Lessons From The Rising Sun

It would be all too easy to write the success of Japan’s iMode off to cultural eccentricity. Savvy marketing and positioning, coupled with solid technical infrastructure highlight several valuable lessons that others would do well to take note of.

A key component of iMode’s success has been the positioning of the service. NTT DoCoMo was very careful not to parallel or relate any of the services available on iMode to media such as the Web. Inherently, wireless services like iMode should not be ‘the web on a 4 line screen.’

Focusing on unique capabilities was also characteristic of AOL’s success. Its focus on services like AOL Instant Messager and the (in)famous AOL Mail have consistantly delivered robust subscriber growth. So much so that the ISP recently made the bold move to raise subscription rates by 9 percent in this tough climate.

In the case of iMode, the focus on signing content partners and developing its billing infrastructure (both in a technical and business sense) has seen 21.7 million Japanese citizens take up the service. Channeling its attention to the whole product and wider opportunities has clearly been a differentiating factor. Jupiter Research analyst Seamus McAteer argues that WAP portals have become obsessed with monetising the four line frontpage and have neglected the fundamentals of a wider business model.

At the heart of iMode’s success is its billing system and infrastructure. The key here is the single billing relationship with the customer. In part it has to do with user trust, but more than that it is related to the administration and upkeep of many accounts. From a consumer perspective, paying $2.95/month for news from Channel 9, $2.95/month for sport results from Fox Sports and $3.95/month for financial updates from The Financial Review is not nearly as attractive as paying $9.95/month to a single provider — namely the telco.

For the privilege, NTT DoCoMo takes a 9 percent cut of the sales. In addition, NTT DoCoMo charges for the data usage on the consumer end. These two revenue streams were a chief contributor to stellar revenue and profits for the giant telco.

The model of a billing gatekeeper is not new. Indeed, one has to look no further than the humble porn industry. Adult verification service, AdultCheck, accepts user subscription fees in exchange for access to thousands of paid adult sites.

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