo charges a monthly fee of 1 to 3 euros
  for using an i-mode service and 0.003 euro per
  data package (128 bytes) transferred, i.e. amount
  of information downloaded
• Average i-mode bill is between 15 and 21 euros
  per month
• WAP is billed on a per minute basis for about
  0.20 euros per minute, i.e. connection time

38
Europe vs Japan A Comparison

• Cultural backgrounds
• Attitude towards time
• Killing time vs saving time
• In a society where saving time (e.g. through the
  wired internet) is a relevant part of daily life
  the user must first be shown the value, how
  mobile entertainment kills time

39
Europe vs Japan A Comparison

• Community habits
• Public transport vs car
• Japan is a commuting society, primarily using
  public transportation to travel
• It is forbidden to make voice calls in subways
• Phones represent a fun means of spending time
• Europeans use their car

40
Europe vs Japan A Comparison

• Role of phone
• Life style component vs tool
• The keitai an important part of the Japanese
  society, adding a life-style component
• Primary communication method, carried along
  everywhere, a part of the owners identity
• Mobile devices fashion accessories in Japan
  different handsets to suit various occasions
• European users see the phone merely as a
  communication tool

41
Europe vs Japan A Comparison

• Consumer groups
• Entertainment something can be offered to every
  age group
• Kids and teenagers
• Similar to their Japanese counterparts are
  expected to be fascinated users of the wireless
  web when content allows
• Heavy users of game consoles
• Will undeniably be among the most dedicated users
  of mobile entertainment

42
Europe vs Japan A Comparison

• Young adults
• Accross the world, numerous young adults with
  large budgets
• Likly to share a strong demand for brand products
  and are likely to turn to wireless phones for
  entertainment services
• Tech savvy and perceptive to new trends, they are
  often first users of new gadgets, when
  entertainment is involved
• Will push the demand for wireless data usage in
  Europe, as the age group currently already
  accounts for the highest wireless data use and
  mobile phone penetration

43
Europe vs Japan A Comparison

• Business users
• Europeans show the largest differences when
  compared to Japanese counterparts
• Japanese adults open to making use of
  entertaining services in spare moments
• European using the devices primarily for
  infotainment and communication, popular content
  will include news and weather
• European users have less time and are interested
  in saving time, will not have many moments to
  fill with entertainment
• Entertainment that serve dual purposes will be
  popular

44
Europe vs Japan A Comparison - Main Differences

• i-mode
• Proprietary standard, developed by NTT DoCoMo
• Used mainly in Japan/Hong Kong
• No learning curve for content providers due to
  similarity to HTML
• 4300 official sites and 80 000 unofficial sites
  in Japan
• Billing provided by NTT DoCoMo for official sites

• WAP
• Open standard, developed by wireless phone
  industry
• Used around the world as de facto standard
• Learning curve for content providers
• 24000 sites accessible globally (2003)
• Must agree to pay charges by credit card

45
Conclusions

• Mobile entertainment has an enormous potential
• In Europe essential to concentrate on simple
  services high reach and less rich applications
• In Europe young people should be targeted (accept
  lower richness in favor of reach)
• New technologies should be priced moderately and
  tested in environment area

46
Without the right solution, you wont get far
picture www.infonet.com