DoCoMo rethinks its strategy

Business Week (BW) published quite an informative article about DoCoMo's business strategy, which includes new acquisitions in Japan and abroad. This time the company looks closely at its neighboorhood markets in Asia. But don't expect DoCoMo to go on a shopping spree as it used to do in the past. DoCoMo says it is limiting most new ventures in Asia to less than $90 million a piece.

DoCoMo's domestic activity is focused on growing musclues in non-wireless business areas with a goal to link them with the wireless model. The recent acquisitions include a controlling 34% stake in Sumitomo Mitsui Financial Group's credit-card business, a 40% stake in Tower Records Japan, and a 2.6% piece of Fuji TV.

Commenting on i-mode, BW provided an interesting data on i-mode's spread between Japan and the rest of the world:

"But even i-mode, a runaway success in Japan since it was introduced in 1999, has struggled abroad. DoCoMo now licenses its i-mode technology to 22 countries from Spain to Singapore, but 84% of i-mode users worldwide are in Japan. Hirata (DoCoMo's Senior Executive VP) says i-mode brings in well under 10% of overall revenues. "We don't really expect it to be a huge profit maker," he says. "We're more after the cost benefits from having economies of scale for i-mode-enabled handsets."

It is not a surprise for me that i-mode has difficulties abroad. Here, in the US, AT&T Wireless was closely working with DoCoMo to roll out mMode, an American version of i-mode, before AT&TW was bought out by Cingular. When rolled out, mMode was very impressive from the technical and design point of view, but the pricing was expensive and the revenue distribution model varied greatly from DoCoMo's. While DoCoMo splits revenues by keeping 10% and giving the rest of 90% to content developers, AT&TW was taking 40% of revenues, leaving developers with the rest. As you can imagine, the mMode uptake was not significant and it seems Cingular is phasing out or rebranding most of the mMode's platform.