i-Mode's youth market could wipe out Wap

As Wap suppliers argue over protocol, the Japanese i-Mode mobile solution has found success by focusing on content rather than...

As Wap suppliers argue over protocol, the Japanese i-Mode mobile solution has found success by focusing on content rather than applications. Could it do the same in Europe? asks Ian Murphy

As European mobile phone suppliers struggle to convince users of the benefits of mobile Internet access through the Wireless Application Protocol (Wap), in Japan an alternative solution, NTT DoCoMo's i-Mode, has found incredible success.

There is little doubt that much of i-Mode's success has been due to the fact that it is all centred on one operator. This immediately eliminates many of the interoperability issues that have bedevilled the Wap debate.

But NTT partners have also responded by producing the content that is required to make mobile services work. This has extended into a huge unofficial market that has helped drive the technology forward.

Without content the Internet would have remained primarily an educational tool for techies. And just as content created a demand for Internet access, so it will drive the take up of mobile services. A key difference between Wap and i-Mode, has been that, as Wap suppliers debated protocol issues, DoCoMo was creating content for i-Mode.

By October 2000, after just 20 months of operation, i-Mode had 12.78 million users and with revenues of $3.8bn (£2.7bn). This means that i-Mode makes about $300 (£212) from each user per year.

Although data services are i-Mode's selling point, over half of its revenue still comes from voice calls. The income from data services comes primarily from controlling the pipe and charging for access.

One such access deal is with Japanese company Bandai, whose cartoon character Hello Kitty produces revenues of $3m per month through multiple downloads of a single image. Each image costs just $2 but by aiming clearly for the youth market, Bandai and i-Mode have made a very compelling business case.

Suppliers selling ring tones are having similar success and, despite growing concerns over copyright protection issues, there are currently over 20,000 charged-for ring tones available via i-Mode.

These services are particularly well suited to the Japanese market, leading some commentators to warn that success in Japan should not be seen as the basis for success elsewhere. But there may be parallels.

Look at the European success with SMS (short message service) and pre-paid mobile phones. This medium is almost solely a youth market and looks set to reach a rate of 20 billion SMS messages per month by the end of 2000. The youth market is buoyant and it is difficult to see any great difference between cultures on this score.

Further evidence of this commonality within the youth market comes from Italy and Scandinavia, which have seen huge success for online mobile games and horoscopes - these are among the most popular entertainment component for i-Mode. These success stories make it easy to understand why Disney is pushing so hard to get its Wap service up and running.

It is i-Mode's vast number of content providers that has made it successful. But Enoki Keiichi, managing director of NTT DoCoMo Gateway Business, admits that he did not tell potential partners the entire truth about subscribers and revenue models in the early days.

The success of i-Mode has perhaps excused his approach, but he explained that there was a serious reason for taking this tack.

The primary concern was to ensure that the content would attract users. This strategy was a runaway success and user numbers quickly shot up, in turn leading to more content and more users.

To give some idea of the number of content partners, both official and unofficial, Enoki provided the following figures in an address to the Mobile Internet show in Paris recently: There are 656 application portals with over 1,140 official Web partners. Should you be willing to type in the URL yourself, then there are a further 24,435 sites catering for i-Mode, with an increasing number offering English language content.

In fact, some of the heaviest access is for the CNN and Bloomberg services in English. On top of this, there are over 266 search engines including Yahoo, Infoseek and Lycos, with Yahoo alone getting over 100 million hits through i-Mode - equivalent to 10% of the entire hits across the US.

While major players such as AOL argue that there can be no mobile Internet without a set of rich applications, DoCoMo disagrees. Portability is more important than full motion video, and with a current mobile phone market of 80 million users, you don't need huge market penetration for a business to be successful.

For content providers, this is an important issue, and DoCoMo really pushed the size of the market when recruiting partners.

Another plus for i-Mode content providers, compared to those looking to deliver across Wap, was the fact that they could use their existing skills to deliver content. Compact HTML (CHTML), the language driving i-Mode, is a subset of HTML v3 with some additional tags. It is therefore easy for providers to adapt their existing content and tools.

The spread of content is also an argument against those who believe that i-Mode is purely a Japanese phenomenon.

There are four key areas for content: information, e-commerce, database and entertainment. Information accounts for about 20% of total traffic, including the news, English language content and sport. The Olympic games were a major success for i-Mode with results and performances being followed very closely.

E-commerce now boasts over 300 banks providing live services, as well as secure online trading. European providers have been trying to persuade banks to go with Wap as the ultimate in mobile banking and on the whole success has been very limited, with many providers backing off through concerns about security and the performance of the service.

Database services such as restaurant guides are available via most media and are nothing special, but a dictionary service has proved to be the third most popular i-Mode database service, closely followed by a recipe service. This gives a hint that the demographics of i-Mode usage are diverse - offering content providers a position from which they can experiment with new types of content.

The most popular content, however, is entertainment, including Bandai's Hello Kitty downloads and ring tones. Gaming is by far the most common form of entertainment, although limited video capability will be added during the second half of 2001 and music streaming of the top 10 is already underway.

Looking ahead to the future of i-Mode, Enoki said the introduction of Java and SSL was on track for the end of this year. This would consist of an applet using Java and would provide an extension of the e-commerce environment, with the possibility of agent functionality being downloaded into the device.

IMT-2000, the global framework for third generation (3G) wireless communications is likely to be implemented in spring 2001, allowing higher bandwidth services, such as music and video, to be provided. To i-Mode users, this service upgrade will be transparent, with users able to upgrade the devices in their own time while continuing to receive their existing services over the network.

Mobile: the next generation

IMT-2000 is the global framework for third generation (3G) wireless communications. In Europe it is being implemented as the Universal Mobile Telecommunications System (UMTS), in North America as CDMA2000 and as NTT DoCoMo in Japan. The technology is aimed at providing high-speed communications for carrying high-quality audio and video signals. Another goal is advanced global roaming, which means being able to go anywhere and automatically be able to use whatever wireless system is available - whether an in-house phone system, cellular device or satellite-linked system.

UMTS, the European implementation, will run in the 2GHz band and offer global roaming and personalised features. Designed as an evolutionary step up from GSM, multimedia data speeds of up to 2mbps are expected.

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