Business strategy case study docomo
I-mode was positioned as a simple, usable and fun-to-use service. This flexibility in operation helped DoCoMo to attract more content providers onto the I-Mode platform.
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According to analysts, I-Mode was nothing less than a phenomenon in the Japanese mobile telephony market. A teaching note is available to accompany this case. Customer representatives were present at all its branch offices and shops across Japan to take feedback on products, services, customer assistance, product maintenance, repair and other product related issues. I think it is a perfect strategy. The service was initially offered in Tokyo and Yokohama, and was to be launched across the nation by mid During this period, the company also began offering free global roaming to its FOMA customers to retain its existing customers and to lure new customers. This model featured a rotating liquid crystal screen and had a good battery life of over hours. The battery life is too short. Though the price of the FOMA enabled handset was very high, the company was confident that it would get over , subscribers by the end of fiscal Analysts pointed out that though DoCoMo had tried earlier to enter the global arena with I-Mode through its deals with few cellular companies, it could not succeed due to I-Modes incompatibility with the digital transmission standard used worldwide. Our overseas business is to offer our know-how. Being an open platform, I-Mode allowed all and sundry to set up a site on its network, thus increasing the variety of content available. But clearly this is no longer realistic. The company thus decided to focus on offering better phones with good battery life and to enhance the quality of its content through better content partnerships. Thus, despite its turnaround on the anvil, investors remained unconvinced.
Without that kind of commitment from Japanese companies, our economy will never recover. This was because its technology upgrade was in sync with technology standards worldwide and did not require rebuilding of a whole system, as required by FOMA or I-Mode.
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On account of its problems with its overseas partners, DoCoMo announced in October that it was considering freezing its overseas investments. Due to its easy-to-use nature and affordability, the subscriber growth was so fast and so high that the company faced capacity problems in early Analysts said that customers might not be interested in buying costly 3G enabled handsets, just to have faster service and view pictures and video. Apart from this, DoCoMos ambitious investment drive went awry with the company forced to take a According to reports, these companies had spent billions of dollars in acquiring licenses to operate 3G services and landed in huge debts. DoCoMo realized that most of its customers were not very comfortable making payments through the Internet. With the customers shifting to cheaper wireless e-mail services from DoCoMos expensive voice-mail services, and with I-Mode also losing its initial pull, the ARPU figures were reportedly rather depressing. Launched in February , its i-mode service was an immediate and explosive success. Though these minority stakes did not yield much profit to the company, they served DoCoMos primary aim in gaining international footage through them.
With such initiatives, DoCoMo succeeded in staying close to its customers and understanding their needs and thereby changing its strategies to provide solutions for them. The company also announced that it would launch a mini trial service of FOMA in the introductory phase, by providing it to about 4, customers in Tokyo.
According to the company sources, such discounts and free offerings took a heavy toll on the companys revenues.
However, the companys new handset PV launched in mid March reported sales of one million handsets by the end of the month. Commenting on the reluctance of these companies to join the 3G bandwagon, Yasumasa Goda, analyst, Merill Lynch Japana leading financial services firm, said, The whole point of investing abroad was a speedy roll-out for 3G.
The I-Mode network was based on Personal Digital Cellular Technology - a technology that allowed the data to be sent to its destination in parts called packets. Apart from this, the saturation of Japans wireless telecom market was also posing a severe threat to the companys growth.
We do not want that to happen with our 3G services.
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In July , it was reported that DoCoMo was delaying the launch of I-Mode in Europe on account of the difficulty in adapting it to the European market. This was because its technology upgrade was in sync with technology standards worldwide and did not require rebuilding of a whole system, as required by FOMA or I-Mode. This was on account of the companys efforts to reduce the weight of its handsets and increase their battery life, combined with aggressive advertising which positioned 3G services as an affordable service. The company also had made it easy for individual Web developers to make their sites I-Mode friendly. But despite these measures, the companys ARPU continued declining during early The launch, originally scheduled in May had to be postponed by 5 months. This was till then, the biggest investment the company had made overseas. Launched in February , its i-mode service was an immediate and explosive success. This was because the company wanted to keep its services simple and did not want to create any unrealistic expectations among the customers. Commenting on this, CEO Keiji Tachikawa said, Reckless spending on network expansion will not help promote 3G services ; wed better focus more on returns on investment. Many wireless companies seemed to doubt the commercial viability of the service in the long run. DoCoMo realized that most of its customers were not very comfortable making payments through the Internet. According to this model, billing was based on the volumes of data received and sent by the subscriber and not on the amount of time spent on the Internet. We cannot give it away free, but we can make a minority investment in interested partners.
In the words of Kirk Boodry, telecommunications analyst, Dresdner Kleinwort Benson Securities TokyoI-Mode came at the right time, in the right place, with the right content.
The digital transmission standard used in Japan was compatible with the GSM system used worldwide.
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