Reports of i-Mode's death in Europe are greatly exaggerated

Martha Bennett

At this time, there are no signs that KPN Mobile might be pulling out of the i-mode service the company is providing through its German e-Plus business. The same applies to the i-mode service in the Netherlands. It is true that the Belgian launch, through KPN Mobile’s Belgian unit, BASE, did not take place in June as originally expected. A launch date in September 2002 is now being talked about, but no firm date has been made public, as far as we know. It is also true that subscriber numbers to date have been disappointing for KPN Mobile and NTT DoCoMo. By mid-May, total i-mode subscriber number in Germany and the Netherlands were a mere 34,000 (out of a combined customer base of around 13 million). Following cuts in the cost of the handset and other special promotional deals, numbers appear to have risen to around 60,000 now – still not a very high portion of the total subscriber base.

However, at this point there is nothing to suggest that i-mode in Germany and the Netherlands isn’t being supported anymore. Quite the contrary – in the last few days, there has been a flurry of announcements from DoCoMo itself which suggests an increased push for i-mode in Europe:

• DoCoMo has stated that it is aiming for a combined European customer base (Germany, the Netherlands and Belgium) of one million by the end of 2003. To help achieve this, an expanded range of i-mode-capable phones is due to be introduced. The first introduction, in the near future, will be that of a lower-cost, low-end model to supplement the single, rather pricey handset currently available. Phones with built-in cameras and on-board games capabilities, are set to follow later in the year or in early 2003.



• According to Japanese newswire reports, DoCoMo is going to set up a European holding company and consulting firm in the Netherlands. The intention is to increase capabilities for supporting the marketing and promotion of i-mode in Europe and to provide technical support. The new entity is to be called DoCoMo i-mode Europe BV, and it is to be capitalized at €2.4 million (roughly $2.4 million).



• Spain’s dominant mobile operator, Telefonica Moviles, has just (as per an announcement on July 23, 2002) entered into a licensing deal with DoCoMo. The intention is to launch an i-mode service in Spain through Telefonica Moviles España, sometime in the first half of 2003. Other Telefonica Moviles businesses (the company owns a total of 19 wireless carriers in 14 countries) may launch services at a later point, but no specifics were disclosed.



• Separately, DoCoMo and Telefonica Moviles have reportedly agreed to form a business and technology alliance in mobile communications.

In addition to these announcements, it is worth remembering that DoCoMo also has a licensing deal with Bouygues, the French operator. The i-mode service in France is due to be launched by mid-April of 2003.

In summary, and as the standard phrase goes, rumors of the death of i-mode in Europe are greatly exaggerated. In the highly volatile environment of telecommunications, it is of course always possible that changes in ownership can take place or strategies may be modified quite suddenly. For the time being, though, it looks like full steam ahead for DoCoMo and i-mode in Europe.

Looking at the wider picture, Giga continues to sound a note of skepticism with regard to the chances of success for i-mode in Europe. The fundamentals have not changed significantly, only in Spain does DoCoMo have a deal with a dominant operator, handset choice remains inadequate, and despite recent discounts, handset prices are still comparatively high and can involve having to take out a 24-month contract.

In addition, there are signs that German consumers may not be willing to spend quite as much money on mobile services as predicted. A recent survey showed that consumers regard €50 as the maximum acceptable amount for their mobile phone bill (this includes contract as well as voice and data services). This contrasts painfully with €100, the sum that many operators appear to have been using as the basis of their calculations.