Tuesday, June 26, 2012

DoCoMo’ s Evolutionary Strategy Implementation and it’s move into Hybrid NFC Phones


Founded in 1992, DoCoMO is a predominant mobile phone operator in Japan. It is largely run by government which account for around 46% of its share. It is widely known for its wireless and data communication technologies to subscribers in Japan. DoCoMo launched its wireless mobile service known as I-mode in 1999 and this was a huge success.
They followed a different strategy when compared to most European and U.S Mobile Carriers:

  1. 1.       I-mode used always-on packet switching technology, so that phones do not have to disconnect the internet to receive calls. While Europeans at that time carriers charged for internet for every minute logged in, I-mode charged the user for every data-packet transmitted.
  2. 2.       I-mode used compact HTML to encode the websites, the European carriers used WAP which required content providers to reformat the information.
  3. 3.       I-mode was able to offer i-mode data handsets and bore inventory risks whereas in US and Europe handsets were manufactured by popular brands such as Nokia.

But DoCoMO was unable to bring this model to USA because it could not dictate handsets and they moreover required very large investments.

In 2002, DoCoMo came up with a Next Generation High Speed data service using Wideband CDMA but its competitor KDDI came up with flat pricing model which was able to existing mobile infrastructure through Qualcomm’s CDMA2000-1X.This meant that KDDI handsets were of lesser costs; they had a higher battery life and were GPS ready. Soon, KDDI was able to gain large user share and a series of regulatory changes in 2006, meant DoCoMO had to build a newer lifestyle infrastructure to bolster subscriber retention.

Mobile Felica  and Business Risk Mitigation
DoCoMO then aimed to implement Felica chips into Mobile phones to enable them to remotely control all the activities. It was a way to implement lifestyle infrastructure model envisioned by its leaders.
Wary of first mover disadvantage and to reduce inventory and business risks, DoCoMo sought to partner with Sony to produce Felica mobiles .They founded a joint venture known as Felica Networks, which specially subsidized the costs of Felica mobile phones to DoCoMo in order to maintain the competitive advantage.Felica soon became de-facto standard in JR East Commuter ticketing and was built in 80 million handsets.
A Felica phone


Development and Implementation of Hybrid Models
As of 2011,NFC is a standard for cell phones to communicate with each other over small distances. DoCoMo plans to support NFC in Felica Phones. Two implementation options are being sought after:
     1. The phone will have two embedded chips one for NFC and other for Felica.
     2. NFC enabled Sim cards will be developed in future implement a single chip Felica phone.

Felica currently is predominant only in Japan and other countries especially in Europe use NFCs. This shift to NFC will enable phones in Japanese to use contactless services such as payments and transit ticketing when they move to foreign countries.
Docomo’s move to NFCs will not be without challenges especially in the context of  updating payment terminals to use the new methodology and also cooperating with SIM vendors to put Felica into their products.


Sources:

1. DoCoMo Reveals Strategy for Its Move to NFC
http://nfctimes.com/report/docomo-reveals-strategy-move-nfc

2. DOCOMO Enriches Mobile NFC Ecosystem
http://www.nttdocomo.com/features/mobility34/

3. “Contactless” Convenience with Sony’s Felica
 http://www.sony.net/Products/felica/about/index.html




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