While the west is taking its first tentative steps towards Web-enabled cellphones, i-mode is walking tall in the east, writes Jonathan Watts There is a new walk on the streets of Tokyo these days. It is too slow to be a stroll and too purposeful to be a wander. In crowds it often results in the odd stumble, bump and mumbled apology. But it is no drunken stagger either. The legs know where they have to go, but the eyes are too preoccupied to chart a clear course. Suddenly it’s cool not to look where you are going in Japan. Why? Because you’re engrossed in the latest way to surf the “wireless Web” – a cellphone and Internet service called i-mode. I-mode (the “i” is for information) is the first system to put cyberspace in subscribers’ pockets 24 hours a day with cheap and continuous access to a range of information services. It is tipped as the next big thing to come out of the land of the Walkman, the Game Boy and the PlayStation.
What’s the big deal? South Africans can already use their cellphones to get online and exchange e-mail messages using the wireless application protocol (Wap) system. Like i-mode, Wap phones do not access the Internet as we know it – they provide a cut-down version designed to work on small screens.
But, while Wap and i-mode are rivals, their contest is in danger of turning into a mismatch between a weedy infant and a bodybuilding giant. In terms of cost, popularity, ease of use and commercial success, Wap is being whipped. I-mode is here and changing millions of lives. Since its launch in February 1999 the system has transformed Japan from an online laggard into one of the fastest-growing online markets in the world. With seven- million subscribers, i-mode is the country’s most popular online portal. At current rates of growth it will make Japan the first country in the world where cellphones are more popular than PCs as a way of getting into cyberspace, and 600 000 customers signing up every month have put i-mode on course to overtake America Online (AOL) as the planet’s leading online portal by the middle of 2002. The service is so popular that its operator, NTT DoCoMo, had to halt sales and advertising temporarily last month because demand kept crashing the system.
In Tokyo’s trendy Shibuya district the system is changing the way people look, sound and spend their time. Yoko Uenishi, a 17-year-old high school girl, bought her i-mode phone “because it looked cool and all my friends had one. But now I use it all the time, especially when I want to kill time on the train.” Her phone – a tiny, ultra-light, metallic pink device that flips open like a Star Trek communicator – is decorated with a designer strap and stickers of cartoon characters. To personalise it even further, she has downloaded a Hello Kitty animation for the 3cm by 5cm screen inside and a pop song melody that plays when she has a call or a new e-mail. Like most teens, Yoko mainly uses i-mode for e-mail. She reckons she sends and receives about 15 messages a day – which means clicking away at tiny phone-pad buttons until her fingers ache. But she also checks her horoscope each morning, books concert tickets and follows the latest chart news – which, naturally, includes a new top 10 of downloaded melodies.
But i-mode is not just child’s play. Through more than 13 000 sites, subscribers can book airline tickets, trade stocks or find a lover. Date clubs are said to be particularly popular among would-be adulterers because i-mode offers more anonymity than a phone and less risk of being discovered than a PC. One site provides information about the nearest available love hotel. Keiji Matsuo, a broker at one of Japan’s biggest securities houses, is a recent convert, but finds that the service already fills up a large part of his day. Each morning, he gets a wake-up call from i- mode, then uses it to check what happened on the New York stock market while he was asleep. The latest analysts’ reports are e-mailed to him when he is out of the office and he clicks on to the Net to show clients the latest share prices. Last thing at night he checks the London markets before he goes to bed. “It’s fun, it’s useful, it’s lighter than a laptop and quieter than a [cell] phone,” he enthuses. “Best of all it is cheap so my wife doesn’t get angry.” He spends less than R50 a month on i-mode, including the basic R20 fee. It may not sound much, but analysts say i- mode is creating a revolutionary new pattern of consumption. The buzz word is micro-niches – tiny purchases that can be made while walking along the street or waiting for a train. Until now, these have been impossible because of the costs of distribution and billing, but with i-mode the marketplace is in your pocket and the cash register is your monthly phone bill. Because i-mode offers continuous access to the Internet, there is no need to dial up and wait for a response and most sites can also be accessed with just a few button clicks rather than typing out Web addresses. Such continuous access has yet to arrive in South Africa. Yet the service is far cheaper than using a personal computer and landline because charges are based not on time, but on the volume of data downloaded. Receiving five short e-mails costs about 10 yen, while the charge for checking a train timetable or the weather is unlikely to be more than 16 yen. You do not need a credit card – these transactions are automatically put on your phone bill. This allows almost unconscious consumption. It is as though DoCoMo and partners have found a way to package plankton and sell it to whales. The toy maker Bandai, for example, earns about R6-million a month from a website that simply provides a different picture each day for i-mode users to download on to their screens. These microniches are already generating huge revenue. According to the Nomura Research Institute, i-mode’s seven-million subscribers spend an average of R100 a month on content. This means big bucks for DoCoMo, which gets 9% of the fee for every cartoon character, melody or news service downloaded.
For the first full year that i-mode was in operation, DoCoMo racked up record profits of R16-billion, a jump of 23% from the previous 12 months. Much more is to come, according to forecasts that the wireless market will grow fivefold by 2003. Currently the system is a prototype available only in Japan, but DoCoMo has plans to make it smoother, faster and more widely accepted. Next year it will become the first company in the world to introduce a third- generation mobile communication system that it says will allow data transmission at 15 times the existing speed of 9,6 kilobits a second. By 2003 the company hopes to raise the pace further to a blistering two megabits a second, swift enough for webcasts, interactive games and video conferencing.
This is frightening news for European telecommunication companies, which are at least a year behind. Until recently, it was widely believed that i-mode would be difficult to export because of technical standards, security concerns and cultural differences.
However, DoCoMo has begun to move aggressively into overseas markets. Last year, it formed partnerships with global giants Microsoft and Sun Microsystems. Last month it bought a bridgehead in Europe with a Euro 5-billion stake in KPN, a Dutch cellphone company. It has also paid R35- billion for 20% of Voice System, the United States cellphone firm. Further takeovers and tie-ups are expected as DoCoMo becomes evangelical about its system. It will be hard to resist. As the world’s most valuable telecommunications company, DoCoMo has an almost bottomless war chest as well as the backing of its politically powerful former parent company, NTT.
Unless Wap gets moving, European consumers could be the next ones doing the i-mode walk. In Japan there has been no contest between i-mode and Wap. The EZ system (based on Wap) is faster and technically superior, but i-mode is cheaper and has greater marketing clout. Who says the best man wins? Remember VHS vs Betamax.