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Japan's NTT DoCoMo Hedges Its Bets on Wireless Data

As the Internet, e-mail, and mobile computing continue to grow in popularity, data transmission could soon surpass voice communications in terms of market potential for cellular phone firms.

Taking advantage of its hegemony as Japan's largest mobile communications operator, NTT Mobile Communications Network (NTT DoCoMo) this week forged yet another in a series of strategic alliances with foreign information technology leaders to ensure that it will back a winner no matter who comes out ahead in the development race.

On June 15, NTT DoCoMo announced that it will work with 3Com to jointly develop wireless data communications capabilities and services for Japan's burgeoning handheld computing market.

NTT DoCoMo will work with 3Com to integrate the latter's Palm Computing mobile application technologies with its own wireless data communications infrastructure.

"The Palm Computing platform is quickly becoming popular in the Japanese handheld computing market," said NTT DoCoMo senior vice president Shuichi Shindo. "3Com's strong position in the worldwide handheld industry combined with the openness and extensibility of the Palm Computing platform make them an ideal technology and business partner for us [and] a perfect match for our mobile computing solutions."

The partnership is expected to result in wireless network solutions and services that will expand the use of Palm Computing devices in Japan where 3Com remains a minor player.

Although 3Com's Palm OS-based products reportedly enjoy a 72 percent market share worldwide, their share in the Japanese handheld device market -- dominated by the homegrown Sharp Zaurus -- remains well under 10 percent.

This poor showing has been due, in part, to 3Com's long reliance on third-party localized versions of its English-language products. It was not until February that 3Com announced a Japanese version of its Palm OS. The announced tie-up thus promises a boost for 3Com's renewed effort to market Palm Computing devices in Japan.

NTT DoCoMo will integrate its own wireless communications technologies with 3Com's Palm OS technologies to develop Internet-enabled wireless mobile devices and related services.

For example, the partners will optimize for NTT DoCoMo's cellular network 3Com's network-independent Web Clipping technology for wireless Web and intranet access, thus enhancing delivery of both consumer-level and mission-critical business information to users of Palm Computing devices.

"By working with NTT DoCoMo, we are ideally positioned to help drive the market for wireless information services and solutions in Japan," said Robin Abrams, president of Palm Computing and a senior 3Com vice president.

"Our joint efforts will help insure that our Palm Computing platform is optimized to leverage the power of Japan's largest wireless network infrastructure to bring a great new generation of wireless capabilities to our rapidly growing customer base there," he added.

The tie-up with 3Com caps a series of moves by NTT DoCoMo to retain its market leadership in Japan.

While it holds a dominant 57 percent share of the Japanese cellular phone market, NTT DoCoMo's share of new subscribers had dipped to 50 percent in April, then fell sharply to 42 percent in May -- the first month since 1996 that NTT DoCoMo has signed fewer than half of new cellular subscribers.

The drop is attributable largely to strong competition from the new nationwide cdmaOne network of DDI Corp. and IDO Corp, which promises 64K-bps wireless data transmission capabilities by the end of the year.

The tie-up with 3Com seems an appropriate antidote to its worries about losing ground to cdmaOne, but NTT DoCoMo is not betting its future on just one horse.

Three months ago, the company stunned local market watchers by announcing wireless data communication-related tie-ups with three international partners in the same week.

On March 15, NTT DoCoMo announced a cooperative alliance with UK-based Symbian, a Microsoft CE competitor and joint venture of Psion, Ericsson, Motorola, and Nokia, for development of mobile "wireless information device" operating systems.

Two days later, it announced signing of a technological cooperation agreement with Sun Microsystems aimed at integrating by the end of 2000 Sun's Java, Jini, and Java Card technologies into NTT DoCoMo's i-mode and next-generation cellular units.

NTT DoCoMo then finished off the week by announcing it would work with Microsoft to improve the wireless data communications functions of the Windows CE operating system and jointly develop data center services for CE-based mobile terminals.

While these diverse alliances may end up pitting various groups within NTT DoCoMo against each other and dilute its development efforts, they also help to ensure that the company is backing a winner.

As one local industry analyst put it, "They're hedging their bets; they don't want to be left out of anything."

Having placed its earlier bets on other strong contenders, it seems that through this week's deal with 3Com, NTT DoCoMo has decided to back the favorite as well.



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