Eastern promise

Many European mobile businesses point to the incredible success of Japan's mobile Internet sector and draw the conclusion that European m-commerce will be just as successful. Some go further, specifically pointing to NTT DoCoMo's i-Mode services as the way forward for Europe. But what are the actual lessons to be learned from i-Mode's success?

It certainly is a phenomenon, with 40,000 subscribers joining each day. i-Mode subscribers can tap into a huge range of services including banking, games, news and shopping. Every i-Mode phone has a button that allows easy access to 1,600 DoCoMo-endorsed sites, some of which are free while others charge up to $2.50 a month. DoCoMo handles the billing for official sites and keeps 9% of their revenue. ADVERTISEMENT


Japanese consumers say that their top three reasons for wanting an i-Mode phone are to communicate with friends, to kill time and to obtain urgent news. Almost half use their handsets while commuting and more than a quarter use them while watching TV. When asked which services they value most, Japanese consumers rank email at the top, with two thirds of Japanese users sending emails every day using their handsets. Ring tones come in a distant second.

Interesting new services continue to be introduced. Matsushita Refrigeration has developed a new vending machine to sell alcoholic beverages and cigarettes to adults after checking their age from mobile phone registration data. This initiative could yet be dwarfed by Coke's plans to network one million soft-drinks vending machines with i-Mode phones, allowing the cashless purchase of drinks. Coca-Cola will encourage Japanese consumers to use the new machines with a loyalty program which awards points that can be exchanged for soft drinks or branded merchandise. Sonera in Finland started similar services some time ago and Virgin Mobile is experimenting with comparable technology in the UK.

In Europe, WAP's poor reception has been put down to over-hyping from suppliers, bad handset design, the use of GSM bearers and the lack of colour, among other things. To deal with such issues, the WAP Forum has been defining WAP 2.0 to be X-HTML. But the promise of X-HTML compatibility, colour graphics, animation, large file downloading capabilities, location based services and streaming media may not be sufficient, because it isn't handset design, colour or cHTML that have created the vibrant i-Mode market in Japan - it is the business model.

The major use of i-Mode data services is email which, since i-Mode is a packet network, is inexpensive. Consumers pay only for the data sent and received, not for connection time, which means an email costs a penny or so: but lots of use means lots of pennies. The minor use of i-Mode is content, for which DoCoMo provides interfaces to its billing system. This gives both content providers and consumers a straightforward and easily understood charging model.

It is this charging model that is the real difference between the European wireless world and the i-Mode one: in the latter, service providers can get paid. It is having the billing system in place and giving access to that billing system to third party providers of content that has given Japanese subscribers such a wide range of services.

There is a synergy between online business and payment (look at the case study of eBay and PayPal for further evidence) that has yet to be resolved in the European mobile space. The message for European operators wanting to attract the same kind of content market is clear: if you bill it, they will come.